Speaker 1: High. I'm Carol Masser and I'm Jason Kelly in Bloomberg
Speaker 1: Business Week. This week, the magazine continues to tackle the
Speaker 1: global pandemic and Carol as Asia, Western Europe, and parts
Speaker 1: of the US emerge from what will hopefully be the
Speaker 1: worst of the pandemic. The virus in Brazil isn't slowing down.
Speaker 1: You're so right, Jason, Brazil Maybe the Pandemics Perfect Storm.
Speaker 1: Total fatalities now exceed fifty one thousand. That's the second
Speaker 1: highest toll after the United States. It's second in overall
Speaker 1: cases as well, with more than one million confirmed infections.
Speaker 1: And to make matters worse, it's almost winter in the
Speaker 1: Southern Hemisphere, potentially bringing even faster uptick in infections and
Speaker 1: providing a glimpse of how the virus might fare later
Speaker 1: in the year elsewhere in the world. And Jason, when
Speaker 1: COVID nineteen finally receives While Brazil may very well have
Speaker 1: been hit harder than any other country, worst case scenario,
Speaker 1: cash strapped, dysfunctional, and led by a chloro queen obsessed
Speaker 1: populist Brazil Maybe the Pandemics Perfect Storm? By Julia Lte,
Speaker 1: Simone Iglesias, Martha Beck and Ethan Brauner. On a recent
Speaker 1: afternoon in Sauluis, the capital of Marenno State in northeastern Brazil,
Speaker 1: hosan Alima Castro sat on a flimsy plastic chair in
Speaker 1: front of her house as stray dogs sniffed potholes in
Speaker 1: the narrow street and a few neighborhood kids launched kites.
Speaker 1: The bar across the way, where a few months ago
Speaker 1: an acquaintance of Castro's had been shot, was closed because
Speaker 1: of the pandemic. Her job at a convenience store had
Speaker 1: disappeared too, so Castro, whose forty three and shares her
Speaker 1: modest home with her father, two brothers, and two of
Speaker 1: her kids, had nowhere else to be. Although the coronavirus
Speaker 1: is widespread across Brazil's northeast, she wasn't wearing a mask,
Speaker 1: nor was any one else in her crowded neighborhood, where
Speaker 1: basic services have been so neglected that many residents have
Speaker 1: no access to clean water. Castro's brother, Moises, a garbage collector,
Speaker 1: was the first in her family to get Then her
Speaker 1: other brother and Luciano did too, followed by their father, Francisco,
Speaker 1: who has diabetes. He suffered badly struggling to breathe and
Speaker 1: running a soaring fever. But no one in Castro's household
Speaker 1: went to the hospital, a place that some in su
Speaker 1: Luis believe makes patients sicker or worse. That would be
Speaker 1: a death sentence, she said. As Asia, Western Europe, and
Speaker 1: parts of the US emerged from what will hopefully be
Speaker 1: the worst of the pandemic, the virus in Brazil isn't
Speaker 1: slowing down. Between late May and mid June, the country
Speaker 1: galloped past Spain, Italy and the UK in total fatalities,
Speaker 1: which now exceed fifty one, the second highest toll after
Speaker 1: that of the US. It's second in overall cases too,
Speaker 1: with more than one million confirmed infections, with local officials
Speaker 1: now lifting quarantines despite continued growth in cases, It's conceivable
Speaker 1: that when COVID nineteen finally recedes, Brazil will have been
Speaker 1: hit harder than any other tree. The reasons Brazil has
Speaker 1: made such a perfect host for the coronavirus are diverse
Speaker 1: and not yet fully understood. Like the US, it never
Speaker 1: issued nationwide rules for social distancing, even if the government
Speaker 1: had wanted to, the rules would have been impossible to
Speaker 1: enforce in a country of two million where some states
Speaker 1: are larger in land area than France. That left local
Speaker 1: officials to do as they saw fit, issuing orders that
Speaker 1: varied widely and sometimes contradicted one another. Poverty is certainly
Speaker 1: also part of the picture, and the densely packed favelas
Speaker 1: threaded through Brazilian cities. Social distancing isn't feasible, and not
Speaker 1: working means not eating, especially with the cash strapped state
Speaker 1: unable to provide enough support. So is the dysfunction of
Speaker 1: the government. Overcrowding in public hospitals is a long standing problem,
Speaker 1: as is graft among the people who are supposed to
Speaker 1: build new ones. And then there's President Gayre Bosonaro, a
Speaker 1: right wing populist who came to power with the teen
Speaker 1: campaign that echoed Donald Trump's pledges to drain the swamp.
