The events of the weekend, with the resignation of the main members of Guedes’ economic team early on Friday night, stirred up the analyses, moving and guiding the media. This mass layoff, in particular, stands as something very serious. It may soon be remembered as the beginning of total economic chaos. It is a background that brings Brazil closer to countries that have experienced unprecedented recent economic crises, such as Macri’s Argentina, or even Venezuela, placed by Bolsonarism as an antithesis, as the ultimate example of what we cannot be or become.
The market, represented here by banks and brokerages, responsible for buying and selling assets, shares that are part of the IBOVESPA, future interest contracts, or even the dollar, is the one that ends up selling the story that without a primary surplus the country cannot grow. That without strict fiscal austerity, there are no possibilities for development.
What happened in recent days, however, demonstrates a loss of control by Guedes over the country’s economy. And it is no coincidence – I think this is a very naive argument – that this is happening now, in the weeks that the Pandora Papers scandal immediately ensues. This one, a scandal that dissipates any strength that the Minister could still have, considering that it has been weakening and eroding since the first day of service with a disastrous neoliberalism, which made the country drop 30% in dollars last year. We are the only country that had such a big drop, and the real was the currency that devalued the most, according to IMF data. Excluding Turkey, Venezuela and Argentina, we are the country with the highest inflation, within the large economies.
We saw, then, the collapse of the image, built during the campaign, of Guedes as the knight of fiscal austerity and spending caps. He finds himself, at the moment, completely blackmailed: even more so now, when the parliament is aware that our Minister has millions in tax havens, and finds himself profiting from the chaos. Became a puppet.
It’s a total lack of control: emergency aid becomes Brazil aid, which replaces Bolsa Família, with a value that goes beyond the spending ceiling, but is temporary, so it’s based on an interpretation of the law that sets precedents… phew, you’re out of breath. The most intriguing thing is that it would only last a year, that is, the election campaign year. There is also the announcement of aid, which was not agreed with anyone, nor with any ministry, for truck drivers. It is not even known what the value is, and immediately the truck drivers ask for tricks, taking a stand in not accepting.
In the analyses, those who predict the fall of the Economy Minister also emerged. In practical terms, I don’t see it making any difference. And more: if there was the possibility of a new Ministry of Economy, who in their right mind would accept, in the midst of this chaos?
The size of this chaos will depend on what the government’s joint effort to restore credibility will be, although it will be difficult for it to be rescued. This is because the market has reached an inflection point where it is better to bet on deterioration, not improvement. Seeing the desperate situation, each one tries to take their share.