A lot of people have accused the Brazilian government of failing to control the public spending due to a swift increase in lending by state banks. This lending was funded by public money. As a result of uncontrolled lending by the many state-run banks, Brazil’s credit rating has been downgraded to BBB. Standard & Poor’s also suggested that Brazil would continue to lose its investment credit rating in the coming years if a fallout from some corruption scandals additionally deteriorates the execution of austerity measures and slows economic growth.
According to a top-notch Brazilian banker and investor, Igor Cornelsen, the secret to solving the scenario lies in the knowledge of the market. Most Brazilian private banks lend to borrowers with the highest credit worthiness as they need a sense of security. This leaves people with less credit worthiness with the option of declining their business plan, spending their cash or accessing credit from public sector banks, which of course creates a challenge to the macro economy and the development of the country at large.
Igor Cornelsen believes that the strategies to be adopted by the Brazilian government should make investors feel secure by implementing market-oriented policies and fiscal austerity. As such, Brazil will emerge as an attractive market in South America and many investors will be behind them in the world of banking.
For starters, Igor Cornelsen believes that the new finance minister will formulate relatively orthodox fiscal policies and not irrational ideologies as deemed up by his predecessor, Guido Mantega. His strong view on fiscal reforms is a stock contrast from the ideas of President Dilma. With an educational background from the University of Chicago and an experience from the International Monetary Fund, he is expected to be an insightful policymaker and an associate to the private sector in a government that is obviously inhospitable.
Similarly, Brazil should pay close attention to their trading partner, China. China is one of the strongest economies in Asia. A stronger link with the country means good prices for their raw materials.
Igor Cornelsen has guided several other investors to make more successful long-term investments. He is responsible for managing some of the largest institutions in the world. Currently, Cornelsen works as the proprietor of Bainbridge Inv Inc., an agency he founded to provide expert advisory and insights into investing particularly in volatile stock markets.
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