From the OECD Forum in Paris

The OECD Forum opened yesterday in Paris to debate the most pressing social and economic challenges confronting society. Leaders and influencers from all sectors of civil society are here. The speakers include former and current heads of state and government, leaders of NGOs and trade unions, academics and the press.

I met some Brazilians there and we talked about the possibility of Brazil finally getting into the “club”. Getting an OECD membership is a big step towards committing to international governance. It would help attract foreign investment to Brazil. An OECD analyst told me that many members have joined when there were scandals going on in there countries. So apparently the domestic turbulences in Brazil would be not a problem.


The OECD Forum in Paris.

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When will Brazilian GDP recover?

For 2017, the Brazilian government’s official number is 1% growth, with the recovery starting already in the first quarter.

However, according to O Estado de S. Paulo newspaper, the Minister of Finance, Henrique Meirelles, has already admitted in private conversations with members of Congress that the economy should something around 0.5% in 2017. for the last quater of 2016, a decline of 0.5% quater over quater GDP. Minister Meirelles also said that he believes the worst in the economy is already over.

Besides, the recent interest rate cut should boost the economy. Nevertheless the minister admits that employment levels should not rebound soon.

A touch of irony?

Regarding the BCB’s decision to cut interest rates, Meirelles commented that: “contrary to what happened in the past, the interest rate reduction is now solid. It is based on falling inflation.” (My personal opinion is that he is right. It is important to stress the differences between the Temer’s vs Rousselff/Lula’s administrations).

Source: Bradesco BBI Briefing and Estado de São Paulo


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Optimism returns, The Economist

…. A positive trend, albeit brief

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Brazil’s economy The only way is up


Cheer up. The Economist is calling a bottom

Brazil’s economy

The only way is up

The recession rages on. But there are incipient signs of recovery

FOR many Brazilians, the high point of the Olympic games in Rio de Janeiro came in the rain-drenched Engenhão stadium on August 15th. That was when Thiago Braz (pictured) won an unexpected gold medal, and set an Olympic record, in pole vaulting. Brazil’s beaten-down economy is nowhere near performing a feat that would remind anyone of Mr Braz’s jump. But it may be starting to pick itself back up.

The signs are still tentative. Manufacturers are investing again: imports of capital goods were 18% higher in dollar terms in June than in the same month last year, the first year-on-year rise since September 2014. Industrial production increased in June for the fourth consecutive month after two years of nearly uninterrupted decline. Firms’ stocks of unsold goods are starting to shrink, and the number of lorries on motorways has stopped falling.


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Brazil versus Rousseff: democracy won

The Brazilian Congress impeached the head of the executive, president Dilma Rousseff. All senators voted, under the processual supervision of the president of the Supreme Court, Ricardo Lewandowski. The result: 61 in favor and 20 senators against the impeachment.


Presidents of the Senate, Renan Calheiros and of the Supreme Court, Ricardo Lewandowski during the judgment of the impeachment of president Rousseff.

Is it a coup d’etat? Funny to even make this question after seeing more then 70 hours of judgement. Brazil is a republic. The executive, the legislative and the judiciary are equal powers. The law that rules impeachment was made in 1950.

As Kenneth Rapoza, Forbes contributor points out:

The impeachment is not a coup because:

  • The constitution has a list of impeachable offenses. Breaking the budget law is one.
  • The decision to impeach comes from Congress, starting in the Lower House.
  • The Senate is the final judge and jury on the matter, regardless of third-party interpretations of the law. Senators interpret the law.
  • Dilma’s attorneys appealed to the Supreme Court at least two times, citing procedural errors. Once, the Court agreed and took Cunha out of the committee to rule on whether to impeach in the Lower House. All other appeals were dropped.
  • Dilma can appeal the Senate impeachment vote to the Supreme Court. If it was a coup, she could not appeal.
  • Dilma lives in the Presidential Palace. Usually a coup is an illegal takeover that runs the president out of town.
  • Dilma is being investigated for receiving illicit campaign funds from Petrobras, but she is not being tried for anything related to the Petrobras scheme. Therefore, it is irrelevant that Cunha’s co-conspirators are tainted by that scandal.  If the co-conspirators had also allowed for, or spent money the government did not have, then we could compare the two ‘crimes’ .
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State reform and the privatization of a Brazilian champion: the case of Vale

Privatization is a controversial subject in Brazil. It has been so for a while. After the Petrobras scandals, the interest of the public role in the economy remains active. Vale is an historical case. Privatized in 1997, the company has evolved into the 2nd largest mining group. In this perspective, I presented a paper in the Quinto Congreso Latino-Americano de Historia Económica (CLADHE V)  about the subject. This is an outline of this paper and there is a link to the ppt presentation below.

International presence of Vale in 1997

mapa Vale 1997

As continental country with substantial potential for development, in the 2000s Brazil became one of the emerging economies. Coincidently or not, the previous decade was a period characterized by reforms and privatizations. Among the numerous companies privatized in that period, one stands up: the mining company Vale. The relevance of Vale’s case derives from multiple aspects. It shows the intersection of macro and micro history, during a period of intense transformations.

From its foundation in 1942, Vale was a tool of Brazil’s industrialization and economic development. Over time, the company’s influence in the economy was reinforced by the weight that natural resources acquired to Brazil’s trade balance. In 1975, Vale became the world leader in iron ore exports. Although the period and the company have been largely, Vale’s privatization remains a subject that fuels the debate of the public role in promoting economic development in contrast with the liberalization policies inspired by the Washington Consensus.

Research Questions 

What were the macroeconomic factors influencing the privatization of Vale and what rational was used for the valuation of the company, in particular the difficulties in assessing mining assets, the debate of national resources ownership and the questioning of the sale price.

This paper was presented at the section “l’Etat et les privatizations dans l’Amérique Latine et le Sud de l’Europe”at the Quinto Congreso Latino-Americano de Historia Económica (CLADHE V) that took place at the University of São Paulo – USP on July 21th 2016.  The ppt presentation can be download at Research Gate.

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Brazil versus Rousseff. (I witnessed the largest protest ever)

Brasilia, March 13th. Early in the morning I started hearing the cars honking. It was just the beginning of a memorable day. A spontaneous popular manifestation is not an ordinary thing. On the streets, I saw people wearing yellow shirts, Brazil colors were everywhere… windows dressed with Brazil’s flags, wrapping cars, bikes.

Brazilians are generally complacent when it comes to politics. The sentiment that corruption is a cultural treat has been part of the nation’s “personality” for quite some time. So what draws millions of people all over the country to protest against the labor party (PT) of Lula and his successor Dilma Rousseff?


“You paid for this” a triplex presumably built for Lula (under investigation)

After the Mensalão scandal, when many PT leaders went to prison for corruption, a number of factors piled up. Critics of the dubious conduction of the economy including fiscal fraud and lethargy in implementing structural reforms, begin to partner with the sentiment that the only interest of Lula and his friends were to get rich and stay in power for as long as possible.

This Sunday’s protests are a clear expression of what the majority of the population wants. The message is simple: no more corruption. In a peaceful and even humorous way, the popular spontaneity also reinforced  the independence from political parties.

Brazilians are not looking for a new charismatic leader,  but the goal is to reinforce the principle that nobody is above the law, no matter how rich and powerful. Lula is under investigation and the same people who elected him, now wants him to be judged with severity.

The hero is the judge. Sergio Moro, the head of the team investigating the scheme of corruption on the highest level of the republic, was honored while even the opposition leaders like Aecio Neves, had to cancel his speech due to poor popular reception in São Paulo.

It was really a memorable day.



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