Brazil finally gets some rain, but rationing still looms

February 19, 2015

Jeb Blount – Reuters, 2/18/2015

Heavy rains during Brazil’s four-and-a-half-day Carnival holiday offered the first relief in months for the country’s drought-stricken and economically crucial southeast, but was unlikely to end fears of water and electricity shortages.

A cold front along Brazil’s southeastern coast near the two principal cities of Sao Paulo and Rio de Janeiro brought heavy rains on Sunday, Monday and Tuesday to most of the region and the neighboring center-west, home to much of the country’s farm belt.

The southeast is Brazil’s most populous and economically developed industrial region. The southeast and center-west together produce the bulk of such key Brazilian export crops as soybeans, coffee, sugar and orange juice.

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Sao Paulo water crisis adds to Brazil business woes

February 12, 2015

Ruth Costas – BBC, 2/11/2015

Renato Soares has seen all sorts of problems in the 33 years he has been running a small laundry in a middle-class neighbourhood in Sao Paulo. But with Brazil’s biggest city facing potential water rationing, he thinks his biggest headache may be about to arrive.

“We have survived recession, hyperinflation, arbitrary changes in legislation and a complex bureaucracy and tax system,” Mr Soares says. “We were also robbed twice. So at this point I didn’t think a day would come in which I would seriously think about closing my business.

“But how can I operate a launderette without water?”

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Brazil Dries Up and Blacks Out

February 5, 2015

Mac Margolis – Bloomberg View, 2/4/2015

Water is to Brazilian politicians what oil is to Latin American petrocrats — just a pipeline away, too abundant to fret over. Except when it’s not.

Despite a summer storm over the weekend, Rio de Janeiro is parched, and its reservoirs are depleted. Sao Paulo is worse: the Cantareira System of interconnected lakes that supplies water to 8 million people is dipping into its “dead volume,” roughly the equivalent of the red zone on your car’s gas gauge.

January rains were enough to cause flash floods and craters in the streets, including one that swallowed a motorcycle in Sao Paulo, but not to top up the nation’s depleted reservoirs and hydroelectric dams.

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Sao Paulo Drought Could Benefit Brazil

February 3, 2015

Stratfor, 2/2/2015

The state of Sao Paulo, Brazil’s financial core, remains in a drought of historical proportions, and we expect to continue seeing reports of water shortages in the greater municipal area of the city of Sao Paulo. Further water restrictions and rationing will be necessary if the region does not receive substantial amounts of rain in the next several months. While we may see a small drop in industrial activity, wealthier consumers — residential and industrial — will be able to find and use more expensive alternative sources of water. The shortage may contribute to the slowing of Brazil’s economy, but it will not cause a collapse. Rather, the drought will be a relatively short-term water stressor and has the potential to be a catalyst to solve Sao Paulo’s larger structural problem of inadequate and inefficient water infrastructure. In the long run, it could even benefit the industrial viability of the city and state.


The worst drought in nearly a century continues to plague Sao Paulo state and neighboring Rio de Janeiro and Minas Gerais states in southeastern Brazil; the nearly 30 million people living in the extended municipal complex of Sao Paulo have been dealing with extremely low reservoir levels for more than a year. In fact, the water reserves have fallen so low that they are now below the dead level, the point at which the water must be pumped up to reach the pipes connecting the reservoir to the greater distribution system. In late 2014, the Cantareira system authorized the use of its second quota of dead volume. The system is at roughly 5 percent of its capacity and is considering authorizing a third quota. If usage continues and the reservoir is not replenished, projections indicate that it will run dry by September. Other reservoirs supplying the city have also declined over the past year, including the Alto Tiete, which like Cantareira has approved the use of its dead volume.

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Brazil FinMin Levy An ‘Island In Sea Of Mediocrity’

January 27, 2015

Kenneth Rapoza – Forbes, 1/24/2015

Brazil’s new Finance Minister Joaquim Levy is an island in a sea of mediocrity, says ex-Central Banker Arminio Fraga in an interview this weekend with Brazilian daily Estado de Sao Paulo. The FinMin job almost belonged to Fraga. But his chosen horse didn’t win the race in October. Instead, beleaguered Workers’ Party president Dilma Rousseff won in a squeaker and replaced Guido Mantega, not a market favorite during his tenure as Finance Minister, with Levy, who is already a market favorite.

Levy, an ex-Treasury secretary under Dilma’s predecessor, Luiz Inacio Lula da Silva, is taking an sledgehammer to Dilma’s populist policies of the last four years.

Investors like life on Levy Island, but sea great white shark fins everywhere. This is no day at the beach for the Brazilian economy. High interest rates (12.25%) and high inflation (6.41%) have turned off investors. The iShares MSCI Brazil (EWZ) exchange traded fund, which basically tracks the iBovespa stock index in São Paulo, is underperforming the MSCI Emerging Markets Index year to date. Even sanctioned Russia’s equity market is doing better than Brazil.

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Brazil police raiding warehouse for stolen goods find two military tanks

January 27, 2015

AP – The Guardian, 1/27/2015

A Brazilian police raid to recover stolen cars and cargo came up with a more interesting find: two war tanks.

Police in Brazil’s biggest city said on Tuesday that the engine-less tanks were found inside a warehouse in Sacoma, a low-income district in São Paulo. Police also confiscated 500 television sets, car body parts and a recently stolen semitrailer truck.

Army officers told the UOL internet portal that the two tanks found on Monday did not belong to the army and that their origin would be investigated. Officials did not say what sort of tanks they were or how old they might be. Images published by local media show a treaded vehicle with five road wheels on each side.

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Brazil’s worst drought in history prompts protests and blackouts

January 23, 2015

Jonathan Watts – The Guardian, 1/23/2015

The taps have run dry and the lights have gone out across swathes of Brazil this week as the worst drought in history spreads from São Paulo to Rio de Janeiro and beyond.

More than four million people have been affected by rationing and rolling power cuts as this tropical nation discovers it can no longer rely on once abundant water supplies in a period of rising temperatures and diminishing rainfall.

The political and economic fallout for the world’s seventh biggest economy is increasingly apparent. Protesters in dry neighbourhoods have taken to the streets, coffee crops have been hit, businesses have been forced to close and peddle-boat operators have had to cease operations because lakes have dried up.

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