3 revealing myths about Brazil’s crisis

Brian Winter – Vox, 05/11/2016

To many observers, Brazil appears one swarm of locusts short of a full-fledged Biblical plague. Whether it’s the off-again, on-again impeachment of President Dilma Rousseff, the country’s worst recession in 80 years (or maybe ever), the spread of the bizarre and frightening Zika virus, or its continued struggle with drug gangs and homicides, Brazil looks anything but ready to host the world at the Summer Olympics this August.

Without a doubt, it has been a terrible 2016 — and a huge letdown after Brazil’s economic boom of the 2000s, which helped it win the Olympics in the first place. But the particularly confusing nature of this crisis, paired with the convergence of the world’s media hordes on Rio de Janeiro, has also produced a truly epic amount of misinformation, stereotypes, and wishful thinking.

So, in the spirit of better understanding the Land of Samba and Surf (oops, a stereotype!), and trying to gauge where the political and economic crisis might be headed next, here are three common myths about Brazil’s current crisis. The myths themselves are revealing in what they say about the country’s image — among locals and rubbernecking visitors alike.

Read More…

 

With her job on the line, Brazil’s Rousseff has cleared out her office

Lisandra Paradguassu – Reuters, 05/10/2016

Brazilian President Dilma Rousseff has packed up personal photos and stripped the shelves in her third-floor office in the Planalto presidential palace – a sign she may be resigned to losing her job in a Senate vote on Wednesday.

In what could be one of her final meetings as president, Rousseff received the secretary general of the Organization of American States on Tuesday, as guards tried to stop photographers from documenting signs of an impending move.

Though government lawyers have asked the Supreme Court to stop the Senate vote, an aide said privately the leftist Rousseff expects to receive official notice on Thursday of her suspension on charges of violating budget laws.

Read More…

 

Brazil’s Senate Begins Debate on Ousting Dilma Rousseff After Months of Turmoil

Simon Romero – The New York Times, 05/11/2016

BRASÍLIA — After months of tirades, secret maneuvering and legal appeals,Brazil’s Senate began debating on Wednesday whether to impeach President Dilma Rousseff, suspend her from office and put her on trial.

The debate, followed by a vote as early as Wednesday evening, is a watershed in the power struggle consuming Brazil, a country that experienced a rare stretch of stability over the last two decades as it strengthened its economy and achieved greater prominence on the world stage.

Now, those gains are unraveling. Brazil is facing its worst economic crisis in decades, huge corruption cases across the political spectrum and a bitter feud among its scandal-plagued leaders — just months before the world heads to Rio de Janeiro for the Summer Olympics.

Read More…

Corruption is not new to Brazil, so why is it threatening the presidency now?

Ryan E. Carlin, Gregory J. Love and Cecilia Martínez-Gallardo – The Washington Post, 05/05/2016

Ronald Reagan was famously called “the Teflon president” for his ability to deflect scandals that might have sunk his popularity. So why couldn’t Brazilian President Dilma Rousseff tap into this same protection?

Following the lower house’s overwhelming vote on April 17 to impeach Rousseff, Brazil’s government sits on the brink of collapse. An onslaught of corruption charges against the president and her Workers Party (PT) has emboldened her political opponents. In response to allegations of an elaborate kickback scheme that funneled bribes to politicians via the state-run oil firm, Petrobras, Brazil’s elites — including the government’s largest coalition partner, the Brazilian Democratic Movement Party (PMDB) — and the public have abandoned Rousseff’s government. Her approval stands at a historically low 9 to 10 percent.

Media coverage of these scandals has been scathing and unrelenting. Yet high-level corruption is hardly new in Brazil. In fact, Rousseff’s predecessor and mentor, Luiz Inácio “Lula” da Silva, also from the PT, was himself at the center of several scandals. In 2005, the expansive mensalão investigation of PT payoffs for legislative support threatened to derail his bid for reelection. And yet Lula proved to be a Teflon president and cruised to an easy victory in 2006 — and then helped his chosen successor win the presidency in 2010.

Read More…

 

Understanding the political crisis in Brazil

Lisa Desjardins, Paulo Sotero, Uri Friedman, Monica de Bolle and Brian Winter – NPR, 05/03/16

Last month in Brazil, the lower house of the country’s National Congress voted to impeach the president, Dilma Rousseff. There are the legal grounds for the move — alleged cooking of the government books. And then there are the political motives, which as many observers have pointed out, are what’s really driving the impeachment. Those have to do with a massive corruption scandal at Petrobras, the state owned oil company. Add to that a severe recession, and many Brazilians are not happy with how their country is being run. Guest host Lisa Desjardins gets an update on the political crisis in Brazil from our panel of guests.

Listen to the podcast…

 

Petrobras scandal

Paulo Sotero – The Editors of Encylocpædia Britannica

Petrobras scandal, Brazilian political corruption scandal beginning in 2014 that involved the indictment of dozens of high-level business people and politicians as part of a widespread investigation alleging that many millions of dollars had been kicked back to officials of Petrobras, Brazil’s huge majority-state-owned oil company, and to politicians—especially members of the ruling Workers’ Party (Partido dos Trabalhadores; PT) of Pres. Dilma Rousseff—by prominent Brazilian corporations in return for contracts with Petrobras.

The malfeasance was revealed by a federal investigation begun in 2014 under the code name Lava Jato (“Car Wash”). The massive scheme to defraud Petrobras—Brazil’s largest enterprise and a symbol of the country’s entrenched economic nationalism—did not fully come to light, however, until after the narrow reelection of President Rousseff on October 26, 2014. By the time of her second inauguration, on January 1, 2015, Rousseff’s approval rating had collapsed to 14 percent, with some two-thirds of Brazilians blaming her for Petrobras’s troubles.

Dubbed “Petrolão”—after mensalão (“big monthly bribe”), the vote-buying scandal that had plagued the government of Rousseff’s predecessor and mentor, Luiz Inácio Lula da Silva (better known simply as “Lula”)—the episode came to be viewed as the largest corruption scandal in Brazilian history. By June 2015 a massive scheme to defraud Petrobras on contracts to develop the so-called pre-salt oil reserves found offshore in 2007 had appeared on investigators’ radar. Moreover, reports suggested that federal prosecutors were also looking into the electricity-generating sector, pension funds for employees of state-owned companies, and the National Bank of Economic and Social Development (BNDES). The latter had provided billions of dollars in subsidized financing to Petrobras and other “national champions,” such as billionaire Eike Batista, whose wealth plummeted spectacularly in 2013.

Read More…

 

Is Brazil giving up on growth?

Kenneth Rapoza – Forbes, 04/25/2016

Inflation is down nearly 100 basis points from a few months ago, but the Central Bank of Brazil has no intention of lowering interest rates. Investors should take this coming Wednesday’s meeting as a cue whether or not there is a growth strategy anywhere in Brasilia.

Nomura Securities said that they are forecasting the Bank to keep rates at 14.25% even though inflation is coming down. Brazil’s rolling 12-month inflation was as high as 10.7% in January. It’s currently 9.4%. Nomura has close ties to Brazil’s central bank and is good gauge of which way the wind is blowing on the monetary policy committee.

Brazil’s economy, expected to contract by around 3.5% again this year, is facing a massive political crisis. It would be good if the central bank could be more independent and cut rates to boost growth. On the other hand, sentiment among Brazil’s business class is so burned out with the twin crises of politics and economics that it is going to take more than a rate hike to improve things.

Read More…