patrick.net

I once made a little money by buying SID, the Brazilian steel maker. Currently pays a dividend of 7.5%, but that's largely because the stock price is down so much lately...

It's very hard to open bank account in other countries. I've tried in person in Canada and the Netherlands and they just don't want your money if you're a foreigner. Maybe it's different if you're a rich foreigner.

I think you're right. There is an investment opportunity. Read "The Age of Deleveraging" by Shilling. I think he would say that if you bought the Brazil equivalent of a 30 yr T-note today and sold it one year from now, then rebought, then waited a year, then sold and so on .... that your return would be very high (assuming you believe that interest rates in Brazil will not go higher).

This same strategy would have worked astoundingly well for you in the US between 1979 and today, but now rates are so low, it's hard to imagine they could go any lower. That's why the PIMCO CEO thinks the 30 year bond bull in the US is dead.

Its not that easy as it sounds. Technically based on how foreign currency markets work, the difference in interest rates should equal the difference in inflation numbers. The inflation numbers have an effect on foreign currency exchange rates as well so your $100 today could be worth $90 a year from now when you convert the Real back to USD (which could wipe out your gains). I don't think they are paying 11% for $ deposits.

It's very hard to open bank account in other countries. I've tried in person in Canada and the Netherlands and they just don't want your money if you're a foreigner. Maybe it's different if you're a rich foreigner.

That's because of US pressure. Best move is to open a company in other countries, and then invest through the company.

Ironically, while US companies can move capital with ease, they don't make it easy for middle class US citizens.

Performing a carry trade?
http://www.youtube.com/embed/oJVc1yk46NQ

Brazilian women are hot.

I think if I was going to invest in Brazil (and single), I'd invest in travel, and lotsa spending money while I am there.

AJ1201 says

Its not that easy as it sounds. Technically based on how foreign currency markets work, the difference in interest rates should equal the difference in inflation numbers. The inflation numbers have an effect on foreign currency exchange rates as well so your $100 today could be worth $90 a year from now when you convert the Real back to USD (which could wipe out your gains). I don't think they are paying 11% for $ deposits.

Thank you, I didn't take inflation rates into account. A quick check gives Brazil a 6.5 inflation rate for December 2011, and 3.4 inflation rate for November 2011 for United States.

Inflation rates are roughly twice what they are in the United States, but there still money to be made even after taking inflation into account.

Currency traders lose money as often as make it. It's a straight up gamble, not an investment.
RE: opening a Brazil bank account to make higher interest. I have one story, which may or may not be useful.
When I was working in Mexico, the friendly banker said I should put my money into an interest bearing account, because the rates were so good. I was very young and just spent it most of the time.
However, as I rememeber the peso then was at about 25/$1 us dollar. This was a long time ago of course, before the big devaluation.
The peso in 81 or thereabouts lost about 50% of its value overnight.
Today the peso is at 13,760/$1 us dollar. They created "new pesos", 1 new peso=1000 pesos. So, if you look at the exchange rate, you will see 13.76 pesos/$1 us dollar. It's really 13,760.
There is often a dark side to making high interest rates in banks.

TechGromit says

AJ1201 says

Its not that easy as it sounds. Technically based on how foreign currency markets work, the difference in interest rates should equal the difference in inflation numbers. The inflation numbers have an effect on foreign currency exchange rates as well so your $100 today could be worth $90 a year from now when you convert the Real back to USD (which could wipe out your gains). I don't think they are paying 11% for $ deposits.

Thank you, I didn't take inflation rates into account. A quick check gives Brazil a 6.5 inflation rate for December 2011, and 3.4 inflation rate for November 2011 for United States.

Inflation rates are roughly twice what they are in the United States, but there still money to be made even after taking inflation into account.

What I meant is inflation differential is one factor that drives the "exchange rate". The BRL would very well depreciate 10% in 1 year thereby making your investment return almost 0%.

I'd be pretty careful of investing anything in Brazil. Not so much because of the markets but because of the government.

The Federal government of Brazil has a power that is very weak. It reads more like a confederation rather than a federation.

