Farming flourishes amid Brazil’s fiscal mess

AG Web, 12/9/2015

Financial and political turmoil that put Brazil on the brink of a depression also is contributing to one of the best years ever for domestic farmers.

A consequence of economic stress in Latin America’s biggest country is a weak currency that has turbo-charged export revenue for everything from soybeans to beef to coffee. Even as global surpluses spark a commodity slump, the drop in the Brazilian real against the dollar is so steep that farmers still come out ahead. Agriculture revenue will rise to a sixth straight annual record this year and grow again in 2016, the government predicts.

“That’s the only part of the economy which is still evolving positively,” said Fabio Silveira, an economist at GO Associados, a consulting firm in Sao Paulo.

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Brazil court suspend impeachment process against President Dilma Rousseff

Rogeria Jelmayer – Wall Street Journal, 12/9/2015

SÃO PAULO—Brazil’s Supreme Court Wednesday suspended the impeachment process against President Dilma Rousseff until at least next week, a delay analysts say carries risks for Ms. Rousseff.

The president has been accused by a fiscal watchdog of manipulating the numbers of her government’s budget to disguise poor fiscal performance.

She has denied any wrongdoing.

Ms. Rousseff and her supporters are trying to get through the impeachment process as quickly as possible because they feel she has enough support in Congress at the moment to either derail the process before it reaches trial in the Senate, or to win there. The president could lose some of that support if the process is drawn out because information damaging to her case could come out, analysts say.

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Brazil’s Vice President sends letter criticizing President Dilma Rousseff

Paulo Trevisani & Rogerio Jelmayer – The Wall Street Journal, 12/8/2015

BRASÍLIA—Brazil’s already turbulent political situation took an extraordinary turn Tuesday with the publication of a letter sent by Vice President Michel Temer to embattled President Dilma Rousseff in which Mr. Temer accuses the president of having no confidence in him or his party.

The vice president’s authorship of the letter, which was published in several local newspapers Tuesday, was confirmed by Mr. Temer’s spokesman. The president’s press office had no immediate comment on the letter.

Ms. Rousseff is facing an impeachment process that the president of the lower house of Brazil’s Congress, Eduardo Cunha, approved last week. Ms. Rousseff is accused of illegally manipulating the numbers in the national budget; she has said her administration did nothing wrong.

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Rating-cut angst lurks as Brazil stocks, real decline on budget

Denyse Godoy, Paula Sambo and Filipe Pacheco – Bloomberg Business, 7/22/215

Traders now have one more reason to expect a downgrade of Brazil’s credit rating.

Speculation that President Dilma Rousseff would cut the primary budget surplus goal, which excludes interest payments, spurred the biggest slide in the world for the real and sank the Ibovespa. After the close of trading, a government report confirmed that the administration is proposing a reduction of its target for this year.

The move is seen hurting Brazil’s credibility and worsening the outlook for an economy set for the worst recession in 25 years.
“That could certainly jeopardize the nation’s credit rating,” Jason Vieira, the chief economist at Infinity Asset Management, said by phone from Sao Paulo. “It would be terrible news for the economy and for investors alike.”

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The Hijacked State

Murillo de Aragão – O Estado de S. Paulo, 6/20/2015  

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Image courtesy of Arko Advice

For a long time now, the Brazilian state has been hijacked. Formerly, by the military regime. Today, after re-democratization, citizens lost control of the state to politicians, bureaucracy, and to the rigging of public posts through patronage by politicians and syndicates. Each of these hijackers operates in accordance with their own logic. While many politicians use the state to get reelected and perpetuate themselves in control, others use it for business. Some use it for both.

Evidence of this abuse lies in the succession of scandals that involve politicians, political parties, state institutions, and public work. Bureaucracy hijacked the state to get access to economic gains in forms of salaries and other benefits. Those who rigger the state are there to create business transactions and political power that favors those they sponsor.

In midst of a puddle of mud and billionaire financial losses, Petrobras gives us proof of the prevalence of minor interests. It will not pay dividends to its shareholders, but will instead, pay over R$ 1 billion to its employees per performance, although there has been no profit.

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A setback in Brazil

The Editorial Board – The Washington Post, 6/27/2015

Just a couple of years ago, it was widely concluded that Brazil had finally overcome the decades-old gibe about the world’s fifth-largest country: that it would always be “the country of the future.” Exports, particularly to Asia, were booming; a middle class was filling in the once-polarizing gap between the very rich and very poor; and huge offshore oil discoveries appeared to ensure yet another economic acceleration. In seeming confirmation of its new status, Brazil was chosen to host both soccer’s World Cup last year and the 2016 Olympics.

The Rio de Janeiro games are still a year away, but already Brazil’s bubble appears to have burst. The economy is mired in a deepening recession, thanks to the drop in oil and other commodity prices. The state oil company, Petrobras, has triggered the biggest corruption scandal in the country’s history, with dozens of businesspeople and more than 50 members of Congress implicated in some $2 billion in kickbacks. Investments in the vaunted new oil fields have been cut back, even as Brazilians fume over the billions spent on new stadiums.

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Small expectations between two big countries during Brazil’s official trip

Michael D. Mosettig – PBS, 6/26/2015

As official visits go, it has been an inauspicious scene-setting for next week’s trip of Brazilian President Dilma Rousseff to the United States and a Tuesday meeting with President Barack Obama.

First off, the trip is a re-do. Rousseff was supposed to be in Washington two years ago for a full-fledged, bells and whistles state visit. She abruptly cancelled after revelations that the National Security Agency had been tapping her phone. (The scandal was even more painful for the Boeing Company, which had been on the verge of winning a $4 billion contract to re-equip the Brazilian air force. The contract went to a Swedish company.)

In her country of 202 million people, Rousseff’s problems keep mounting. The national joke in Brazil is that her poll ratings (barely 10 percent) are one point ahead of the country’s inflation rate (8.4 percent). Brazil’s signature, state-dominated company, Petrobras, is engulfed in allegations that billions disappeared in kick backs to Rousseff’s Workers Party. Just last week, two of the country’s major industrialists were arrested. Neither Rousseff nor her highly popular predecessor and mentor Luiz Inacio Lula da Silva have been implicated so far, but the country is on edge against the possibility of the scandal spreading.

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