Update 27 Jan 19 Can Bolsonaro Make Brazil Great Again?
The issue of political anomie and spoiled and blank ballots during the first and likely second round of the voting remains a problematic issue for "scientific" pollsters and commentators. Brazil's film industry exploits this issue-- and the ambivalence associated with Brazilian values toward corruption and ethics-- by taking a nonchalant, humorous, satirical view of national and local politics, it is not difficult to understand why the recently released film The Honest Candidate 2 has been a big success. The Honest Candidate --the first film in this series-- was a major success on the eve of the election that saw Dilma Rousseff of the Workers Party take power.
UPDATE 2 Oct In an event at the White House yesterday US president Donald Trump strongly criticized Brazil, accusing Latin America's largest economy of, among other things, being unfair to the United States.
Coming just six days before the nation votes to elect its next president, the Trump criticism was buzzed up by major print and online media as well as by Brazil major television chains. The message from Washington is that Brazil needs to implement more "free market" (economic liberalism) policies, to get its stagnant economy moving again. It's the usual mantra, cut spending on social services, privatize or otherwise sell state businesses and drastiscally cut pension benefits. Ironically, this "package" is the key message being voiced by economist Paulo Guedes, the man who right wing candidate Jair Bolsonaro says he has chosen to become his finance minister,..if he wins the election.
Guedes holds a PhD from the University of Chicago, the incubator of "free market" economics. Gudes is also a member of the Brazil Millenium Institute, a clone of the US "free market" think tank, The Cato Institute. President Trump, and his Treasury Secretary, former Goldman-Sachs heavyweight Steve Mnuchin, have a predilection for "free market" economics. Considering that the statement comes just a few days before the nation votes, and with Bolsonaro's lead in the "scientific" polls being erased by Workers Party (PT) candidate Fernando Haddad, what Brazil media has covered as criticism of its complicated state-controlled business infrastructure can be viewed as a tacit endorsement of Bolsonaro by Trump, who like other foreign leaders, is not supposed to meddle in the internal politics of another sovereign nation. Former Trump senior adviser Steve Bannon has already provided counsel to the Bolsonaro campaign. As a "yardstick", the amount Brazil exported to the US last year, $26.8 billion, mostly petroleum, aircraft and components and other items, represents less than 10% of the roughly $300 billion Brazil has invested in US treasury instruments. UPDATE ENDS
Brazil should be saying good-bye to its worst recession. Instead, the UN Economic Commission for Latin America has revised its growth estimate for Brazil downward while president Michel Temer's nation is busy investing in the US, helping Donald Trump make America great again. Brazil is even walking back its commitment to fund the new BRICS Bank.
While millions of Brazilians are rioting and demonstrating over hunger, marginalization and unemployment-- according to official US Treasury TIC Data-- Brazil has been thconoe largest buyer of US Treasury securities so far this year.
Photo by worldaffairs7.com
Brazil #3 owner of US Treasuries
According to the latest TIC Data report published by the Treasury, Brazil is now the third larges investor in official US paper after China and Japan. (Note- the TIC Data report is available online at a US Treasury website, which you can search for and access via Google or other search engines, but it cannot be accessed in some countries).
With $300 billion dollars invested in US Treasury notes (1.24 trillion reais at current exchange rates) Brazil owns twice as much Yankee paper as fellow BRICS member India.
For reference, here is a list of NATO nations, and US trade partners holdings of Treasury securities according to current official data-
United Kingdom $274 billion, Germany $71.2 billion,
Belgium $154.7 billion, Norway $50 billion,
Canada $100.2 billion, Mexico $40.8 billion,
France $93.4 billion, Italy $40.7 billion,
Based on the above official data, Brazil holds more Treasury securities than France, Germany, Norway, Mexico and Italy combined.
The $43 billion in US Treasury notes Brazil purchased between December 2017 and June of this year equals roughly 90 percent of the $50 billion that all of the BRICS nations have invested in the BRICS "New Development Bank."
But why can't Brazil afford its BRICS bank payments?
