Investors see riches in luxury US homes
Jan Brzeski stands in a sun-filled, beautifully refurbished living room high in the Hollywood Hills, looking out at a swimming pool and, miles (km) below, stunning views of Los Angeles.
Brzeski is a private money lender running an investment firm in Los Angeles that provides loans to house flippers investors who buy a home, refurbish it, and sell it at a profit. Many flippers turn to money lenders because they cannot get banks to provide such short-term, quick financing.
Standing with Brzeski is Scott Ryan, the realtor who bought this four-bedroom, five-bathroom house in December 2012 for $1.5m with money lent by Brzeski and has transformed it with another $600 000. This week the property will go on the market at $3.295m.
"People will come in here and fall in love," Ryan said, with a house flipper's standard issue optimism. "This is an emotional sale. If it takes a week to sell, I will be surprised. There are a lot of young, wealthy people here, and a lot of money out there."
Eighteen months ago Brzeski and his firm, Arixa Capital Advisors, were lending investor money to flippers on very different properties: $250 000 single family homes in southern California's up-and-coming lower- to middle-class blue-collar neighborhoods. Most of the deals involved foreclosed homes that were totally refurbished, and then sold quickly.
No more. Brzeski now focuses on developers working on high-end flips of mansions and townhouses in exclusive neighborhoods, such as the Hollywood Hills and Bel Air.
And he is not alone. There has been a surge in high-end and luxury flipping nationwide. Between 2011 and today, flips of homes valued at $1m or more have risen almost 40% across the United States, according to RealtyTrac, the housing data company.
Between 2011 and 2012, high-end flipping soared 456% in Phoenix (150 properties from 27); 867% in Orlando (29 homes from 3); and to 73 properties from 10 in Las Vegas, according to RealtyTrac. To qualify as a flip for the figures, a home has to be bought and sold within six months.
Brzeski says two main factors combined to send him upmarket in the projects he lends on.
Newly flush Wall Street investors moved into the mid-market with so much money that they bought nearly every foreclosure in sight, mostly to rent.
The Blackstone Group, for example, spent $5.5bn on 32 000 homes across America, according to the firm.
American Homes 4 Rent, the California-based real estate investment trust founded by self-storage billionaire Wayne Hughes, spent $3.3bn, on more than 19 000 houses.
"These Wall Street guys employed huge dollars," Brzeski said. "These firms came to the courthouse steps and bought everything in sight. So the low- to mid-market dried up."
Brzeski said he had originally been wary of the high-end market, because of the much bigger sums involved and thus greater risk. But then in 2011 he financed the purchase of a house in West Hollywood for $1.425m. Another $1.175m was spent on a total refurbishment.
"When the developer put it on the market, they had multiple, all-cash offers," he said. "There was a line out the door to buy it. It sold for $3.5m. This was an incredibly profitable project. This really opened my eyes."
The house was bought by actress Sarah Gilbert, who became famous on the television sitcom "Roseanne."
Daren Blomquist, RealtyTrac's vice president, said: "Flippers are getting more confident that the market is really recovering, and therefore are more willing to go high-end, even though it's more risky."
Blomquist said with the stock market doing so well, there is a lot of investor cash out there, and a huge amount of wealth and pent-up demand at the high-end of the market. When a beautifully refurbished mansion hits the market, they are snapped up, often with all-cash offers, he said.
Foreign investors are also spending billions on the US property market. Last year, Chinese investors spent $12bn on US real estate, making the country the second-biggest foreign investor, just behind Canada, according to the National Association of Realtors.
Blomquist also sounded a warning for anyone who thinks flipping is easy. Many who try, suffer catastrophic losses.
"It's 10 times as risky doing high-end flips. Unfortunately what happens a lot of times, flippers have a property, then they can't find a buyer to purchase it."
Brzeski's business model is simple. Using a fund of investor money he lends 75 percent of a project's "hard costs" - that is money used for the purchase and refurbishment - and collects interest at an annual rate of approximately 10%.
