Light at the End of the Tunnel or Just the Olympic Torch?

vCBzn8YZAs usual, tedious times and interesting events in Brazil.  The stock market (BOVESPA) has gone on a tear and risen well over 30% since the beginning of the year.  But Interim President is still struggling to get a handle on the economy, double digit unemployment, government spending and the long lasting recession.  Some optimists see growth in 2017, but it probably more prudent to sit back and wait until the end of August to see if suspended President Dilma surprises everyone with a comeback. Or perhaps more importantly, if Interim President Temer can gain legitimacy. In the meantime, the Olympic Games officially start on Aug. 5 and most Brazilians are, for the moment, bored or upset.  Even the mayor of Rio seems to have lost his enthusiasm.  Newspapers and thrill seekers are searching every nook and cranny to find the presence of a terrorist with a group of 12 suspects arrested over the weekend.  In the meantime, in Sao Paulo, kidnappers have taken F1 magnate, Bernie Ecclestone’s mother-in-law for ransom.

While it is not likely, a terrorist act is always a possibility in today’s world where just one distraught individual has the capability of creating major havoc.  More likely, are the predictable missteps such as the one that resulted in the death of Juma, the Amazonian jaguar in the picture.


Looking beyond the Games and to the end of the year, here are the majors:

The Legacy:  Rio’s planning for the World Cup and the Olympic Games started well over 10 years ago.  The focus has been on monuments and transportation.  Urban renewal of Praca Maua and adjacent areas shows promise.  This old downtown area had been decadent for years and the new museums, parks, bike ways, light rail and some upscaling of business are positive on the cost benefit side.  Barra da Tijuca and the Olympic Village are more questionable.  The construction in western and most desired part of Rio will benefit the city’s upper and middle classes.  It is true that private developers made tradeoffs to with the mayor to build the village but with the purpose of turning immense profits once the Games are finished.  The public sector financed almost all of the infra-structure (subway, roads, water, sewage and security) for the wealthy while the slums are again left out except for questionable investments such as trams in the place of water and sewage.  Some community mobilization and awareness took place around the removal of Vila Autodromo but it remains to be seen if there will be life after the Olympics for social movements.  The spot light will be gone and it will be back to the day-to-day struggle.

On a larger scale, Brazil, in spite of the crisis, is among the few countries that have successfully hosted both the World Cup and the Olympics and the only nation in the Southern Hemisphere to have done so.  The problems inherent in Third World Brazil are not going away.  Inequality, violence, poverty, poor government management and a mentality that the state should solve everything are not changing.  Still Brazilians will remember the Olympics favorably and will say: “We did it.”

The Economy:  The international press is starting to promote Brazil’s bottoming out.  After at least 3 years of clear economic decline, the cyclical nature of the market is bound to kick in.  However, Brazil is only partially a market economy.  While Temer has recruited his so-called “Dream Team” led by Finance Minister Henrique Meirelles, it remains to be seen if the current stock market rally will hold up if the government fails to rein in spending and the ongoing deficits send everything spiraling down again.  Meirelles has talked a good game for international finance and the market but the government has not achieved any of the promised fiscal reforms.  The question remains if the honeymoon will last beyond September.

The Polity:  Dilma’s ousting now appears a foregone conclusion.  At the same time, venal Eduardo Cunha has been ousted from the presidency of the lower chamber.  Renan Calheiros, the Senate President, continues in spite of also being notoriously corrupt.  Municipal elections will be held in October and it unlikely that there will be much renewal.  Brazilians, at this point, are too cynical and tired.  People don’t believe politicians but still vote for the same old figureheads that seem to offer a personal touch, an immediate promise of a job, running water, or a clean-up of crime and corruption and maybe a place in heaven as the so-called “evangelicals” often do.  The rigid and expensive system favors the incumbents and those who gain a hold through having a large war chest and some form of notoriety.  Reform depends on changing the Constitution and the politicians know that the status quo is probably more beneficial than tinkering.  So nothing happens.

Civil Society: Before the World Cup, the PT government was caught off guard by major street mobilizations and protests.  These continue in a diminished form.  With the economy sinking, it is more important to make sure you keep your job or spend your time hustling than it is to go out to protest or promote.  It may be the case that there will be a backlash against the government, if some sort of carnage occurs during or after the games, but barring this, people are tired and skeptical.  At the same time, Brazil’s still growing access to the internet favors democratic participation and diversity of opinion.  The problem is that just as off the net, Brazil’s low levels of education and paucity of critical thinking lead to the propagation of populist solutions that have immediate attraction but often long term negative implications.  Fighting corruption continues to be a major theme but few make the connection between the need to build institutions, strengthen basic education and expanding and deepening popular participation through the formal political process.