According to website www.brazilmonitor.com, the Temer government has noted that it is financially challenged to pay its $300 million annual share in the project for this year and has waffled about when that tranche will be payed, the implication being that the issue would be dumped onto the financial portfolio of the next president, who takes office in January 2019. It also raises the thorny question of just how "committed" Brazil is to the BRICS.
The impending financial walkback on Brazil contributing to BRICS bank was probably known to Russian Security Council Secretary Nikolai Patrushev at the time he visited Brazil last December.
Russia, which once held upwards of $100 billion in US Treasury bonds and other instruments, has sold off its dollar holdings in large part to protest Washington's aggressive embargo policy and other issues known to Kremlin insiders, and Kremlin "watchers."
Now, on the eve of Brazil presidential elections, candidates are debating cutting social programs to reduce a burgeoning public debt against the cost of the economic uncertainty and increased civil unrest the budget cuts will likely promulgate.
Nobody, but nobody, in Brazilian media is asking, or hypothesizing, what would happen if, let's say, 10% of Brazil-owned US Treasuries ($300 billion total) were cashed in and that that $30 billion (roughly 124.5 billion reais) made its way back into the Brazilian economy to, seemingly, stimulate growth.
At this link you will find one of the few articles that discusses details about who buys and sells US Treasuries. But it was published shortly before Brazil came the #3 holder, and Brazil receives scant attention. It's somewhat helpful- draw your own conclusions. Needless to say, Goldman-Sachs is a major player in the US Treasuries market.
Economists and others would quickly retort that "it's not that easy" to cash in some of Brazil's US Treasury holdings and invest those funds in Brazil's underperforming economy. Maybe it isn't. Perhaps that's because once the political class gets word of a 124.5 billion real windfall coming their way the money will just fill the coffers of "Brazil Inc." and never trickle down to the social programs that were developed with the intention of making Brazil a more just, and egalitarian society. None of the US or UK-based Latin American think-tanks or Latin-focus NGOs or human rights shops are asking the question either. Keep in mind that former president Fernando Henrique Cardoso frequently responds to the media about the situation in Brazil with the meme that ...Brazil has a good constitution but is an unjust society.
Brazil buys helicopter-carrier to stretch its sovereignty across South Atlantic
Still, Brazil's money was good enough for the government of British prime minister May to take 84 million pounds for the sale of its former Royal Navy flagship the HMS Ocean, a helicopter carrier. Brazil will now use the carrier, rebaptized the Atlantico, by Brazil's navy, to patrol and protect the nation's chain of islands that stretch across the South Atlantic Ocean and end less than 1000 nautical miles from the coast of West Africa.
Brazil believes that the islands and their surrounding waters likely hold strategic mineral reserves (petroleum, natural gas, as well as fishing rights ) that can be monetized. (Brazil already holds the world's largest reserves of the strategic mineral Niobium, essential to the defense, aerospace and nuclear industries.) Protecting these areas is a key element of the long term strategy voiced by Raul Jungmann (when he was still Defense Minister in December, 2017) that is now being put forward by the Ministry of Defense. Jungmann is now faced with the daunting task of serving as Brazil's Minister for Public Security.
Times change-- under Lula $1 dollar bought 1.6 reais. Under Temer $1 dollar has weaken to its lowest level since the start of Plan Real 4.19 reais
Anxiety over the outcome of the coming nationwide voting for president and state governors and Congress has sufficiently roiled world financial markets, causing the real currency weaken to its lowest levels since the Plan Real was started to "save the economy, in 1994.
Some of the same politicians and business kingpins who have helped take economy to its current depths,orchestrated the impeachment of leftist leader Dilma Rousseff --for economic crimes “against the state”. Ironically, Dilma is currently running for a Federal Senator seat in her "home state" of Minas Gerais, and she has a good chance of winning. Keep in mind that the "Strong Real" of the Lula era that weathered the US and global "crisis" continues to be linked by Brazil media and others to Brazil's stong agricultural economy with little credit given to anybody on Lula's economic team other than former Central Bank diretor Minister Meirelles.