Usually the loan is repaid within six to 12 months. He does not share in the profit made by the flip. Brzeski loans between $1m and $4m on each project.
Another factor, unique to California, helps him fund luxury flips, said Brzeski. Because of a 1978 voter initiative law knows as Proposition 13, the tax assessments of California houses have increased dramatically less than home values since the law was enacted, as long as the home has remained unsold.
Now, owners who had been reluctant to part with their large homes since the early 1970s because of "Prop 13" are dying, or are finally ready to downsize.
"Almost all our homes in these A and A-plus neighborhoods have something in common. You look at the appliances in the kitchen. If they are from the 1960s or 1970s, that's the house to flip," Brzeski said.
Across the country, close to Washington, DC, Chris Haddon works for Hard Money Bankers. They provide money for investment deals on "fix and flip" projects in Washington, Maryland and Virginia.
Haddon says he, too, has seen a surge in deals involving high-end properties.
"A few years ago, you would look at a $2m property and have no idea how long it would take to sell. The high-end market is always the last to rebound. But it's now rebounded and DC is hot."
In Miami, Mark Black, a realtor, said people with cash have been moving into the high end of the market in the past year.
"The market has gone through the roof. You see people buying properties one year ago and selling them at 20, 30% profit. Some of these are no more than paint jobs. The ones that are doing big rehabs are making huge profits."
In Manhattan, Tim Desmond, a realtor with luxury realtors Stribling, said high-end flips in New York are not for the faint of heart, but the profits can be huge.
He cited a 12 000-square-foot (1 115-square-meter) home on Manhattan's East 56th Street that was bought by an investment group for $10m. It took two years to convert it into two, three-story, 6 000-square-foot (557-square-meter) condominiums. The first is now on the market with a $17m price tag.
US clown with Obama mask draws criticism
A clown wearing a President Barack Obama mask
appeared at a Missouri State Fair event this weekend, and the announcer asked the enthusiastic
spectators if they wanted to see "Obama run down by a bull".
The state's second highest-ranking official, Lieutenant Governor Peter Kinder, denounced the performance in a tweet on Sunday. He said it was "disrespectful" to the president.
"We are better than this," the Republican tweeted.
State Fair officials on Sunday said the show was "inappropriate" and "does not reflect the opinions or standards" of the fair.
It wasn't clear if any action will be taken against the performers.
Perry Beam, who was among the spectators, said "everybody screamed" and "just went wild" as the announcer talked about having the bull run down the clown with the Obama mask.
'Klan rally'
"It was at that point I began to feel a sense of fear. It was that level of enthusiasm," Beam said.
He said another clown ran up to the one wearing the Obama mask, pretended to tickle him and played with the lips on the mask. About 15 minutes into the performance, the masked clown had to leave after a bull got too close, Beam said.
"They mentioned the president's name, I don't know, 100 times. It was sickening," Beam said. "It was feeling like some kind of Klan rally you'd see on TV," he said, referring to the Klu Klux Klan, which terrorised African-Americans for decades.
Officials with the Missouri Rodeo Cowboy Association, the organisation that co-ordinated the rodeo, did not return phone calls seeking comment on Sunday.
After Beam and his family returned home, he posted a photo of the clown in the Obama mask on his Facebook page. The photo and the posting were then promoted online by a blog, Showmegrogress.com, which elicited a huge response Sunday on Twitter.
Scott Holste, spokesperson for Missouri's Democratic Governor Jay Nixon, said on Sunday in an e-mail that Nixon "agrees that the performance was disrespectful and offensive, and does not reflect the values of Missourians or the State Fair".
The state's second highest-ranking official, Lieutenant Governor Peter Kinder, denounced the performance in a tweet on Sunday. He said it was "disrespectful" to the president.
"We are better than this," the Republican tweeted.
