Brazil's President Luiz Inacio Lula da Silva is at the helm of an already shaky coalition.

Since February, his personal approval rating has slipped almost ten percentage points to 56%, while the government as a whole now garners a meager 40%.

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Political analysts believe that another ten-point slide would more than likely lead to election defeat.

While "Lula" – as the President is commonly known – does have more than a year until voters return to the polls in October 2006, all the time in the world doesn't figure to save the Brazilian leader now.

As economic growth in the South American nation continues to freeze up, Lula can hardly afford another scandal to undermine his reputation – but that's exactly what he's got on his hands.

The latest embarrassment stems from allegations of bribery and corruption within a number of Brazil's state-owned companies. Brazil's postal service is now under scrutiny after allegations that the agency was influenced by a bribery ring that "has spread to involve not only corporate chiefs, but ex government and military officials."

Now a Brazilian magazine reports that not only does the conspiracy's ringleader happen to be one of Lula's close allies– but the corruption is not an isolated incident.

With the recent announcement of a formal investigation into the affair, speculation is hot that the probe will be thorough and uncover wrongdoing in other branches of the government.

Historically, Brazilian governments have long forged alliances with the smaller political parties in order to consolidate power. The government has rewarded those minority groups with federal jobs in return for their members' support and discretionary spending.

But the country expected much more from da Silva's government, which now faces serious allegations that it committed bribery and bilked public companies.

So here's the benefit for you:

The upshot of all the Brazilian turmoil has been a rapid loss of confidence in both Brazil's currency (the real) and its stock market, with the dollar rising 5.6% against the real since the end of May.

The Bovespa (Brazilian Stock Exchange) has performed well under Lula's government, rising some 200% at one point after his October 2002 election victory.

But despite a relatively strong performance in 2005, Brazilian stocks have fallen 9% since the realization that the government probe could be announced.

Self-imposed political disasters like the da Silva debacle have been common throughout Brazil's history, and there is no way to calculate how long this one might last.

After the massive improvements and great prosperity Lula had brought to Brazil during less than three years in office, it's hard to predict the degree of severity and long-term effects of this blow to his authority, but it is definitely in the early stages.

Unlike the Brazil of the '90s, the country has a more responsible fiscal position, unemployment has fallen and wages have risen.

The current slide in Brazil's stock market might prove to be a nice medium-term investment opportunity.

Meanwhile, on the other side of the globe, the Chinese stock market is jumping for joy – not on news of the Brazilian scandal, but because the government sought to place a buying floor under Chinese share prices.

A recent 8% share rise in the Shanghai Composite index was warmly welcomed by investors who had been biting their nails since April 2004, when the stock market peaked.

Since that zenith, the market has collapsed and its value has fallen some 44%, wiping out many small investors. The plummet comes despite a Chinese growth rate that is three times that of the United States, plus a once-in-a-generation boom in commodity prices as the world's most populous nation experiences some major growing pains.

Had you just arrived here on Earth from another planet two years ago, you probably would have chosen the Chinese stock market as the most logical destination for your freshly minted earth dollars.

But you'd have been off the mark by light years.

Long since has the hot money been burned in Chinese stocks, as speculators sought after their pot of gold.

Many of China's would-be shining stars have since proven to be badly run and heavily indebted companies that were based on bad business models to begin with.

So now the Chinese government is making strong moves to correct things.
With the Shanghai Composite at an eight-year low, the government has been instrumental in generating a clarion call to rally shares.

Primarily, the central bank intends to offer loans at incredibly low interest rates in order to inject liquidity into the system and bolster the beleaguered brokerage sector.

The government has bailed out 19 of 129 brokerage companies in the last two-and-a-half years. And at least one-third of them are losing money.

But by shoring up these troubled enterprises, the central bank is giving the green light for those contemplating a dive into the stock market.

And Chinese investors may have seen the last of brokers who previously victimized them by misallocating their funds through bad investments – or just stealing their money outright.

Next up, the government has allowed money management companies to buy mutual fund products, which will increase capital for stocks and should provide a surefire boost to the market.

The Chinese government also recently announced that listed companies can now purchase their own stock.

Such a move will no doubt please cash-rich companies eager to buy their own shares at bargain prices, but moreover it's yet another government prop placed beneath the market.

Finally, the government has instructed mutual fund companies to support the stock market. One could construe this to mean that the government is explicitly telling fund managers that the market is not going any lower – but also that all sidelined cash should be channeled into the market.

The bottom line: The Chinese government's measures seem to have taken root pretty quickly – as the Shanghai market appears to be responding.

2. Day-Trading Evolves, Exchange Seat Prices Swell

Many investors learned a tough lesson back in 2000 after they "mastered" the art of day trading equities.

They realized the hard way that they weren't geniuses. A one-way bet during the bull market in roaring technology shares came to a crashing end, leaving bulls licking their wounds.

It was simple back then.

Take $10,000, open an online trading account, buy NASDAQ-listed equities and then sit back and enjoy the ride. There were few other costs.

On the other hand, take a look at the cost of doing business as a local trader on the New York Mercantile Exchange (NYMEX).

If you want to access that market and stand in the trading pit, right now you'll pay around $20,000 per month to lease a seat. That means you'll need to clear $240,000 a year before you can start to pay yourself.

Or you could purchase a seat – if you can find a willing seller.

The NYMEX recently reported that a seat changed hands at a record sale price of $2.485 million – a 25% increase on a previous sale last October.

With the exorbitant cost of admission to the market, exchanges have looked at other ways of maintaining access for the public.

For instance, London's International Petroleum Exchange (IPE) began trading its oil and gas contracts electronically in April and has boosted volumes by 50% – to the point that it's actively competing with its New York counterpart.

Observers believe that the IPE – which is owned by Atlanta-based consortium InterContinental Exchange (ICE) – is headed for its own public listing through an initial public offering (IPO).

That would leave the NYMEX floundering, forcing it to seek a partner by way of either an equity alliance or a merger through another exchange.

The nagging problem: Existing seat holders would have to vote in favor of such a move.

But their own interests tend to supercede those of the group. These shareholders are less concerned with how the NYMEX propels strategic growth than they are about the price of investment in a seat.

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