The Great Brazil Topic

[Paleobrazilian]

Well, this thread deserves a large recap!

As you probably know, Dilma Rousseff (PT-RS) was barely reelected back in October 2014 after what was the tightest democratic election ever in Brazil's history. Most will remember the two-month roller coaster. More on the election here: https://uselectionatlas.org/FORUM/index.php?topic=170116.0

Some will probably remember that as the election went by, Brazil's economy started to show unequivocal signs of weakness, with shrinking growth, rising inflation, a weakening currency and a federal budget out of control. The economic weakness was made worse by the fact that the financial market clearly chose Aecio Neves as its candidate, as the government was blamed for the results of a failed economic strategy adapted from 2011 onward.

Some will remember that during the election, Dilma emphatically said that there was nothing wrong with the economy, that inflation was under control and that no adjustments would be needed. She also attacked both Aecio Neves and Marina Silva strongly, claiming that they would go on with privatizations, restricting worker's rights, cutting government spending on social problems, etc.

Some will also remember that as the election went by, the largest corruption scandal in Brazil's history started to be blown wide open for everyone, as its whistleblowers started to tell the feds all they knew about a gigantic corruption scandal underway in Brazil largest state owned company, Petrobras. 2 days before the runoff, it was leaked that, according to one of the whistleblowers, both Lula and Dilma knew about the wrongdoing and did nothing to stop it.

Well, just one day after the election Dilma was forced to go on a full "etch a sketch" mode, recognizing the economy was not in its best state and that some sacrifice would be needed. Later that week, interest rates were increased to curb escalating inflation, and soon after Dilma announced Joaquim Levy, an orthodox economist who was part of Aecio Neves' staff as her finance minister. Levy was supposed to set forth a series of unpopular measures, such as raising taxes and restricting access to pensions, social security and unemployment benefits.

A few days later, Dilma was faced with a disaster in potential as it became clear that the federal government would run a deficit in 2014, falling well short of the budgetary target set forth by the 2014 budget. Since that would violate Brazil's balanced budget law, an impeachable offence, Dilma was forced to bargain with the Congress a change on the fiscal target before December 31st. The consequence was that Dilma lost a lot of leverage and political power.

Dilma took an even stronger hit when the new Congress was sworn in. The new Congress has a much less stable majority than the one Dilma worked with on her 1st term, specially in the House. To make things worse, Dilma tried to intervene on the race for the presidency of the House, as she tried to avoid the election of Eduardo Cunha (PMDB-RJ), one of the cunningest politicians in Brazil, a man she despises. She failed badly, Cunha was elected with ease and Dilma lost even more support in Congress.

Finally, the Petrobras scandal turns worse for the government each passing day. Right after the election, a large number of businessmen were arrested, all of them suspected of paying hefty bribes for politicians in exchange of highly profitable contracts with Petrobras. While some denied any wrongdoing and said they had nothing to tell the feds, some went rogue and started telling all they knew about the corruption scandal to the feds. This led to even more new info, deepening the investigations further. As things got bleaker, the government finally decided to sack Petrobras' president, Maria Graça Foster. The problem is, they chose a man with previous ethics concerns to replace her, scaring even more investors away from Petrobras. Remember, Petrobras last produced a valid balance sheet on the 2nd quarter of 2014.

As February came by, things started to get even worse for Dilma. First, Eduardo Cunha was sworn in as the President of the House, promising to act with independence from the Executive. From them on, things soured quickly. Dilma has angered the entire PMDB, that refuses to negotiate with the leading political negotiators of the federal government (including Dilma's Chief of Staff, Aluizio Mercadante). Things got nuclear when the Attorney General announced the name of the first politicians that will be investigated for involvement with the Petrobras scandal. The list contains the name of many PMDB barons, such as Eduardo Cunha and the President of the Senate, Renan Calheiros (PMDB-AL). Cunha and Calheiros claimed their names were on the list because the federal government asked the Attorney General to do so. As a reaction, they rallied the PMDB to make things even worse for Dilma in Congress.

Finally, the PT itself has been taking increasingly large hits. Renato Duque, a former director of Petrobras and a man known to be very close to José Dirceu was arrested late last year accused of involvement on the scandal. He was released just a few days later, but last Monday he was arrested again, as the Prosecution proved he was still laundering huge sums of money in Monaco. The latest findings show Duque was the man responsible for asking hefty bribes for the PT, bribes that were collected by a now infamous name, João Vaccari Neto, the treasurer of the PT. PT members are in panic that Duque may be desperate in prison, and that for this reason he may decide to tell what he knows to the feds. There's also increasing evidence that José Dirceu got millions from the corruption scheme, and that Dilma's 2010 presidential campaign was largely funded by bribes and laundered money. Finally, large PT names such as Senator Gleisi Hoffman (PT-PR), Senator Lindbergh Farias (PT-RJ) and Senator Humberto Costa (PT-PE) emerged on the AG's list of investigated politicians.

