Wednesday 26 November 2008

Lula and the Financial Crisis

Apart from other things, Lula is famous for his blundering utterances in public.

Since the financial crisis in the U.S. started to worsen, president Luiz Inácio Lula da Silva changed his tone.

March 30, 2008: "Bush, my son, solve your crisis."

September 17, 2008: "What crisis? Ask Bush."

September 22, 2008: "Until now, thank God, the crisis has not crossed the Atlantic."

September 29, 2008: "For Brazil, if it comes close, it will be very minimal."

One day later:
September 30, 2008: "The crisis is very serious and so intense that we do not yet know the magnitude of it."

October 4, 2008: "There [in the USA], the crisis is a tsunami. Here, if it reaches us, it will be a marolinha (high wave), not even good enough for surfing."

cartoon: J. Bosco in O Liberal

October 5, 2008: "We want this issue of the crisis presented to Congress."

November 8, 2008 opening the G20 meeting in São Paulo: ”Nobody is safe and all countries will be affected by the crisis.”

During the São Paulo G20-summit (one week before the summit of heads of state in New York), ministers of finance and presidents of the central banks, discussed measures against the financial crisis that began in the United States. The group intended to rally forces to get more influence over the direction of the global economy. In his openings speech, President Luiz Inácio Lula da Silva said that the crisis is serious, requires coordinated actions, and that no country in the world will be spared.
Lula also said that the G7 countries - the United States, France, Italy, Germany, UK, Canada and Japan - no longer are in a position to lead the direction of the world economy solely. He called for more participation by emerging countries arguing that in 2007 these countries accounted for 75% of the growth of the world economy.

’The crisis is global and requires global solutions also. It is time for a pact between governments for the creation of a new global financial architecture.” he said.

For the world press assembled in São Paulo the G20-summit was a nightmare. Due to a failure of the press service, journalists from around the world could not hear Lula’s speech.
While the president gave his speech at the Hilton Hotel, the journalists were confined in a room of the Hyat Hotel, at a short distance of the Hilton, where the meeting took place. All should be watching the speech by Lula via a tv-screen, but the screen did not work.
According to the Ministry of Finance, the transmission system of the NBR failed and the journalists were unable to follow Lula’s speech.
”It is a shame, it is a shame,” shouted the foreign journalists accompanying the meeting of the G20.
Nevertheless the summit was the perfect moment for all who, often only preaching to empty pews, resisted the "neo-liberal" free market economic model highflying in the past few decades. Politicians, economists and social activists want to take advantage of the current financial crisis to bury this model once and for all, together with all forms of speculation.

Since the beginning of the crisis, President Lula gradually changed the tone regarding the crisis in the global financial system and its consequences in Brazil. Apparently the crisis came unexpected, with a huge foreign capital outflow that took both the government and the private sector by surprise. It generated mistrust between banks which stopped lending money.
In a clear change of behaviour, the government and its economic team finally began to realise the seriousness of the problem, that Brazilian companies had with derivatives - bets on the recovery (over-valorisation) of the real - and the over-optimism of President Lula, who came to say that the crisis of Bush would not reach the country.

Some internal contradictions within governments, especially between Central Banks and Economy Ministries, are becoming more acute. In Brazil, the dominance of the monetary authority (the Central Bank) suffered a blow when emergency measures were needed to avoid a greater economic slowdown.
The G20 summit in São Paulo - Minister of Finance Guido Mantega and President Lula

The disagreement between Brazilian Minister of Finance Guido Mantega over the conservative policies of the Central Bank, which advocates high interest rates and an unrestricted floating exchange rate, was already common knowledge. But the crisis and the recommendations of the G20 strengthened Mantega's position. As chairman and spokesman of the meeting, he emphasised the need for anti-recession measures.
The president of the Central Bank, Henrique Meirelles, tried to soft-pedal this approach, underlining instead the concerns over inflation that were also expressed in the meeting’s final communiqué, and the special characteristics of each country.
The G20 summit in São Paulo - president Lula and the CB president Henrique Meirelles

Walking and talking between two fires Lula said that despite the financial crisis Brazil will maintain all works in progress of the Programa de Aceleração de Crescimento (PAC = Program for Accelerated Growth). The president said that the global financial crisis not caught Brazil unprepared and promised that the government will not allow that the country's economic growth will be hampered. "My government and the people have made sacrifices and are now beginning to reap the rewards ... with our expanded home market, which protects us partly of the international crisis," said Lula. "The government will not allow our growth compromised," added the president.