Speaker 1: Since the coronavirus appeared in Brazil in late February, Bolsonaro
Speaker 1: has frequently obstructed efforts to contain it, demanding local officials
Speaker 1: abandoned severe tactics like shuttering businesses, firing a health minister
Speaker 1: who pushed for a more aggressive response, and at one
Speaker 1: point limiting the disclosure of epidemiological data, saying that without
Speaker 1: the numbers there would no longer be a story on
Speaker 1: the evening News. The Supreme Court ordered the government to
Speaker 1: resume releasing the figures. While in the early weeks of
Speaker 1: the outbreak, Bolsonaro's intransigence resembled what was happening in the
Speaker 1: White House, even Trump grudgingly conceded the severity of the
Speaker 1: situation once the body count started to soar. Bolsonaro, meanwhile,
Speaker 1: has doubled down, insisting that the antimalarial drug chloroquine is
Speaker 1: an effective treatment and claiming the number of cases is
Speaker 1: being exaggerated. Bolsonaro's office did not respond to requests for
Speaker 1: comment on this story. In a written risk bonds to questions,
Speaker 1: Brazil's health ministry said it's acted aggressively to test patients
Speaker 1: and add intensive care beds, protective gear, and ventilators across
Speaker 1: the country, spending more than eleven billion rays or two
Speaker 1: point one billion dollars so far. Most local and state
Speaker 1: leaders have ignored Bolsonnaro's push to end lockdowns. Brazil has
Speaker 1: a federal system and governors have wide powers over public health,
Speaker 1: but his continued dismissal of the pandemic seriousness has undermined
Speaker 1: distancing measures, while mismanagement and corruption at all levels of
Speaker 1: government have prevented help from getting to where it's needed.
Speaker 1: The consequences are severe. In Parah, a vast and underdeveloped
Speaker 1: state that neighbors Marino, COVID nineteen has been killing about
Speaker 1: fifty out of every one hundred thousand citizens, more than
Speaker 1: double the national average. I saw people getting to the
Speaker 1: hospital with family members already dead in the passenger seat.
Speaker 1: People given CPR on the sidewalks because the hospitals are full,
Speaker 1: says Alberto Beltrame, the state health secretary. One day in April,
Speaker 1: he visited the morgue in the capital. There were twenty
Speaker 1: bodies scattered everywhere. It's something you'd see in a war.
Speaker 1: As the virus continues to spread, Brazil may be turning
Speaker 1: into the true worst case scenario, a laboratory for what
Speaker 1: happens when a deadly and little understood pathogen spreads without
Speaker 1: much restriction. Unlike past plagues, the coronavirus has spread in
Speaker 1: substantial part from the rich to the poor, with prosperous
Speaker 1: and well connected global cities Milan, London, New York among
Speaker 1: the earliest hotspots outside China. The story in Brazil was similar.
Speaker 1: The first clusters emerged in Salt Paulo, Brazil's financial capital,
Speaker 1: in early March, as wealthy residents returned from overseas trips.