The Olympic torch may be the light at the end of the tunnel.  However, the torch will be moving on and Brazil may still have to face some years in the dark.

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Rio Olympics

As we get close to the opening of the Games, I am re-posting an edited version of a blog from February.  Overall, things have slipped a bit since then with Dilma’s suspension and Interim President Temer trying to gain traction.  Eduardo Paes, Rio’s mayor and the original “pretty boy” of Olympic success is now somewhat chastened and is speaking of Brazil missing an opportunity.  Violence has spiked, numerous athletes (mainly golfers) have withdrawn and the promised clean up of the Guanabara Bay and Rodrigo Freitas lake have failed to materialized.  Paes and other leaders, like most politicians, cannot find their own “mea culpa”.  Still barring a major terrorist attack by Daesh or its ilk, I am virtually certain the games will be exciting, challenging for athletes and spectators and overall a success for their duration.  The problems for Brazil will come later but that is another topic.

Here is the edited post and I hope some readers find it useful.


Brazil is in the midst of a major political crisis accompanied by an economic depression. By August, when the games start, Brazil will be in its third year of negative growth and rising inflation.   It is also well known that street crime in Brazil is as bad and sometimes worse than New Orleans, Chicago or Baltimore. If you are fearful of nighttime escapades in those downtowns, you might want to think about how you are going calm your nerves in Rio’s urban jungle. Tourists can be prey, especially if you have a tendency to make yourself a mark. My recommendation is to leave the expensive watches, gold jewelry and other portable and more ostentatious valuables at home and go out with a group. Everyone in Brazil has a cell phone or two, so that is not a big deal but if you are careless your iPhone 6 might disappear and “find my phone” will not provide a remedy.

Adding injury to insult, Brazil is also the epicenter of the Zika crisis. This latest epidemic comes as the country finishes preparations for the games. Some sensationalists have proposed cancelling the games but, on the other hand, Carnaval has just ended and millions of revelers in shorts, bustiers, bikinis and flip-flops hit the streets in defiance of the aedes aegyptius mosquito. While real, Zika appears to be another of the many health worries in a shrinking and interconnected world. In the past, we have feared Ebola, chicken-driven influenza, Chikungunya, SARS, and a host of others. Zika creates panic because of its possible association with the occurrence of microcephalia. While the true impacts of the disease are still unfolding, it seems that Zika may be, in reality, less harmful in scale than say dengue fever or malaria, which follow the same transmission path.

So assuming you have tickets or can obtain them and you have gotten past the health, security, economic/social/political tension, you still need to find a place to stay. If you are with an organized tour group, most likely hotel reservations have been secured. If not, you may have trouble. Rio has lots of hotels but accommodations meeting international standards are lacking. All of the hotel rooms will be full and the Rio Olympic Committee has struck a deal with AirBnB in order to make up for the shortage. The issue with AirBnB will of course be location and if the accommodations actually meet the expectations of the traveler. Rio is a big city spread out along hundreds of kilometers of coast and mountains. So if you don’t know the neighborhoods and routes, you could wind up in the wrong place. Last year, drug dealers and bandits fatally shot a couple that accidentally drove into the gang lord’s turf attempting to follow instructions with a GPS application. Aside from possible danger, roads are normally clogged and traffic flows slowly.   Just as an example, from the Windsor Hotel in Copacabana/Leme to the Olympic Village, it is only about 12 miles. This trip could take as little as 25 minutes or as long as a couple of hours.   Also what are you going to do if inhabitants of Rocinha, a favela community that sits abreast of the route, decide to shut down the roadway as has happened in the past?

Getting around physically and maneuvering the cultural challenges of a big Latin American city are important considerations.  Buy hey, it is the Olympics and Rio.  Once you are there, aside from the sports events, Rio has lots and lots of attractions. The physical beauty is spectacular and trips to Corcovado and Pao de Acucar are almost minimum requirements for photo ops. Pedra da Gavea, Tijuca Forest and the Botanical Gardens are also high on the list of places to see and this, of course, goes without mentioning the beaches. But again remember to plan.  During the Games, waiting for the trams that take you up to Corcovado or Sugar Loaf may involve lines of more than 3 to 4 hours. No fun!

Eating, drinking, and hanging out are basic parts of Carioca (residents of Rio) life. But as a gringo, how do you know where to go? Obviously, there are tour guides, Yelp, books, magazines and more information than you can process on the Internet. Still, it is best to find and hang out with locals who can make recommendations and engage in these activities with you. So with 6 months to go, it is time to build your network through social media and see whom you might find compatible.