Former President Fernando Henrique Cardoso criticized the way Lula’s government was facing the economic crisis and was ironic, calling Lula a "great economist", in reference to the statements Lula made by calling the crisis a marolinha when coming to Brazil.

“No need to be aggressive with anyone personally, but we have to say that not everything the master is saying, is right, because it is not. We have to say the king is naked here, there, and yonder. Put your clothes on, Mr. President. Do not talk nonsense, Mr. President. Be more consistent with your history. Don’t be as fast in your judgments as the others. Note that a nation is made in the course of generations. Don’t be so pretentious. Be a little more humble,” completed Fernando Henrique Cardoso.

The former president said that people realize when things are not going well.
”I understand that the president have to animate the country. But the country is not silly. The country understands when things change. Things have changed in the world, changed for the worse. It is cyclical? It is momentary? Yeah, but we have to be able to view the future to leave the ruinous situation we are in and don’t continue saying that it is not ruinous. It is ruinous."

But after all nothing really changes. All governments in the world are implementing stimulus programs, not so in Brazil. Apparently the Lula’s statement that all-works-in-progress of the Programa de Aceleração de Crescimento (PAC = Program for Accelerated Growth) will continue is, in Lula’s opinion, sufficient enough alongside the high level interest rates and (disputable) interventions of the Central Bank in the exchange market, selling its stock of dollars to keep the real over-valorised, in favour of the banks, disgracing the products manufacturing segment.

President Lula planting an aroeira tree

sources: UltimoSegundo, O Globo, IPSNews, J. Bosco/O Liberal

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Saturday 15 November 2008

Seven Federal States and the Federal District Concentrate 80% of the GDP


And nevertheless Pará is the champion of economic activity.

About 80% of the Gross Domestic Product (GDP) of Brazil is generated by only eight of the 27 states of the Federation, concentrated in São Paulo, Rio de Janeiro, Minas Gerais, Rio Grande do Sul, Paraná, Bahia, Santa Catarina and the Federal District.

The concentration of the GDP in eight regions reduced by 1% (from 79.7% to 78.7%, equivalent to R$ 23.7 billion (USD 10.8 billion) between 2002 and 2006, while the Northern Region increased by 0.4%.. São Paulo alone realizes some 34% of the Brazilian GDP.

The survey of the IBGE also shows the per capita GDP in the regions. At this moment, the Federal District still has the highest GDP per capita (USD 17,090), almost three times the national average (USD 5,767) and well ahead of São Paulo with USD 8,885 and Rio de Janeiro with USD 8,043.

Pará, with all its minerals (iron ore, gold, diamonds, bauxite and whatever you want) letting his soil be robbed for a pittance, Pará with its obviously inexhaustible stock of hardwood illegally cut down and disappearing, Pará with its abundance of fish in its inner waters but ransacked scot-free, Pará does not belong to the above mentioned list of Prime Producers, Pará has just officially an insignificant share in Brazil’s GDP.

Nevertheless Pará is the undisputable leader. A sad leadership. Ranking No. 1 at the list of slave labour.

Pará remains at the top of the list of slave labour in Brazil. According to the Ministry of Labour and Employment (MTE), just this year, the Special Group for Mobile Labour Inspection held 28 operations throughout the state, during which 592 workers who were in conditions similar to slavery were “freed”. Above that a 1.000 bookings for misconduct were issued and for more than R$ 1.6 million (USD 730,000) payments for compensation and arrears of wages cashed.

The MTE calls attention to the growing rates of slave labour in states that until then, did not appear on that list. Among them, Goiás and Alagoas.

According MTE, this scenario is directly linked to the expansion of the sugar cane industry, a major protagonist in the international market for bio-fuels. And in the southern region of the country, an increase in the number of enslaved labourers is detected in fazendas which grow pine, a species widely used for reforestation. In both cases, the indecency is that slave labour is being used to support activities theoretically sustainable, for which the basic principles as respect for the environment and concern for the social aspect should be fundamental.

'Methanol is a 'clean' energy in regard to the environment. But we need it also to be clean in the sense of respect for those who work in the production of it", said the president of the Sindicato Nacional dos Auditores do Trabalho (National Association of Labour Prosecutors), Rosa Campos Jorge.

To prosecutor Jonas Moreno, the increase in the number of ‘freed’ labourers reflects the intention of the Brazilian government to step up the enforcement actions to repress this rank injustice.



In other words there are still a lot of slaves out there to be ‘freed’.

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