State Fair officials on Sunday said the show was "inappropriate" and "does not reflect the opinions or standards" of the fair.
It wasn't clear if any action will be taken against the performers.
Perry Beam, who was among the spectators, said "everybody screamed" and "just went wild" as the announcer talked about having the bull run down the clown with the Obama mask.
'Klan rally'
"It was at that point I began to feel a sense of fear. It was that level of enthusiasm," Beam said.
He said another clown ran up to the one wearing the Obama mask, pretended to tickle him and played with the lips on the mask. About 15 minutes into the performance, the masked clown had to leave after a bull got too close, Beam said.
"They mentioned the president's name, I don't know, 100 times. It was sickening," Beam said. "It was feeling like some kind of Klan rally you'd see on TV," he said, referring to the Klu Klux Klan, which terrorised African-Americans for decades.
Officials with the Missouri Rodeo Cowboy Association, the organisation that co-ordinated the rodeo, did not return phone calls seeking comment on Sunday.
After Beam and his family returned home, he posted a photo of the clown in the Obama mask on his Facebook page. The photo and the posting were then promoted online by a blog, Showmegrogress.com, which elicited a huge response Sunday on Twitter.
Scott Holste, spokesperson for Missouri's Democratic Governor Jay Nixon, said on Sunday in an e-mail that Nixon "agrees that the performance was disrespectful and offensive, and does not reflect the values of Missourians or the State Fair".
Gibraltar: UK mulling action against Spain
The British government is considering taking
legal action against Spain over stringent border
checks imposed at the border with Gibraltar, a spokesperson for Prime Minister David Cameron said on Monday.
The spokesperson said the checks by Spanish guards, which have caused tailbacks of several hours at the border of the British-held territory, were "politically motivated and totally disproportionate".
"Clearly the prime minister is disappointed by the failure of Spain to remove the additional border checks this weekend," the spokesperson told reporters.
"We are now considering what legal action is open to us.
"This would be an unprecedented step so we want to consider it carefully before a making a decision to pursue."
Britain and Spain are embroiled in an increasingly tense diplomatic spat over Gibraltar, a tiny self-governing British territory at the southern tip of Spain.
Gibraltar has accused Madrid of imposing the checks in retaliation for its construction of an artificial concrete reef off its coast, which it says is aimed at stopping alleged incursions by Spanish fishing boats.
Madrid claims the border checks are necessary to combat smuggling and that the reef is a deliberate impediment to Spanish fishing vessels in a dispute over territorial waters.
A handful of British warships began setting sail for the Mediterranean on Monday on what the defence ministry stresses is a routine exercise that was planned months ago.
But one of the ships is set to dock in Gibraltar later this week in a move that is being seen by Spanish media as an act of intimidation.
The spokesperson said the checks by Spanish guards, which have caused tailbacks of several hours at the border of the British-held territory, were "politically motivated and totally disproportionate".
"Clearly the prime minister is disappointed by the failure of Spain to remove the additional border checks this weekend," the spokesperson told reporters.
"We are now considering what legal action is open to us.
"This would be an unprecedented step so we want to consider it carefully before a making a decision to pursue."
Britain and Spain are embroiled in an increasingly tense diplomatic spat over Gibraltar, a tiny self-governing British territory at the southern tip of Spain.
Gibraltar has accused Madrid of imposing the checks in retaliation for its construction of an artificial concrete reef off its coast, which it says is aimed at stopping alleged incursions by Spanish fishing boats.
Madrid claims the border checks are necessary to combat smuggling and that the reef is a deliberate impediment to Spanish fishing vessels in a dispute over territorial waters.
A handful of British warships began setting sail for the Mediterranean on Monday on what the defence ministry stresses is a routine exercise that was planned months ago.
But one of the ships is set to dock in Gibraltar later this week in a move that is being seen by Spanish media as an act of intimidation.