For people in the know and people with reliable contacts and set ups, the Games are going to be very special and an amazing amount of fun. But if you arrive and you are not well prepared, then the logistics and the confusion of Rio may sap away all your energy and you could come away feeling bad. Plan, be flexible and enjoy the Brazilians, the fun and the Games.

Boa Sorte or Good Luck!!!

Brazil’s Ongoing Quandary



Argentina lost the Copa America on kicks from the mark when Lionel Messi missed his shot. But at that point, Brazil was already long gone.  Even futbol is bad.  The Olympic Games are at the doorstep and the state of Rio declared an economic calamity and does not have funds to pay for hospitals or public security.

Brazil is falling further into the hole just as Rio’s new signature bike path collapsed into the ocean killing two. Mosquitoes and Zika are around and athletes are finding multiple reasons to withdraw from the Games slated for August.   The Rio state and city governments are actually pumping failure and collapse at the Olympics if the national government does not bail them out.

The legal (not political) evidence presented against Dilma Rousseff weakens by the day and, while unlikely, it is possible that Senate will vote to restore her mandate.   Although the economic team put together by the interim President is respected, it so far has shown little progress because the major structural reforms need Congressional approval and/or constitutional reform.  As a result the economy continues to stagnate, jobs are not being created, investments are not made and the foreign community is pretty much paralyzed as they wait to see where Brazil is headed.  Fitch, Moody and S&P all have knocked Brazil further into junk territory and as a result external financing is more difficult and more expensive.  Interim President Temer’s popularity ratings are no better than Dilma’s an as Fellini entitled his film: “E la nave va”


All in all, pretty much everything is in the negative column and things don’t seem to be getting any better.  Making things appear even worse is the fact that both the left and the right continue to throw mud in all directions so the press reports make things seem more dire than they actually are.


But while the overall situation is negative and pessimistic, there are a few saving graces.  The Olympics is an event made for television and for athletes and the Games, strictu sensu, will come off in a successful fashion.  Athletes prepare for years and the drama of competing and winning is always compelling.  NBC has not invested billions for nothing.  Moreover, Rio has done hundreds of big events and, most recently the World Cup, without major catastrophes.  So barring, God forbid, a terrorist act, everything will be fine.  Brazil’s primary sector continues to be productive and successfully exporting.  Agricultural commodities such as coffee, orange juice, meat and cellulose pulp are all up this year on the international market.  With the reduction of imports due to the weakened Real, Brazil has had several months of record surpluses this year.    The foreign reserves are holding up at over 300 billion along with FDI (foreign direct investment) which the Central Bank expects to top 50 billion this year in spite of the “catastophre”.


Indeed, Brazil needs much in the way of corrective action.  But, essentially, there are two fundamental tasks to start: the first is to define the role and the extent of state participation in the economy.  Except for recalcitrant and ideological sectors of the left, the general consensus is that the state is not an effective or productive investor.  The market drive is to privatization but whole entrenched areas resist for both material and ideological reasons. Historically, the state has always conceded social benefits beyond its capacity to deliver.  The 1988 Constitution continued the tradition and today needs deep reform as it defends the idea of “acquired rights” but ignores that the economic system must be able to produce wealth to sustain these “conquests”. Brazil’s ranking in terms of bureaucracy and ease of doing business has worsened instead of improving.  So the challenge is to reform the system but it can hardly be done from within.  Civil society needs to mobilize outside of traditional state controlled channels to achieve this reform.


Second, the way Brazil’s politicians are elected needs drastic remodeling.  Election to Congress needs to be changed to a district system of voting with stricter rules for party formation.  Brazil’s 32 parties in Congress only promote individual opportunism and open the gates to corruption.  These parties are currently nothing more than loose aggregates for gaining state benefits and directing state investment to special interests. The PT has lost its ideological edge and purity.  The PSDB is compromised and though the Rede seemed to offer a chance for reform, Marina Silva does not appear to have the charisma or leadership skills.  The remaining parties fail to offer anything better.


Moving toward liberal democracy should not be that difficult, but Brazil lacks a tradition, leadership, education and perhaps a sufficient density of will to change.  Brazil’s elites have never valued popular education and they only pay lip service to the “will of the people.”  So the real possibilities of change are modest.   Elite accommodation prevails as long as civil society accepts the crumbs and cannot articulate a coherent vision to move forward.  The socially sanctioned hunt for the corrupt may continue and lead to the arrest of hundreds but without better institutions and politics, very little will change in the near future.  If Brazil cannot find its way out of the current state of cynicism, perplexity and despair, the country will face further irrelevance and marginalization.  That would be bad for Brazilians and the world.