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by forinti 3610 days ago
I am not an economist, but it seems to me that Brazil's economic woes originated in the private sector. It simply became too leveraged in the boom years of Lula's government and couldn't handle the aftermath of the 2008 crash.

Dilma, on her part, gave in to the austerity camp (both left and right can't seem to give up this mentality) and made matters worse. In part, this was driven by inflation fear mongering by the media.
1 comments
brguy 3610 days ago
She only gave in to "austerity" after the federal government financial situation became unsustainable. Even then, the spending cuts were minimal.

The economy was already slowing down in 2011, and Roussef's government lowered interest rates and started giving subsidies to certain sectors and companies in order to stimulate economic activity. Some economists said this was a bad idea with potential disastrous consequences considering the global slowdown that was happening. IMHO, they were spot on. The private companies that went under since then were mostly the ones that were financed by public money. It was a failure of cronyism.

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forinti 3610 days ago
Exactly, austerity was applied only on the demand side (social spending and infrastructure), but the problem was precisely the demand side. The private sector didn't need more loans or tax cuts, they needed customers and profits.
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brguy 3610 days ago
Most of the budget is fixed by law, so those were pretty much the only areas where costs could be cut. Social and infrastructure spending was actually record high before the crisis hit, so to say everything was caused by austerity is misleading.
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forinti 3610 days ago
Well, I didn't say everything was caused by austerity. I said austerity made it worse.

Social and infrastructure spending might have been high, but I think they were actually insufficient. Politics and economics are too skewed to the right in Brazil. Look at our budget surpluses for the last few decades:

https://brasilfatosedados.wordpress.com/2014/12/07/3047-supe...

And then look at the UK's budget history:

http://3.bp.blogspot.com/-u_6bLBEcvus/VIL2bc4et6I/AAAAAAAAB7...

Even Thatcher had deficits all along.

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andrenth 3610 days ago
> Politics and economics are too skewed to the right in Brazil.

This is the most absurd out of touch with reality statement I've read this week.

Brazil has 30+ parties almost all with "social" or "socialist" in their name. It's 50 shades of red down here.

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forinti 3610 days ago
It is a matter of personal opinion, after all. Anyway, I took the trouble to enumerate the ten largest parties in the brazilian congress and got their political position from Wikipedia (so as not to corrupt it with my own ideas):

PT - Centre-left; PMDB - Centre; PSDB - Centre (implemented neoliberal agenda in the 1990s); PP - Centre-right/Right; PSD - Centre-right; PR - Centre; PSB - Centre-left/Left; PTB - Centre; DEM - Centre-right (this I find hard to believe); PRB - Centre-right.

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