Cultural Revolution: Ageing Chinese sorry
As a teenager radicalised by China's Cultural
Revolution, Zhang Hongbing denounced his mother to the authorities. Two months
later a firing squad shot her dead.
Now after more than 40 years of mounting guilt, Zhang has ruffled the silence that cloaks China's decade of turmoil with a public confession.
Such rare apologies have been welcomed as a potential gateway to the collective soul-searching that could bring healing but is blocked by a ruling Communist Party whose critics say is unwilling to confront its own responsibility.
"Back then everyone was swept up and you couldn't escape even if you wanted to. Any kindness or beauty in me was thoroughly, irretrievably 'formatted'," Zhang told the Beijing News last week.
"I hope that from my self-reflection other people can understand what the situation was like at that time."
The 1966-76 Cultural Revolution, unleashed by then-leader Mao Zedong to reassert power after the famines caused by his disastrous Great Leap Forward, inflicted myriad personal tragedies and threw society into chaos.
Winds of change
"Red Guard" youths abused their elders - officials, intellectuals, neighbours, relatives - dragging them into "struggle sessions", ransacking their homes and driving some to suicide.
Many targets were jailed or killed, and while no official figure has been issued, one Western historian estimated half a million people died in 1967 alone.
Zhang reported his mother in 1970 for criticising Mao, and military officials came to their home, assaulted her and took her away.
But as the political winds changed - a few years after the Cultural Revolution ended, a court in his native central Anhui province recanted his mother's sentence - Zhang began to rethink as well.
"I will never forgive myself," he said.
Only a handful of public confessions have appeared, mostly in recent years as the Revolution's once-heady teenagers enter their 60s.
Embracing apologies
Wen Qingfu from the central province of Hunan cited age as a spur for admitting in an essay in June that, following orders, he once led a mob to storm the home of a teacher whose son he often played with.
"When people get old they look back and reflect," he told a provincial newspaper. "If I didn't apologise now we would both get too old."
Wen acted in time to see his victim's daughter reply in a public letter on behalf of her frail mother: "You can let go of your guilt."
Many Chinese have embraced these apologies, even though wide airing of past wrongs might invite a spate of legal action, said Ding Xueliang, a Cultural Revolution expert at Hong Kong University of Science and Technology.
In a rare trial stemming from the era, a court in Zhejiang province in April sentenced a man in his 80s to 42 months in prison for a 1967 murder.
Still, Ding said, "the positive consequences would go far beyond the negative ones... to collective soul-searching, to build a more law-based society".
Basics
But China's ruling party prohibits such discussion, which would inevitably broach the question of its own ugly role. Any trial or apology tends to skirt around this central issue, say academics.
"Individual responsibility is one part of this," said Xu Youyu, a researcher at the Chinese Academy of Social Sciences.
"Some things are basic, for example, you can't hit people or humiliate or persecute them."
But the confessions "have not touched on the more important or fundamental issues", he said, and if they did, "there might be a question of whether the discussion could continue".
Shortly after Mao died in 1976 the campaign was ended, and the authorities hung blame on the controversial Gang of Four leaders headed by Mao's wife Jiang Qing, jailing them in 1980.
The following year the official party line declared that the Cultural Revolution had dealt China "the most severe setback and the heaviest losses" since the founding of the People's Republic in 1949.
No museums
Mao was deemed to have been 70% right and 30% wrong, having made "gross mistakes" but far greater contributions.
And with that a curtain over the matter was drawn.
Former premier Wen Jiabao briefly referenced the period last year, warning that China should never retread such "historical tragedies".
The remark - seen as a rebuke to the recently disgraced leader Bo Xilai who had championed "red revival" - heartened those who support freer discussion of the decade, but the impact of Wen's words ended there.
Virtually no museums, memorials or films in China explore the Revolution, except for little-known private efforts such as one museum in southwestern Sichuan province that refers discreetly to a "Red era".