Odebrecht scandals won't go away, adding more confusion to election season
Since the scandals won't go away, not in Brazil, not in Mexico, nor in Colombia or the US, lame-duck president Temer already has a legal team in place to defend himself against charges of economic “crimes” tantamount to those of Dilma and Lula. According to the Globo website, Temer has been accucsed by Federal Police with possible participation in a bribe scheme involving his policitial party, the PMDB (the Brazil Popular Democratic Movement) and the Brazil construction and engineering giant Odebrecht.
Federal Police claim they have iniformation to wit that is highly likely that Michel Temer benefited personally from the operations. The case has been moving through the legal system slowly, as most high profile political cases do. But the stakes have just been raised; according to Globo, and others, because on Wednesday 11 September the Brazil Supreme Court has set a limit of 15 days for the chief prosecutor of the nation to either formally charge Temer, or to dismiss (archive) the case, or possibly to recommend that nothing be adjudicated until after the coming presidential vote and the other national elections for Congress (Senate and Lower House) that will be held on the same day(s). According to an influencial legal website, the Odebrecht corruption charges also involve those "men of confidence" who are part Temer's inner circle.
Temer's high powered lawyers are seeking to exculpate him from painful budget cuts made mainly on his watch that have helped trigger much of the recent social unrest (on the streets and in prisons) that has gone viral in the media and on social networks.
That considered, it raises the question of to what extent the alleged “economic recovery” being trumpeted by Temer's handlers (known in the Brazil press as his “shock troops”) and their fraternity of media hacks, expert forecasters, foundation wonks, and analysts, borders on being “fake news” in its own right.
Much of the high noise to volume ratio they shout out echos the mantra of IMF doyenne Christinane Lagarde (who could better serve her nation as its president), and a Brazilian World Bank director, Octavio Canuto, who both say that Brazil's recovery is on track... pending those painful reforms that The Financial Times and The Wall Street Journal are clamoring for.
Making America Great Again
Under Temer, the United States has established a military training base in Brazil to train Brazilians, Peruvians, Colombians and other Latin military and contractor cadre in unconventional warfare tactics and prosecute Washington's never ending "war on drugs."
Under Temer, arms manufacturer Taurus, one of the top selling handguns in the US market, has built an assembly plant in the great state of Georgia in Trump country, creating jobs for American workers.
Aircraft manufacturer Embraer, who build the Tucano prop-driven attack and ground support fighter used in Indonesia, Peru, the Dominican Republic and Iraq, and elsewhere, have made a deal in which the plane is now assembled in Jacksonville, Florida, by Sierra Nevada, a major Pentagon contractor (owned by Fatih and Erin Ozman, US citizens who emigrated from Turkey during their youth), resulting in more job opportunities for skilled Brazilians being lost to America.
On the cyberwar front, the meme voiced by senior US officials that went viral to wit that China and Russia are using on the ground and cybersecurity and hacker assets to meddle with and influence Brazil's electitions-- that started with the visit of former secretary of state Rex Tillerson, and continued with the two visits of vice president Mike Pence, and Pentagon chief Jim Mattis-- went quiet after meetings between senior Brazilian officials and US deputy secretary of state John Sullivan. Similar memes were amped up by US assets during recent elections in Colombia, and Mexico.
Brazil's president Michel Temer will be the first leader of a major world power to address the UN General Assembly after it opens on September 18th. The UN Human Rights Committee has officially-- on two occasions-- shared with Brazil its view that jailed former president Lula da Silva should be allowed to continue to run for president. But the Supreme Electoral Court and the Supreme Judicial Court have both ruled him inelgible under Brazilian law due to his serving hard time due to a corruption conviction. Itamaraty, Brazil's ministry for external relations, has dismissed the UNHRC demand"(s) that Lula should be allowed to run for president as a "suggestion."
