Brazil: the Party is Nearly Over

We are on the eve of the 2002 Brazilian election, which will determine when the wobbly house of cards will collapse. It is either the "business as usual" candidate, Serra, who will roll over the debt, give more concessions to banks, increase taxes, slash expenditures, privatize gov't businesses (maybe even dish out a chunk of Petrobras, the quasi-state oil company; its exploration monopoly may be given up), and inevitably a serious currency devaluation maybe forced upon it. In the local vernacular, these policies will amount to "urinating in your pants to keep warm." Even these drastic measures will only yield a temporary reprieve before something must yield.

The alternative is Lula, the candidate on the left. His policies will favor improving the conditions of the majority of the population, and perhaps rectify the lopsided income distribution of Brazil. Such policies require improving consumption of the population at large, and investment in public services. The collision course with the policies needed to play the "debt roll over game" and this plan are obvious. One policy requires belt tightening forever, the extraction of the pound of flesh, whereas the Lula program requires that some of the crumbs reach the masses. [read more]

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Brazil Presidential Election Is Set for October Runoff

Brazil's Supreme Electoral Court confirmed today that Luiz Inácio Lula da Silva of the leftist Workers' Party will face José Serra for president in a second-round runoff on Oct. 27.

Mr. da Silva, who was hoping to gain more than 50 percent of the vote to win the election outright, had 46.4 percent with 98.3 percent of the vote counted. [read more]