In a public apology published in June, Liu Boqin of Shandong province in the east detailed his crimes and listed his victims, but only vaguely referenced the political directives that drove him.
Instead he cited "youth and ignorance, being incited, wicked, not distinguishing right and wrong" for having hounded teachers and vandalised homes.
"Although being swept up in the environment of the Cultural Revolution was one reason," he wrote, "I as an individual bear responsibility for my evil actions."
Now after more than 40 years of mounting guilt, Zhang has ruffled the silence that cloaks China's decade of turmoil with a public confession.
Such rare apologies have been welcomed as a potential gateway to the collective soul-searching that could bring healing but is blocked by a ruling Communist Party whose critics say is unwilling to confront its own responsibility.
"Back then everyone was swept up and you couldn't escape even if you wanted to. Any kindness or beauty in me was thoroughly, irretrievably 'formatted'," Zhang told the Beijing News last week.
"I hope that from my self-reflection other people can understand what the situation was like at that time."
The 1966-76 Cultural Revolution, unleashed by then-leader Mao Zedong to reassert power after the famines caused by his disastrous Great Leap Forward, inflicted myriad personal tragedies and threw society into chaos.
Winds of change
"Red Guard" youths abused their elders - officials, intellectuals, neighbours, relatives - dragging them into "struggle sessions", ransacking their homes and driving some to suicide.
Many targets were jailed or killed, and while no official figure has been issued, one Western historian estimated half a million people died in 1967 alone.
Zhang reported his mother in 1970 for criticising Mao, and military officials came to their home, assaulted her and took her away.
But as the political winds changed - a few years after the Cultural Revolution ended, a court in his native central Anhui province recanted his mother's sentence - Zhang began to rethink as well.
"I will never forgive myself," he said.
Only a handful of public confessions have appeared, mostly in recent years as the Revolution's once-heady teenagers enter their 60s.
Embracing apologies
Wen Qingfu from the central province of Hunan cited age as a spur for admitting in an essay in June that, following orders, he once led a mob to storm the home of a teacher whose son he often played with.
"When people get old they look back and reflect," he told a provincial newspaper. "If I didn't apologise now we would both get too old."
Wen acted in time to see his victim's daughter reply in a public letter on behalf of her frail mother: "You can let go of your guilt."
Many Chinese have embraced these apologies, even though wide airing of past wrongs might invite a spate of legal action, said Ding Xueliang, a Cultural Revolution expert at Hong Kong University of Science and Technology.
In a rare trial stemming from the era, a court in Zhejiang province in April sentenced a man in his 80s to 42 months in prison for a 1967 murder.
Still, Ding said, "the positive consequences would go far beyond the negative ones... to collective soul-searching, to build a more law-based society".
Basics
But China's ruling party prohibits such discussion, which would inevitably broach the question of its own ugly role. Any trial or apology tends to skirt around this central issue, say academics.
"Individual responsibility is one part of this," said Xu Youyu, a researcher at the Chinese Academy of Social Sciences.
"Some things are basic, for example, you can't hit people or humiliate or persecute them."
But the confessions "have not touched on the more important or fundamental issues", he said, and if they did, "there might be a question of whether the discussion could continue".
Shortly after Mao died in 1976 the campaign was ended, and the authorities hung blame on the controversial Gang of Four leaders headed by Mao's wife Jiang Qing, jailing them in 1980.
The following year the official party line declared that the Cultural Revolution had dealt China "the most severe setback and the heaviest losses" since the founding of the People's Republic in 1949.
No museums
Mao was deemed to have been 70% right and 30% wrong, having made "gross mistakes" but far greater contributions.
And with that a curtain over the matter was drawn.
Former premier Wen Jiabao briefly referenced the period last year, warning that China should never retread such "historical tragedies".
The remark - seen as a rebuke to the recently disgraced leader Bo Xilai who had championed "red revival" - heartened those who support freer discussion of the decade, but the impact of Wen's words ended there.