Unable to run due to his corruption conviction, Lula, from his jail cell in Curitiba, Parana State, has announced that the Workers' Party's (PT) "replacement candidate" is former Sao Paulo mayor Fernando Haddad. Brazil media and social utilities are trying to buzz up Haddad as a "contender" now that he is the official PT candidate for president. But Haddad's performance as mayor of Sao Paulo was lackluster and, in an effort to gain a second term in 2016, he was soundly defeated by wealthy populist Joao Doria of the Brazil Social Democratic Party (PSDB. According to Brazil media, Doria won 53% of the vote. Haddad obtained only 17% .
Until he was unceremoniously removed as a candidate, Lula was leading in all major "scientific" polls. Now right wing candidate and retired army captain Jair Bolsonaro is now leading in the race to become Brazil's next president. Bolsonaro was stabbed in the stomach at a rally on September 6thri but his wound is not likely to keep him out of the race. In fact, the event (you can read about it at RT and elsewhere) is likely to gain him a bump in the polls and a likely sympathy vote that could take him all the way to the Planalto Palace, Brazil's "White House".
The Bolsonaro-Steve Bannon connection
Last month, Jair Bolsonaro released a photograph of his son, (taken in New York) Eduardo, a Federal Deputy from Sao Paulo, arm in arm with Steve Bannon, a former Trump White House adviser. Bannon, who no longer works at the White House, continues as a media asset for the alt-right movement, globally. Articles discussing the Bolsonaro-Bannon connection quickly went viral world-wide, appearing on Bloomberg, Brazilian economics magazine Carta Capital, and elsewhere, but quickly fell out of the news cycle. Carta Capital quoted Bannon saying that Jair Bolsonaro is part of a "global populist movement."
Bolsonaro was wounded in the city of Juiz da Fora in Minas Gerais state. His life was saved by doctors there at a hospital affiliated with the Brazil nationawide health care system SUS (acronym in Brazilian Portuguese). He was subsequently transferred at the request of his family to the Albert Einstein Israelite Hospital in Sao Paulo where he is recovering. Ironically, even after the SUS system kept him alive, Bolsonaro continues to be vocal in local print and online media about his plan to cut funding for the SUS system
Already campaigning from his hospital bed, Bolsonaro can be seen in this photo making his signature "shoot the gun" gesture, which complements his attitude toward what should be done with people who, during Soviet times, would have been called "parasites" and "cosmopolitans" and "hooligans" among other names. Today in Brazil, Bolsonaro's "shoot the gun" body language gesture, implies killing people, people like, for example, drug gangs and their supporters in favelas, extremists,petty criminals, raucous football fans, truck drivers and other labor union "goons." The New York Times, HuffPost Brasil and others have buzzed up this theme.
According to the Brazilian political blog Poder 360, the Brazil Federal Police and public security minister Raul Jungmann have articulated the view that Bolsonaro and his entourage were not following proper sercuity measures when the stabbing event happened.
When the embattled Temer speaks to the UN in a few days it's important to remember that Brazil played a seminal role in founding the organization. This considered, the United Nations general assembly will likely show respect for Brazil's reputation and applaud Temer's speech, and not mull over the problematic issue of whether his government is any less corrupt than the those "populist" or "leftist" regimes that preceded it. In today's world of post-truth globalism, measuring whether Team Temer is working hard to make Brazil a better place for all Brazilians is more a question of measuring feelings than measuring deeds.
Update 24 September- The Brazil real has firmed up with president Temer set to address the UN tomorrow, September 25th, - markets and websites like Bloomberg (and others) are showing that around 4.06 reais is needed to buy 1 US dollar. But the "tourist dollar" costs consideratly more to travelers buying at banks and exchange houses. Ireland has regained #3 position on US Treasury "TIC list" now holding $300.2 billion in US instruments, a scant half billion more than Brazil's $299.7 billion in US holdings. Also being publicized today in Brazil media is a "poll" of "market experts" released by Brazil's Central Bank (which is an adjunct of the Ministry of Finance), indicating a modest rise in inflation during the coming months into the new presidency (the presidential term starts 1 January 2019 and officially runs for 4 years), and a current prediction that the real will strengthen, with $1 US dollar costing around 3.90 reais.