Wednesday, 23 February 2011

Understanding Brazil – Catching Flu’

I watched a staggering television interview with President Lula the other night which left me worrying, in layman’s terms, about Brazil’s strong economy. With the credit crunch in the USA still squeezing the housing market and much more, Brazil’s Finance Minister smugly announced to a press conference the other week that Brazil wasn’t likely to catch a cold from the pneumonia-laden sneezes of other countries far away. He doesn’t seem to realise how fast sneezes come out. With Brazilians being made redundant from manufacturing companies due to lack of exports, including one home-security company that sold alarms to US households, I think Brazil already has the sniffles but hasn’t yet noticed. With the Dollar dropping so drastically against the Real in the last year or so, Brazil’s exports have become more expensive, with China picking up the slack as it has been doing with other countries for the last decade. Even traditional Brazilian industries such as the shoe manufacturers are losing out in this globalisation. If the strongest economy in the world is struggling and they import only the cheapest goods, Brazil loses its exports to the country that will soon be the strongest economy, and has less money coming in from abroad. Very simple layman’s economics, no?

Apparently not, if you listen to the President of Brazil. The interviewer asked him about Brazil’s strong economy and whether that was down to his government. Lula claimed a lot of the credit for his party and also for the fiscal policies of previous presidents. The next inevitable question was about his preparations for a downturn if Brazil catches a cold from the fallout of the US crisis. Policitians are a strange breed and always like to be seen as in control. For this reason, during interviews and questioning, most will be primed on the likely questions and the possible answers that they can give to reassure the watching public that they are prepared for every eventuality, even if it is a blatant lie. Lula seemed taken by surprise and not a little angry with this question. He replied that they had no plans in place for this because it wasn’t going to happen. The next question was about his Plan B in case it did. I’m not sure he understood fully or just doesn’t have a grasp of contingency measures, as he said that he didn’t work with plans so if he had no Plan A, how can he have a Plan B? The expression on the face of the interviewer told me that she’d expected to be told about a back-up plan, and for his audience not to worry, even if he didn’t reveal any details.


I’m sure that at the very least we can take this as an honest reply and that the President’s government is hoping that by staying clear of the United States and sticking their heads in the sand ostrich-style, the country can avoid the circulating flu. Easy. With such detailed forward planning and with R200M to fall back on in the government’s coffers, you can rest easy in the knowledge that Brazil will continue to grow until it is proud to have the kind of stable first-world economy of which it has always dreamed. For this, we can all be grateful to President Lula.

Pass the tissues somebody please, I feel all emotional. Or maybe it’s just a sneeze or two coming on.

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