Notice the amount of times I said things "got worse" for Dilma. It just goes to tell you how bad things got for her. It's not surprising that the latest ratings of her government are on pair with the ones registered by Collor when impeachment proceedings against him started back in September 1992. The national rating is of 62% bad/awful ratings, and even on the Northeast, where Dilma had a landslide win back in October, over 50% of the voters now say her government is bad/awful.



Thus, with a economy expect to shrink nearly 1% this year (and I'm being optimistic), inflation getting closer to double digits, a melting currency, many broken promises and a gigantic corruption scandal that's getting closer and closer to the presidency, its no surprise that many want to boot Dilma out of overnment. That's why over 2 million people took the streets of hundreds of cities last Sunday, as you may have seen on TV or somewhere on internet. Those were the largest demonstrations in Brazil's recorded history, even larger than the redemocratization demonstrations back in the 80's.

Now, can Dilma be impeached? That's something I'll discuss tomorrow.

[Paleobrazilian]

For Dilma to be impeached, 2 things would be necessary:

1 - The legal aspect: the House cannot open impeachment proceedings against Dilma unless there's evidence that she committed an impeachable offence as the President of Brazil. Some conservative legal experts argue that failing to recognize the corruption in Petrobras is an impeachable offence, but that's not an opinion of consensus. If it's proven that Dilma knew what was going on and did nothing to stop it, though, that would be a crystal-clear impeachable offence.

2 - The political aspect: everyone is very cautious about an impeachment. The PSDB doesn't want to impeach Dilma and then be impeached in 2020, for example. They want to make sure the impeachment will only happen when there's solid evidence to do so and when Dilma's political support has truly collapsed. The PMDB (specially Eduardo Cunha) now rules the country, so they'll only impeach Dilma if/when she becomes disposable. Other situation parties will also try to suck as much as they can from the government before considering an impeachment. So far the only parties already pulling for the impeachment are 2 smaller opposition parties, DEM and SDD. Of course, this could suddenly change on April 12th, when the next anti-Dilma demonstrations will happen. If they're bigger than the ones from March 15th, then there's a strong chance the PMDB will pull the plug on this government and make Michel Temer the next president of Brazil.

[Paleobrazilian]

According to CNT/MDA, 60% of the voters want Dilma's impeachment.

[Paleobrazilian]

Dilma probably has no further electoral ambitions, so it's all about her legacy now.

Lula, meanwhile, wants to kill Dilma. Not only Dilma's political ineptitude hurt Lula's chances for 2018, but it's widely believed that something involving Lula directly will come to surface soon.

[Paleobrazilian]

This has nothing to do with the right. In fact, the most beloved figure by Brazil's left, Getulio Vargas, was a dictator.

It's just that, sadly, democracy was never a priority in South America. When you talk to older/poorer people in places like Brazil, Chile, Argentina etc., they'll tell you they liked the "good old days" because those dictators "got things done".

[Paleobrazilian]

The treasurer of the PT, mr. João Vaccari Neto, was arrested today. Another big blow for the government, and even bigger hits are expected for the next few days.

Meanwhile, the PSDB has asked a former Minister of Justice, Miguel Reale Junior, for a legal opinion about the viability of impeachment proceedings against Dilma.

[Paleobrazilian]

According to the federal Court of Audit, Dilma's government has breached Brazil's balanced budget law, an impeachable offence. I expect the PSDB to file impeachment proceedings against Dilma soon.

[Paleobrazilian]

The coolest explanation of Brazilian politics you'll ever see:

http://aheadmkt.com/guerratronos/?locale=en

[Paleobrazilian]

Petrobras has finally produced its 2014 budget. It lost over 50 billion reais (about 17 billion dollars) due to corruption and impairment.

And this is still a conservative estimation, as there's a lot on the corruption scandal to be uncovered. Plus, Petrobras' debt was probably underestimated as in the third trimester of 2014 the dollar was trading at around 2,60 BRL. It's now at 3,00.

[Paleobrazilian]

It's been 2 months for now, so I guess we deserve an update on what's been going on in Brazil.

