Founder and CEO of Bennett Group Financial, Dawn Bennett, recently reviewed the FIFA World Cup and whether or not it’s worth hosting. Her review of the benefits the World Cup brings to a country is not hopeful. According to her, the Brazilian economy is going to be facing trouble once the World Cup is over. The problem she explains is FIFA doesn’t care at all for the host country’s economy or the costs required for hosting the tournament. FIFA will pocket a cool $2 billion in profit, but the Brazilian economy won’t see a penny of those profits. Meanwhile Brazil will have wound up spending well over $318 million just for the stadium that was built for the finals. Did anyone mention that the stadium isn’t even accessible by road.
Unfortunately for Brazilians, instead of paying attention to the upcoming presidential election in October, their attention will be trained on the World Cup, which means voting for important issues will be out of the media for a long time. This is dangerous for Brazil because they have had a growing number of financial issues, the same as America. They are facing high unemployment, dwindling growth, above-target inflation and more. These are all issues that America is facing as well and is hurting our economy says Dawn J Bennett. Furthermore, Brazil’s inflation is tumbling further and further out of control. It rose at a rate of .46 percent in May alone, causing fear with economists and causing them to downgrade the country’s growth forecast.
The US is seeing a similar problem as well, as it continues to grow at a rate of negative 1% GDP says Bennett. The problem with both economies as Bennett sees it, is they’ve tried to ignore the basic laws of math. The governments are trying to prop their currencies up to make them look better. When you look at the skewed reality though of weak economic growth, record-high valuations, incredibly high stock earnings, poor consumer confidence, lack of retail buying and other more you see an economy that is completely unbalanced.
These continued discrepancies should be setting off warning bells for investors. They should be as vulnerable as the correction of 2008, but with stocks continuing to rocket forward despite stagnant wages, lack of consumer spending and other issues, something isn’t adding up.