Speaker 1: One of the first so called super spreader events was
Speaker 1: the wedding of a social media star, held at a
Speaker 1: beach side resort in Bahia State in March seven. Twenty
Speaker 1: seven year old sal Polo lawyer named Pedro Pacifico, an
Speaker 1: Instagram personality himself with hundreds of thousands of followers for
Speaker 1: a feed devoted mainly to literary recommendations, was one of
Speaker 1: the guests. He felt lousy when he got home, but
Speaker 1: figured he had an exceptionally bad hangover. When he found
Speaker 1: out that another guest had been diagnosed with COVID nineteen,
Speaker 1: Pacifico went for a test. He had it too, as
Speaker 1: he gradually learned, did about fifteen of his friends. But
Speaker 1: at that point, Pacifico says over a video call, the
Speaker 1: disease seemed more like a nuisance than a threat. He
Speaker 1: isolated at home, suggesting quarantine, reading to his followers, and
Speaker 1: trading virus stories with other well off Palistano's It was
Speaker 1: the novelty of it, Pacifico says. No one saw it
Speaker 1: coming or thought it would be so bad. On the
Speaker 1: weekend of the Bahia wedding, Bolsonaro was in Florida visiting
Speaker 1: Trump at Mara Lago in Palm Beach. The two leaders
Speaker 1: entourages took no real precautions, shaking hands and hugging as usual.
Speaker 1: The first person to test positive after returning home was
Speaker 1: Fabio wine Garden, Bilsonnaro's communications chief. As everyone who deals
Speaker 1: with him knows, Winegarden is what Jerry Seinfeld would call
Speaker 1: a close talker with a habit of leaning in when
Speaker 1: he speaks. Five of the eight people who sat at
Speaker 1: his table at amar A Lago dinner tested positive. In all,
Speaker 1: thirty people on the trip got sick. One was Alexander Fernandez,
Speaker 1: an athletic forty four year old who's developing a grain
Speaker 1: export terminal in southern Brazil. After four days isolating in
Speaker 1: his apartment, Fernandez was so weak he couldn't walk to
Speaker 1: the bathroom. He went to the hospital, where he was
Speaker 1: placed in intensive care. I couldn't pull the covers up
Speaker 1: in bed, he says. At one point doctors thought he
Speaker 1: wouldn't make it. The nurse had to help me hold
Speaker 1: the phone so I could face time with my daughters
Speaker 1: to say goodbye. Even as the virus spread through his
Speaker 1: inner circle, the president was sending contradictory signals. On March twelfth,
Speaker 1: he asked supporters to call off planned rallies to support
Speaker 1: his government, but then turned up at one in Brasilia anyway,
Speaker 1: unmasked and fist bumping with attendees. Later that month, he
Speaker 1: urged state governors to curb their quarantines and claimed that
Speaker 1: even though he sixty five, as a former athlete, he
Speaker 1: had nothing to fear from COVID nineteen. The virus is here,
Speaker 1: he said, after walking around visiting shops one Sunday. We're
Speaker 1: going to have to face it, but face it like
Speaker 1: a fucking man. Still, in those early weeks, Brazilians took
Speaker 1: heart in the actions of the Health Minister, a fifty
Speaker 1: five year old doctor named Louise Henrique Mendetta. He spoke
Speaker 1: calmly to the press almost daily, presenting the latest data
Speaker 1: and pushing lawmakers to buy ventilators and face masks. Mandetta
Speaker 1: acknowledged that the virus was a severe threat that could
Speaker 1: be contained only through distancing measures and intensive preparation. He
Speaker 1: also said that counting on unproven treatments such as chloroquine
Speaker 1: being heavily promoted at the time by bolson Arrow and
Speaker 1: his supporters, mimicking a similar campaign by Trump was counterproductive
Speaker 1: or even dangerous. During a visit to the side of
Speaker 1: a temporary hospital near Brazilia in mid April, Mandetta stood
Speaker 1: to one side as the president walked into a dense
Speaker 1: crowd of fans, some of them climbing over each other
Speaker 1: to get a better look. One woman asked him to
Speaker 1: autograph her soccer jersey. After Bolsonaro obliged, she leaned in
Speaker 1: and kissed his hand. In a TV interview the next day,
Speaker 1: Mandetta said it was clearly a mistake that people were
Speaker 1: going into bakeries and markets and putting themselves in crowded situations.