For Dilma, it seems as if she's living a slow motion, never ending train wreck. She has faced all sorts of trouble trying to pass austerity measures. She has succeeded with some of them, but some of them are still stuck in Congress. Not only she faced stiff opposition from the opposition parties, she had trouble dealing with a coalition that's getting more unstable each passing day, and had even more trouble trying to sell austerity to her own party. Among voters, there's a widespread belief that the government spent too much and that now the population (specially the poorest) will be punished for it - and this feeling is absolutely correct.

Meanwhile, the Petrobras scandal grows bigger by the day. Yesterday the feds arrested Marcelo Odebrecht, one of the most powerful businessmen from Brazil, the CEO of Brazil's construction giant Odebrecht. Mr. Odebrecht is a personal friend of Lula who has taken Lula for tours around the World promoting Odebrecht's services. Lula strongly fears he'll be the next one to be arrested, as many believe Mr. Odebrecht is unafraid to tell the feds everything he knows. Lula has also privately berated Dilma for not doing enough to protect his image and his electability.

To make things worse for Dilma, it's now widely believed the government faked a budget surplus during Dilma's first term. The issue is now being discussed by Brazil's Court of Audit and Dilma has 30 days to defend herself against the suspicious of wrongdoing. If the Court of Audit rules that Dilma incurred in a violation of Brazil's fiscal responsibility law, her 2014 budget will probably be rejected, giving the opposition a big opening to try to impeach her.

According to today's Datafolha, Dilma's approval ratings are at 10%, while 65% of the voters now disapprove her. Those were Collor's ratings before he was impeached.

[Paleobrazilian]

Datafolha has conducted a presidential poll that shows Aecio up 10 against Lula. Aecio should pray for an impeachment.

The numbers for Alckmin also look good for someone who's been away from the national radar for the last 9 years. He'd be a strong candidate for 2018 with all the money and TV time he'd have.

As for Lula, I think this is his worst showing in a poll since the 90's. How the mighty have fallen...

[Paleobrazilian]

According to leaked info Dilma's 2014 campaign got 7,5 million reais of laundered money. If this is indeed true, her days as President and Temer's as Vice President are quite possibly over, with political turmoil coming next.

The same fears are now scaring Fernando Pimentel (PT), who was elected as Governor of Minas Gerais last year. In his case, there's already a formal investigation involving him, with tons of evidence that he used dirty money to be elected Governor last year. I don't think he'll survive for long. His fall would also knock down one of the few alternatives the PT have in case Lula goes down before 2018.

Oh, and yesterday the government lost yet another important vote in the Chamber.

[Paleobrazilian]

Has the Army made any noises recently? Is Temer going down too? If so then there's no need for anything exciting.

The military won't do anything whatsoever. We're not in the 60's anymore.

If the Supreme Electoral Tribunal rules that Dilma's campaign was funded with illegal money, her election  (and Temer's election by default) would be declared illegal and a new President and a new Vice President would have to be elected. If this happens before December 31st 2016 a new general election would be called to elect a stopgap President who'd serve until 2018. If this happens after December 31st 2016 the Congress would elect the stopgap President.

[Paleobrazilian]

Dilma's ratings have oficially hit the single digits. According to IBOPE, her approval has reached 9%. Yes, nine percent.

[Paleobrazilian]

Solid evidence that Dilma's campaign was financed with illegal money has leaked. There's a strong chance the electoral justice will declare her candidacy null, immediately removing her (and Michel Temer) from office and triggering a new election. And even if this doesn't happen, with more and more people telling all they know to the feds, she may well be impeached by the Congress. In fact, many on the PMDB now want to pull the plug on the government ASAP.

Her prospects of lasting until 2018 as the President of Brazil are looking rather gloomy. Some are already wondering whether she would be succeeded by Michel Temer (the impeachment scenario) or by Eduardo Cunha + new election (the electoral justice scenario). Temer threatened to abandon his function of political articulation with Congress, showing Dilma he's unafraid of going rogue. Cunha, meanwhile, has put the Chamber of Deputies on its knees, and if he feels Dilma is truly vulnerable to impeachment proceedings, I wouldn't be surprised if he decides to put an impeachment request for voting - and with his tight lock to the Chamber, there's a strong chance this motion would pass, sending the matter to the Senate. In fact, Cunha is clearly trying to build his presidential credentials with a stark social conservative, populist agenda, so if Dilma and Temer are removed from office, he'd not only be the automatic replacement for 90 days, he'd also be a very strong name for the stopgap election.

Then again, it's widely believed that Cunha will also be dragged into the corruption quagmire.

[Paleobrazilian]

Wow. This has really been a remarkably quick fall from grace for Dilma.

