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A U.S. bank reaps market share in Brazil as its rivals retreat; Brazil serves as a cautionary tale against big government spending; and Donald Trump's "Mexico-bashing" could backfire.

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Brazil faces reckoning for past governmental largess

Brazil serves as a cautionary tale on how big government spending and popular policies can be detrimental to a country's long-term development, Paulo Trevisani writes for The Wall Street Journal. Encouraged in part by a commodity boom that supported the economy for years, Brazilian governments "have long been skilled at handing out goodies to voters, from a pro-worker 1940s labor law to subsidies for small farmers." However, when trading partner China decided to cut down on its purchase of iron ore, one of Brazil's leading exports, the South American country's "wealth whipsawed." As Trevisani notes: "Rather than undertaking a round of belt-tightening to cope with the famine after the feast, the government doubled down on popular initiatives." As a result, an economy that grew 7.5% in 2010 has now contracted about 7% during the course of the past two years. "We don't know how to handle wealth," a former Brazil central bank director laments.

Donald Trump's Mexico-bashing hurts American interests too

Donald Trump's criticism of Mexico and his threats to renegotiate the NAFTA trade pact have already taken a toll on the country's currency, but his "Mexico-bashing" could also lead to negative consequences for the U.S., the Financial Times reports. Trump's promise to erect a border wall and make Mexico pay for it has fueled resentment south of the border. And while Mexican President Enrique Peña Nieto maintains that the two countries will continue to have a "good relationship," their rapport could still sour under a different Mexican head of state. The FT notes that relations between the U.S. and Mexico "are not as asymmetrical as they seem," since Mexico could take a number of retaliatory actions in response to Trump's policies. If the two neighbors end their cooperation, that would, ironically, "frustrate the president-elect's desire to make America 'great' by imperiling thousands of jobs and harming U.S. interests."

Donald Trump's trade policy is driving Latin America into China's arms

Even before his inauguration as U.S. president, Donald Trump has had success in terms of securing manufacturing jobs in the U.S., but that success could directly undermine another one of his campaign vows: the containment of China. "Not only will Trump not contain China, but he will cede to it primacy in Latin America, a region dominated by the United States ever since the Spanish were turfed out in the 1820s," Daniel Capurro reports for The Telegraph. Bilateral trade between China and Latin America jumped 2,400% between 2000 and 2013, and Beijing now plans further expansion into areas such as infrastructure and defense products. Trump's policies, however, promise to aggravate the situation. By threatening to scrap free-trade agreements and alienating Mexico, "Trump leaves little left to do but chauffeur Latin America's presidents to the airport and buy them flights to Beijing," Capurro writes.

Bank of America gains market share in Brazil as rivals retreat

Bank of America's decision to stay and fight for corporate clients in recession-struck Brazil is now paying dividends, as the bank last year recorded its best performance ever in the country, ranking second in terms of fees from M&A advising and debt and equity underwriting, Bloomberg News reports. "Other banks became much more cautious, while we didn't cut our team, didn't stop lending, didn't reduce or sell any business, and only slightly reduced our balance sheet," a top executive at the Charlotte, N.C. -based bank said. The company has gained market share in Brazil, where it runs a "very profitable" office, as local lenders scaled back their operations amid rising delinquencies. Now, BofA is looking to maintain its position among the top three firms on the investment-banking league table for Brazil.