Speaker 1: He didn't name Bolsonaro, but he didn't have to. A
Speaker 1: few days later, he was fired. Mandetta's replacement, an oncologist
Speaker 1: named Nelson Tyke, quit after less than a month. He
Speaker 1: was replaced by a general. Bolsonaro is a former army
Speaker 1: officer and has named soldiers to several top posts with
Speaker 1: no medical experience. With the national caseload nearing three hundred thousand,
Speaker 1: the industry issued guidelines allowing doctors in the public Health
Speaker 1: system to prescribe chloroquine and its sister drug, hydroxy chloroquine
Speaker 1: for even mild COVID nineteen cases. In its written response,
Speaker 1: the ministry said that it's following bioethical principles by making
Speaker 1: them available and that Brazilians treated with the drugs have
Speaker 1: had good results. Towards the end of May, Bolsonaro shared
Speaker 1: some good news the US would be sending two million doses.
Speaker 1: The eve of Brazil's Valentine's Day in mid June is
Speaker 1: one of the busier nights of the year. At the
Speaker 1: Villa Roma pizzeria and Salt Bolo's upscale Jardine's district. In
Speaker 1: twenty nineteen, tables were booked solid a month in advance,
Speaker 1: but this year, owner Gabriel Pinero was standing alone, wearing
Speaker 1: a black face mask behind the wooden bar, greeting deliverymen
Speaker 1: who came in one at a time and ventured no
Speaker 1: more than ten steps into the restaurant. He'd put out
Speaker 1: a bottle of sanitizer next to a little sign instructing
Speaker 1: them to clean their bags before putting orders in side.
Speaker 1: The two story window at the back, normally lit to
Speaker 1: reveal the lush plant life beyond was dark, while the
Speaker 1: second floor was filled with stacks of pizza boxes and
Speaker 1: new simplified menus that are easier to clean than the
Speaker 1: thick booklets they replaced. Running a restaurant at this time
Speaker 1: of year is usually such a good feeling, Pinero said,
Speaker 1: Now it's depressing. Villa Roma has been closed to dine
Speaker 1: in customers since mid March, when Salpolo Governor Joao Doria
Speaker 1: defied Bolsonnaro to impose what became a more than two
Speaker 1: month lockdown. Though it was only loosely enforced. Delivery business
Speaker 1: announced by computer beaps that prompted Pinero and his manager
Speaker 1: Carolina to shout orders into the kitchen, has helped the
Speaker 1: restaurants stay afloat, if barely. Sales have plunged to about
Speaker 1: twenty at the pre shutdown level, and of thirty employees,
Speaker 1: only ten are still at work. Desperate to cut costs,
Speaker 1: Piniero renegotiated his rent, asked suppliers for more time to
Speaker 1: settle bills, and took on tasks like buying goods and
Speaker 1: handling payroll himself. We're about breaking even, but it's very tough,
Speaker 1: he said. More and more restaurants are closing and the
Speaker 1: state is not doing anything. Pinero is relatively lucky. Nationally,
Speaker 1: restaurants and bars had fired more than one point two
Speaker 1: million workers by early June, according to Industry Association A Brazil.
Speaker 1: The organization's president in San Paulo, Percival Maracato, says that
Speaker 1: while about eighty percent of owners tried to get financing
Speaker 1: to tie them over, the vast majority were unsuccessful. Banks
Speaker 1: are supposed to be providing plenty of cash. Vulsonaro's government
Speaker 1: recently slashed reserve requirements to give them more room to lend,
Speaker 1: but bureaucracy, demands for collateral and high rates have prevented
Speaker 1: companies from getting it. Many restaurateurs have simply run out
Speaker 1: of money. Unlike in the US and Europe, the Brazilian
Speaker 1: government hasn't been able to provide much direct help to
Speaker 1: companies or individuals. Public finances were in severe trouble even
Speaker 1: before the pandemic, the result of decades of overspending by
Speaker 1: politicians of all ideological stripes and the lingering effects of
Speaker 1: a severe recession in twenty The number of public employees
Speaker 1: has more than doubled in the past three decades. Summer
Speaker 1: paid almost twice as much as equivalent staff in the
Speaker 1: private sector and receive outsize retirement packages. Though Bolsonaro succeeded
Speaker 1: in passing a controversial pension reform last year, that kind
Speaker 1: of spending doesn't leave much for essential needs, such as healthcare.