Virtually no museums, memorials or films in China explore the Revolution, except for little-known private efforts such as one museum in southwestern Sichuan province that refers discreetly to a "Red era".
In a public apology published in June, Liu Boqin of Shandong province in the east detailed his crimes and listed his victims, but only vaguely referenced the political directives that drove him.
Instead he cited "youth and ignorance, being incited, wicked, not distinguishing right and wrong" for having hounded teachers and vandalised homes.
"Although being swept up in the environment of the Cultural Revolution was one reason," he wrote, "I as an individual bear responsibility for my evil actions."
Chilly reception for Kerry?
US Secretary of State John Kerry's trip to
Colombia and Brazil this week builds on efforts to deepen relations with Latin
America, but he can expect a curt reception from the two US allies after
reports that an American spy programme widely targeted data in emails and
telephone calls across the region.
On Kerry's first visit to South America as the Obama administration's chief diplomat, the disclosures by National Security Agency leaker Edward Snowden could chill talks on trade and energy, and even discussions about the 23 October state dinner that President Barack Obama is hosting for Brazil's president, Dilma Rousseff.
"I don't think this is going to be a warm 'abrazo'," said Michael Shifter, president of the Washington-based Inter-American Dialogue, using the Spanish word for "hug". ''I think it will be businesslike."
Kerry arrived late on Sunday in Bogota, the Colombian capital. The country is holding peace talks to end a half century-old conflict with the Western Hemisphere's most potent rebel army, a rebel force diminished in strength thanks in considerable measure to US military and intelligence support.
The US wants to show its support for the peace talks between the Colombian government and the Revolutionary Armed Forces of Colombia, or Farc, which are taking place in Cuba.
Colombia is one of the United States' closest allies in the region, but the reports about the spying programme have rankled Colombian officials.
Clarification on intelligence-gathering
Brazil's O Globo newspaper reported last month that citizens of Colombia, Mexico, Brazil and other countries were among the targets of a massive NSA operation to secretly gather information about phone calls and Internet communications worldwide. The reports were based on information provided by Snowden.
Colombia's president, Juan Manuel Santos, said on Thursday that he wanted clarification from Washington on whether US intelligence-gathering in Colombia had overstepped the countries' joint operations against drug traffickers and illegal armed groups. The US has supplied Colombia with eavesdropping equipment, technicians and aerial surveillance.
Santos said in an interview with The Associated Press that Vice President Joe Biden called him about the issue following revelations by Snowden that US digital snooping has targeted allies as well as foes. Santos said Biden offered a series of technical explanations. Asked if he was satisfied with them, Santos replied, "We are in that process."
Biden also called Rousseff to express what Brazil's communications minister, Helena Chagas, said was "his regret over the negative repercussions caused by the disclosures". Biden invited Brazilian officials to Washington to get details about the spy programme.
Rousseff told Biden that the privacy of Brazilian citizens and the country's sovereignty cannot be infringed upon in the name of security, and that Brazil wanted the US to change its security policies and practices.
Last week, Brazil's Foreign Minister Antonio Patriota was at the United Nations with counterparts from other South American nations to express their indignation about the spy programme to UN Secretary-General Ban Ki-moon.
Anti-government protests
The Obama administration has worked to forge stronger ties with Latin America. In May, Obama took a three-day trip to Mexico and Costa Rica. Biden has visited Colombia and Brazil, where he said stronger trade ties and closer cooperation in education, science and other fields should usher in a new era of US-Brazil relations this year.
Brazil has received much attention in recent months because of Pope Francis' visit and preparations for the 2014 World Cup and the 2016 Olympics to be held in Rio de Janeiro.
Thousands of demonstrators have staged anti-government protests since June demanding better public services in return for high taxes they pay. Under considerable domestic pressure, Rousseff announced a $4bn programme to improve transportation, sewage and public housing in Sao Paulo, Brazil's largest city.
