BRAZIL-The president was "dumbfounded"

Traditional “conspirators” return

On 12 April, 2014 I posted a tongue-in-cheek list of “conspirators” whose actions, according to Brazilians in power, combined to hold Brazil back from realizing its “manifest destiny” as a world power. The number of page views for that post were an all-time record for this blog.

Recently, 4 of the international “conspirators” have resurfaced to once again challenge Brazil’s “forward progress” toward its goal.

They are:

• The Economist magazine that once again featured Brazil on its cover with the headline: Brazil’s Fall;
• The World Economic Forum that just the other day suggested that Brazil might be a little less protectionist;
• The credit rating agencies all three of which reduced Brazil’s paper from investment grade to junk status;
• The IMF, that dealt Brazil the unkindest cut of all with the recent forecast of 2016 GDP growth of -3.5%.

Dilma Rousseff stated publicly that she was “dumbfounded” (estarrecidain Portuguese) at the IMF’s “temerity” and “negativity”. 

A glance backward in time shows that Dilma has confessed being “dumbfounded” often. The first time was in February, 2012 at the occurrence of a military police strike in Bahia. 

It was not until 2014 that Dilma was again “dumbfounded” in May of that year with regard to the salaries that clubs paid their football players. 

The next “dumbfounding” moment was in September when she learned that Paulo Roberto Costa, a director at Petrobrás was involved in the financial scandal that continues under investigation. 

And that was quickly followed by another such moment in October with regard to the use of plea-bargains by the Federal Police.

Apparently there were no “dumbfounding” moments in 2015 (at least for Dilma, but I confess that Ihad a few!) Now the IMF has caused yet another with its dismal forecast of Brazil’s 2016 rate of GDP growth.

A while ago I also made reference to two “targets” of the administration that would have to be dealt with in 2016. One was the Central Bank that was giving off signs of becoming somewhat more resolute in dealing with inflation. 

Central Bank President, Alexandre Tombini proved less resistant than I thought he might be. In the recent decision to hold the base interest rate (SELIC) at 14.25% while the market expected at least a 0.25 percentage point increase Tombini easily folded, also blaming the IMF’s forecast for the decision.

The other nemesis to be targeted this year is the Judiciary – most specifically the Lava-Jato investigation. Now that the investigation is drawing closer to politicians, differences are being temporarily “patched up” in order to protect the common interests of potential additional suspects and/or defendants in the Lava-Jato investigation. 

The temporary “alliances” or “truces” are designed to keep the Federal Police and the Public Prosecutor at bay and that is to the interest of both sides in the War of the Kleptocrats.

However, the Feds and the Public Prosecutor’s office are certain to prove less “flexible” than Alexandre Tombini. They certainly do not appear to be “dumbfounded” or intimidated.

In any case, 2016 is off to an “interesting” start. Things will heat up in February when everybody is back at their desks.

Meanwhile bad news continues to be announced. Inflation is reaching new heights and unemployment likewise. It could be a tough year.