Speaker 1: The centerpiece of Bolsonaro's economic response is a six hundred
Speaker 1: real monthly stipend for Brazil's huge number of informal workers,
Speaker 1: accounting for the bulk of the roughly four hundred billion
Speaker 1: really spent on emergency support so far. The government has
Speaker 1: also used an insurance fund to pay furload employees and
Speaker 1: provided emergency loans to states. The stipend, recently extended to
Speaker 1: run for five months, drew praise, but at a little
Speaker 1: more than half the minimum way age, it's not enough
Speaker 1: for many citizens to get by on, especially in big cities.
Speaker 1: Disbursements have also been delayed by problems including crashing computer
Speaker 1: systems and a shortage of bills for cash payouts. Bulsonaro
Speaker 1: has argued in speeches and on social media that with
Speaker 1: millions of Brazilians living hand to mouth, a prolonged recession
Speaker 1: will be deadlier than the virus, and the only solution
Speaker 1: is to swiftly restart the economy. That's not really in
Speaker 1: his power, but his pronouncements still have a significant effect
Speaker 1: on people's willingness to endure and comply with ongoing restrictions.
Speaker 1: You have about thirty percent of the people who still
Speaker 1: support him and are influenced by his decisions, says Doria,
Speaker 1: The Salpollo governor, once allies, he and Bulsonaro are now
Speaker 1: at odds, in part because of the president's criticism of
Speaker 1: his decision to lock down the state, which has more
Speaker 1: than forty five million people. If he doesn't wear a mask,
Speaker 1: why should they, Doria asks. His insistence on opening the
Speaker 1: economy is another layer of pressure. How Paulo began lifting
Speaker 1: its restrictions on June one, gradually allowing retailers and other
Speaker 1: businesses to reopen, though restaurants and parks are still off limits.
Speaker 1: Health experts are concerned that even in the first place
Speaker 1: in Brazil to experience a COVID nineteen outbreak, it's too soon.
Speaker 1: The number of people in intensive care has declined, but
Speaker 1: cases and deaths keep growing, particularly in rural areas that
Speaker 1: were spared early on. Reopening now is a gross mistake,
Speaker 1: says Pedro Halal the dean of the Federal University of Pelotas,
Speaker 1: who coordinated a large scale study of how many Brazilians
Speaker 1: have been exposed to the virus. It estimated that half
Speaker 1: a million people in Rio de Janeiro have antibodies, ten
Speaker 1: times the number of official cases, and that rates in
Speaker 1: some northeastern cities are much higher. It's like we're saying,
Speaker 1: let's go out and see just how bad the virus
Speaker 1: can get. In the working class district of Nova u
Speaker 1: s who forty minutes by car from Rio's glittering beaches,
Speaker 1: there is a construction site just down the road from
Speaker 1: an evangelical church, between a soccer academy and an aviation school.
Speaker 1: The building was supposed to be a temporary hospital for
Speaker 1: COVID nineteen patients, and the state government had announced its
Speaker 1: opening in May, but a reporter for Bloomberg Business Week
Speaker 1: who visited in June found it far from finished, with
Speaker 1: no obvious signs of ongoing construction, let alone patients. That
Speaker 1: hadn't stopped someone from papering a concrete wall at the
Speaker 1: edge of the site with posters touting the government's pandemic
Speaker 1: response efforts. It wasn't ready when we needed it most,
Speaker 1: said Aria Almeida, a middle aged woman who was standing
Speaker 1: in the shade nearby. The facilities seemed to have made
Speaker 1: little impression on the locals. A teenage boy who was
Speaker 1: selling oranges on a street corner had never heard of it.