Will Silva come back in a new election scenario? Would Lula attempt to grab the PT label, or would it just be too risky?

He definitely wants to run for President again, but his ratings have dropped sharply over the last few months. Does he want to risk his legacy and his electoral history?

Plus, he could well be in jail by the time the next election happen. That's his biggest fear right now. There's mounting evidence against him. He could well end up as the Brazilian version of José Sócrates.

[Paleobrazilian]

According to numerous sources, the PMDB and the PSDB have already started talks on how they'll remove Dilma. This would be pretty much the second coming of 1992.

[Paleobrazilian]

PSDB held their 12th national convention today. Many tough speeches against the government, including one from Geraldo Alckmin, who had opted to take a more neutral stance until today. He's clearly starting to take an opposition stance as he tries to state his case for 2018.

Meanwhile, most of the speeches also showed the party is confident that Dilma and Temer will be taken down by the electoral courts and that a stopgap election will happen pretty soon. We'll see.

[Paleobrazilian]

Meanwhile, Lula's son office is being searched by the Federal Police right now. According to rumors, large companies paid over 1 million dollars on bribes to Lula's family so that he'd issue an executive order favorable to their business. That's just how corrupt this man was/is.

Left wingers may try to spin things as hard as they want to, but the ugly truth for them is that the huge castle of cards built by Lula is about to go down.

[Paleobrazilian]

Senator Delcidio Amaral (PT-MS) has been arrested in connection with the Petrobras scandal! He was the leader of the Government in the Senate, so this is REALLY serious.

Now the Senate will decide if whether to uphold his prison or to release him. This was the 1st time in Brazil that a Senator is arrested.

[Paleobrazilian]

Eduardo Cunha has opened impeachment proceedings against Dilma! Now the House will oficially take on the matter. A special commission will be formed and after that the whole House will decide. If a 2/3 supermajority approves it, Dilma will be provisionally removed from the presidency and the matter will be sent to the Senate for a final decision.

Dilma's goose is cooked.

[Paleobrazilian]

Eduardo Cunha has opened impeachment proceedings against Dilma! Now the House will oficially take on the matter. A special commission will be formed and after that the whole House will decide. If a 2/3 supermajority approves it, Dilma will be provisionally removed from the presidency and the matter will be sent to the Senate for a final decision.

Dilma's goose is cooked.

Cunha is going to be removed from office. And PT is against him. Dilma is very likely to survive. Opposition won't have strength to get 2/3 of votes and Dilma got a massive victory in Congress today.

Dilma only had this "massive victory" because Brazil would have ran into a government shutdown if she didn't - something not even the opposition wanted.

It'll be 1992 all over again. Dilma's abysmal ratings and public pressure will guide the unideological center towards the impeachment. The PMDB is already in favor. Temer is salivating right now. Plus, impeaching Dilma will be a perfect smokescreen for those in fear of the Petrobras scandal. The PT only abandoned Cunha because they'd rather throw Dilma under the bus than hurting the party brand more. The economy will shrink further due to this whole mess and the business sector will fully support the impeachment because Temer should have little trouble guiding some sort of a national unity government until 2018.

There are rumors that the PMDB and the PSDB already sealed an agreement about the after-Dilma. Temer would have full PSDB support and would probably place many high profile Toucans in his cabinet. Then in 2018 Temer would run for Governor of São Paulo, with support from the PSDB. Meanwhile, with the economy recovering and many PT leaders in jail, someone like Aecio Neves or Jose Serra would be in prime position to run for the presidency.

[Paleobrazilian]

Ibovespa's pre-market is up 3%. The US$ price is falling. The financial market wants Dilma out ASAP.

[Paleobrazilian]

The PSDB has held SP since Covas. Would they be willing to give it up?

While they have held SP since 1994, they have no obvious candidate for 2018, as Alckmin is term limited and there's no presumptive nominee. Plus, Alckmin's ratings have dropped sharply over the year. I think they'd be willing to give up SP if they can get something bigger in exchange.

Would the Presidency even be a done deal?

I don't think it would be a done deal, but only Marina Silva seems to be a realistic threat right now. Specially if Lula is in jail or too tarnished to be a serious candidate by 2018.

[Paleobrazilian]

Michel Temer just sent a Frank Underwood-like letter to Dilma Rousseff. The letter leaked to the press. Ouch.

Temer won't admit it, but he's obviously on the the impeachment train now. He went on a São Paulo tour over the last few days that included meetings with political, industrial and financial leaders. He said many times over the last few months that Brazil needed a reunification and that someone had to lead this process. He now wants to lead this process. As the President of Brazil.