Emerging Market Growth and Prosperity from Brazil to China

We’re a bit foggy-headed this morning, Fellow Reckoner. We blame the locals. Unlike their Argentine cousins who, despite growing some of the best wine in the world, barely drink, the Brazilians really know how to party. Not that they don’t have good cause to…

Brazil is on top of the world these days. And the whole world is coming to its cities to catch the view. They’ll host the soccer World Cup here in a few years, and the Olympics a couple of years after that. Head down to Ipanema Beach on any given afternoon and you’ll quickly discover that the whole country has taken to the running tracks and the volleyball courts. Everybody is in training. They must think hosting the Olympics means everyone gets to compete in it! Well, at least they’ll all look good in the grandstands…something the impossibly beautiful people here don’t have too much trouble doing.

Oh yes, and their economy is booming too. Their currency, the real (BRL), goes from strength to strength. Offshore oil discoveries are coming online thick and fast. And, on the world stage, the Brazilians are carving out a larger slice of the geopolitical pie, pressing hard for more favorable trade deals alongside their “BRIC” brothers and sisters. Just this week the four emerging juggernauts – along with newly christened member, South Africa – agreed to begin transacting more in their own currencies, shunning the once mighty dollar.

“If China buys up Brazilian soybeans,” explained Addison in The 5 a couple of days ago, “or Brazil buys finished goods from Russia, such as they are…the countries have unilaterally agreed to transact their deals in real, yuan, or rubles…and now rand…bypassing the greenbacks you have stuffed in your wallet.”

Addison’s takeaway from the deal? “Get used to it.”

Yes, Fellow Reckoner, the world is turning. The “mighty” are fast becoming the “once mighty”…and the “once fallen” nations are registering growth figures the developed world can only dream about.

That’s one of the reasons we love to travel. There’s something about being in a country with real growth, with real economic expansion and activity that you just can’t read about in the pages of a magazine or see on TV. It’s real…and it’s exciting. You can feel it in the air and hear it in the people’s voices. They know that better days are to come, that every sunrise brings with it a new opportunity, a new day to seize. That’s not to say there aren’t bumps and hurdles along the way, of course. But they are the kinds of bumps and hurdles that one scales on the road to a bigger and better future…not the kind that precede a fall from great heights…to even greater depths.

The world economy today is a tale in two parts. One is the story of the weakening, faltering developed world. It is a tale familiar to readers of these pages, one mottled with debts and deficits and all that goes along with political chicanery and bumbling bureaucracy. It is a story, increasingly, of frustration and despair. The other gives cause for hope and optimism. This is a tale of graduating middle classes, rising wages and living standards and opportunities for the tens of millions who are daily striving to capitalize on them.

Thanks to the age we live in – where one can be in Buenos Aires for breakfast and New York for dinner…where individuals can transact with others anywhere in the world with the click of a mouse – we have an opportunity, largely, to choose which story we wish to take part in. You can invest your money – and your time, your life – playing a part in a “first world” tragedy…or a “third world” rags to riches story.

Joel Bowman
for The Daily Reckoning

The Daily Reckoning