Speaker 1: Waiting in line at an auto parts store, a man
Speaker 1: named Fabio Corvalio took it as a given that funds
Speaker 1: for the hospital had been misappropriated. The money has gone
Speaker 1: all over the place, he said. The story in Novaya
Speaker 1: Su has played out in cities across the country, with
Speaker 1: promised temporary hospitals sitting unfinished or unequipped months into the pandemic.
Speaker 1: The challenges and getting them up and running are a
Speaker 1: reminder that of all Brazil's handicaps and fighting COVID nineteen,
Speaker 1: corruption and the state's related failures in delivering essential projects
Speaker 1: might be the most disheartening. Brazil has a rich history
Speaker 1: of graft, ranging from palm greasing to outright theft. Luis
Speaker 1: Nacio Lula da Silva, who served as president from two
Speaker 1: thousand three to was jailed on charges stemming from Operation
Speaker 1: car Wash, a sprawling investigation into bribery involving the state
Speaker 1: oil company Petrobras Bolsonnaro, who pledged to clean up scandals
Speaker 1: associated with Lula and his successor, Dilmarussef, has been embroiled
Speaker 1: in allegations that he tried to prevent federal police from
Speaker 1: investigating his family. Both the current and former president deny wrongdoing.
Speaker 1: Not surprisingly, Brazil's sudden need for more masks, gowns, ventilators,
Speaker 1: and hospitals, already complicated by global rush for the same equipment,
Speaker 1: wasn't wasted by bureaucrats and politicians looking to make some
Speaker 1: extra cash. Police in several states are investigating the suspected
Speaker 1: misuse of funds, over payments for supplies that never arrived,
Speaker 1: and contract padding for politically connected business people. Health officials
Speaker 1: in the states of Para and Rio de Janeiro have
Speaker 1: been fired, while lawmakers in the Ladder are trying to
Speaker 1: oust Governor Wilson Whitzell over suspicions he used hospital contracts
Speaker 1: to line his pockets. Witzel says the allegations are politically
Speaker 1: motivated and he did nothing wrong. Brazil has nowhere near
Speaker 1: the medical resources to handle a second wave of cases,
Speaker 1: let alone the first, which is still expanding, spreading along
Speaker 1: bus routes and waterways deep into the interior. To make
Speaker 1: matters worse, July, August, and September are winter months in
Speaker 1: the southern Hemisphere, potentially bringing an even faster uptick in infections.
Speaker 1: Researchers at the Pontifical Catholic University Rio de Janeiro estimate
Speaker 1: cases could reach one point four million before the end
Speaker 1: of June, bringing the death toll to almost sixty by
Speaker 1: mid July, says the University of Washington's Institute for Health
Speaker 1: Metrics and Evaluation. Brazil will overtake the US in per
Speaker 1: capita fatalities. We have many months still to go, says
Speaker 1: Julio Croda, an epidemiologist who previously worked in infectious disease
Speaker 1: surveillance at the Brazilian Health Ministry. What's sad to see
Speaker 1: is that the curve is still steepening. With Peter Millard
Speaker 1: and that's the story of how the pandemics worst case
Speaker 1: scenario is unfolding in Brazil, and check out that story
Speaker 1: and so much more in this week's magazine. It's on newsstands,
Speaker 1: it's online, and of course on the Bloomberg Terminal, including
Speaker 1: my partner's cover story on Lebron James Business off the Court.
Speaker 1: I'm Carol Masser and I'm Jason Kelly. Joined us every
Speaker 1: day on the radio two pm to six pm Wall
Speaker 1: Street Time. Also check out our podcast for any of
Speaker 1: the interviews you missed. This is Bloomberg.