There is no major political party structure in Brazil. Although we might not like political parties at least they tell us somewhat a prediction of what might occur. If a someone in office here doesn't tow the party line they can lose support. In Brazil no one knows what the president plans to do..it's like that every single day.

Some tried to suggest that Lula was some leftist but in reality some of what he did was more market orientated. In some ways he is like a anti chavez.

I'm not trying to discourage investment in Brazil but you really have to stay informed.

GameOver says

Gold and silver physical bullion are the *ONLY* proper hedge for a sudden USD devaluation.

Gold and silver have the virtues of being portable and not being printable, but lots of things would retain their value if dollars get devalued:

* reasonably priced land
* ownership of companies which make things people really need
* large quantities of gasoline, or wheat or corn (anything on the commodities market really)
* Alcohol, tobacco, and firearms
* professional skills (medicine, law, engineering)
* personal connections

Gold and silver are not the only game in town.

The problem with Brazil right now is that they can't do anything to slow the country down. Higher interest rates won't do it, like they do in the US. I finally realized why. Businesses make huge amounts of profit in Brazil if they're run correctly. While a company here might make 20% margins and 5-10% profits, they make 100% margins in Brazil with 20% profits in Brazil, while their costs SHOULD be far lower. They're just hemorrhaging money because they simply don't have a culture that knows how to be productive.

But for someone who wants to invest, or wants to get involved, they're going to borrow at whatever costs because it's so lucrative down there.

I was just in Salvador, as we were leaving, the taxi driver said: They've just built 50 of these towers, and they're building 50 more. They were far out of the city, with what would probably become a horrendous commute in 3 years. 100, brand new, residential towers. Probably 20 stories high. Housing has been going up at 25% a year for the last 8 years or so.

I'm not sure what will happen, but it's going to be explosive when it does.

I get around 9-10% in a savings account down there, 6% flat, with 3-4% inflation adjusted. It's also income tax free, because the government is trying to get people to save.

Don't bother trying to open up an account, you'll go insane. My wife a CPF (SSN), and old accounts, so we use those.

GameOver says

Hard bullion is the only thing that you could readily sell to finance most of the other purchases on your list in a Doomsday scenario, don't you think?

I almost forgot slaves! Yes, slaves are portable, easy to sell, hard to print, and they have many uses.

All you have to do is get people to borrow lots of money from you, and to think they must protect you because they want to be like you one day. Then they are your slaves.

They will work, and you will take the results of their work. Just call it "interest" and it's legal. Even better, call it "The American Dream" or "The Free Market" and they will defend their own slavery to the death. They'll never figure out that they are doing all the work and you are getting all the benefit of it.

The only risk is if government shifts taxes to non-productive income like interest in place of taxes on actual work. But there's really no chance of that ever happening, especially with our "representative" democracy that represents only the non-productive slave owners. So you can enjoy your slaves, generation after generation.

Patrick : YOU should run for office. You got the right stuff mister.

JodyChunder says

Patrick : YOU should run for office. You got the right stuff mister.

Thanks! I'd be interested if I didn't have to take money from people who would then want to tell me how to vote on laws.

But we don't have any public campaign finance for Congress, right?

And without the privately-funded Congress voting to make publicly-funded Congress a possibility, it will remain impossible. Catch-22, I think.

Caution about those Caribbean countries' banks though. I have an American friend in Europe who opened an account in the Cayman Islands I think. Anyway, the bank went under and took his whole deposit with it. No FDIC. Money gone.

Jason M. says

Caution about those Caribbean countries' banks though. I have an American friend in Europe who opened an account in the Cayman Islands I think. Anyway, the bank went under and took his whole deposit with it. No FDIC. Money gone.

Thanks Patrick... taking this to the next level: What countries are good choices for residency (not relocating to), for the purpose of moving investments? Let's get a list together. Rather than guess, I invite anyone posting information to provide links to objective sources. Cost and difficulty of gaining residency is also very helpful information to post, at the same time, if available. Thanks in advance.

http://www.panamalaw.org/index.html has some good info.

Nice ass ets.