The protests have weakened her domestic support, but she can bolster her poll numbers with a strong stand against the US over the spying allegations, said Carl Meacham, former Latin America adviser on the Senate Foreign Relations Committee and director of the Americas Programme at the Centre for Strategic and International Studies in Washington.
"I think the tone of the visit will be a bit tense because of these issues raised by the surveillance [programme] and I think Secretary Kerry will have to speak to that," he said.
On Kerry's first visit to South America as the Obama administration's chief diplomat, the disclosures by National Security Agency leaker Edward Snowden could chill talks on trade and energy, and even discussions about the 23 October state dinner that President Barack Obama is hosting for Brazil's president, Dilma Rousseff.
"I don't think this is going to be a warm 'abrazo'," said Michael Shifter, president of the Washington-based Inter-American Dialogue, using the Spanish word for "hug". ''I think it will be businesslike."
Kerry arrived late on Sunday in Bogota, the Colombian capital. The country is holding peace talks to end a half century-old conflict with the Western Hemisphere's most potent rebel army, a rebel force diminished in strength thanks in considerable measure to US military and intelligence support.
The US wants to show its support for the peace talks between the Colombian government and the Revolutionary Armed Forces of Colombia, or Farc, which are taking place in Cuba.
Colombia is one of the United States' closest allies in the region, but the reports about the spying programme have rankled Colombian officials.
Clarification on intelligence-gathering
Brazil's O Globo newspaper reported last month that citizens of Colombia, Mexico, Brazil and other countries were among the targets of a massive NSA operation to secretly gather information about phone calls and Internet communications worldwide. The reports were based on information provided by Snowden.
Colombia's president, Juan Manuel Santos, said on Thursday that he wanted clarification from Washington on whether US intelligence-gathering in Colombia had overstepped the countries' joint operations against drug traffickers and illegal armed groups. The US has supplied Colombia with eavesdropping equipment, technicians and aerial surveillance.
Santos said in an interview with The Associated Press that Vice President Joe Biden called him about the issue following revelations by Snowden that US digital snooping has targeted allies as well as foes. Santos said Biden offered a series of technical explanations. Asked if he was satisfied with them, Santos replied, "We are in that process."
Biden also called Rousseff to express what Brazil's communications minister, Helena Chagas, said was "his regret over the negative repercussions caused by the disclosures". Biden invited Brazilian officials to Washington to get details about the spy programme.
Rousseff told Biden that the privacy of Brazilian citizens and the country's sovereignty cannot be infringed upon in the name of security, and that Brazil wanted the US to change its security policies and practices.
Last week, Brazil's Foreign Minister Antonio Patriota was at the United Nations with counterparts from other South American nations to express their indignation about the spy programme to UN Secretary-General Ban Ki-moon.
Anti-government protests
The Obama administration has worked to forge stronger ties with Latin America. In May, Obama took a three-day trip to Mexico and Costa Rica. Biden has visited Colombia and Brazil, where he said stronger trade ties and closer cooperation in education, science and other fields should usher in a new era of US-Brazil relations this year.
Brazil has received much attention in recent months because of Pope Francis' visit and preparations for the 2014 World Cup and the 2016 Olympics to be held in Rio de Janeiro.
Thousands of demonstrators have staged anti-government protests since June demanding better public services in return for high taxes they pay. Under considerable domestic pressure, Rousseff announced a $4bn programme to improve transportation, sewage and public housing in Sao Paulo, Brazil's largest city.
The protests have weakened her domestic support, but she can bolster her poll numbers with a strong stand against the US over the spying allegations, said Carl Meacham, former Latin America adviser on the Senate Foreign Relations Committee and director of the Americas Programme at the Centre for Strategic and International Studies in Washington.
"I think the tone of the visit will be a bit tense because of these issues raised by the surveillance [programme] and I think Secretary Kerry will have to speak to that," he said.
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