Brazil may be heading for a subprime crisis

Financial Times published today that Brazil may be heading for a subprime crisis. Finally somebody realized that "borrowing in Brazil is punitively expensive". We have to look to debt service burden in relation to disposable income, instead of just saying that loans to GDP is “only” 46 per cent:

For consumers specifically, the ramifications are serious as the debt service burden has risen to 24 per cent of disposable income and is set to rise further as rates push higher. We expect the burden to rise to an exorbitant 30 per cent by 2012. To put this into context, the US consumer “blew up” when the debt service burden hit 14 per cent (with a current read of approximately 12 per cent). In other words, the Brazilian consumer has twice the debt load from a cash flow perspective relative to a US consumer who is still widely regarded as being over leveraged.