1 00:00:00,280 --> 00:00:02,599 Speaker 1: So down. Before we get started today, we just wanted 2 00:00:02,600 --> 00:00:05,320 Speaker 1: to take a moment to let everyone know about something 3 00:00:05,440 --> 00:00:07,400 Speaker 1: new from Bloomberg. Do you want to hear what it is? 4 00:00:07,680 --> 00:00:11,520 Speaker 1: Go for it? Well. Starting now, you can actually use 5 00:00:11,560 --> 00:00:15,320 Speaker 1: our Io s app or Bloomberg's Google Chrome extension to 6 00:00:15,480 --> 00:00:20,640 Speaker 1: scan any news story on any website, instantly revealing relevant 7 00:00:20,640 --> 00:00:24,280 Speaker 1: news and market data from Bloomberg and other sources related 8 00:00:24,320 --> 00:00:28,160 Speaker 1: to the companies and the people you're reading about. So really, 9 00:00:28,320 --> 00:00:30,680 Speaker 1: no matter where you're reading the news, you can bring 10 00:00:30,720 --> 00:00:33,680 Speaker 1: the power of Bloomberg's news and data with you. It's 11 00:00:33,720 --> 00:00:37,440 Speaker 1: pretty amazing. Download our Io s app or search for 12 00:00:37,440 --> 00:00:40,599 Speaker 1: the Bloomberg extension on the Chrome Store to try it out. 13 00:00:41,240 --> 00:00:48,479 Speaker 1: Learn more at Bloomberg dot com, backslash lens. What the 14 00:00:48,560 --> 00:00:51,720 Speaker 1: heck is going on in Brazil? Didn't they just remove 15 00:00:51,960 --> 00:00:56,600 Speaker 1: one president amid alleged corruption, Then the vice president took over. 16 00:00:56,720 --> 00:01:01,720 Speaker 1: Now he's facing demands he quit. He reportedly okayed hush 17 00:01:01,800 --> 00:01:05,280 Speaker 1: money to a former House speaker, who of course is 18 00:01:05,480 --> 00:01:11,319 Speaker 1: himself in jail for graft impeaching. Dil Marussef, the previous president, 19 00:01:11,720 --> 00:01:14,920 Speaker 1: was supposed to put an end to the country's problems 20 00:01:15,400 --> 00:01:18,639 Speaker 1: at least according to one narrative, and all the while 21 00:01:18,720 --> 00:01:22,800 Speaker 1: the economy, one of the world's largest, continues to contract 22 00:01:23,360 --> 00:01:36,959 Speaker 1: the country's worst recession. Welcome to Bloomberg Benchmark, a show 23 00:01:37,000 --> 00:01:41,120 Speaker 1: about the global economy. I'm Daniel Moss, executive editor for 24 00:01:41,160 --> 00:01:44,640 Speaker 1: Economics in New York, and I'm Scott Landman, an aclothic 25 00:01:44,800 --> 00:01:48,240 Speaker 1: editor with Bloomberg in Washington. You know, Scott, you thought 26 00:01:48,280 --> 00:01:52,400 Speaker 1: politics in the US had become divisive. Yet here we are, 27 00:01:52,560 --> 00:01:55,360 Speaker 1: for the second time in a year, we have to 28 00:01:55,520 --> 00:01:59,880 Speaker 1: sort through this Brazilian thicket of economic and political difficulties. 29 00:02:00,040 --> 00:02:04,280 Speaker 1: Thank god we have Viviani Rodriguez here with us, managing 30 00:02:04,400 --> 00:02:08,520 Speaker 1: editor at Bloomberg for Latin American economic and government news. 31 00:02:09,120 --> 00:02:11,520 Speaker 1: In a way, I'm sorry to say, we're welcoming you 32 00:02:11,560 --> 00:02:14,680 Speaker 1: back a second time to talk about this. Yes, it 33 00:02:14,800 --> 00:02:18,520 Speaker 1: is almost like stranger than fiction than I mean. To 34 00:02:18,560 --> 00:02:21,200 Speaker 1: be honest, I finally difficult to believe that both Brazilians 35 00:02:21,240 --> 00:02:26,240 Speaker 1: expected to be living the situation again just about twelve 36 00:02:26,320 --> 00:02:29,640 Speaker 1: months after you impeach the president in a very traumatic form. 37 00:02:30,000 --> 00:02:34,639 Speaker 1: Now you're probably the best person of Bloomberg to decipher 38 00:02:34,720 --> 00:02:37,720 Speaker 1: all this for us. You were born in sal Polo. 39 00:02:38,560 --> 00:02:45,560 Speaker 1: You reside in New York, You've lived and reported in Brazil, Argentina, Mexico, 40 00:02:45,800 --> 00:02:49,320 Speaker 1: and now you're in change of not just Latin American economics, 41 00:02:49,400 --> 00:02:53,040 Speaker 1: but Latin American government as well. So look, help us 42 00:02:53,040 --> 00:02:56,840 Speaker 1: out here. The narrative went, once we get rid of 43 00:02:56,880 --> 00:03:01,200 Speaker 1: President Dilma Russov, all the country problems will be solved 44 00:03:01,200 --> 00:03:05,639 Speaker 1: and the economy can take off. What. Yes, there's there's 45 00:03:05,639 --> 00:03:09,000 Speaker 1: two waste of seeing this question, right. I mean, there 46 00:03:09,120 --> 00:03:13,400 Speaker 1: was a lot of instability, giving the situation of Russef 47 00:03:13,520 --> 00:03:15,320 Speaker 1: and the Workers Party in the build up for the 48 00:03:15,760 --> 00:03:19,440 Speaker 1: for the impeachment, actually the country was just completely unmanageable 49 00:03:19,480 --> 00:03:23,359 Speaker 1: and governable. So people really wanted to see that situation addressed, 50 00:03:23,680 --> 00:03:26,360 Speaker 1: and a lot of people, especially markets, right said, while 51 00:03:26,400 --> 00:03:29,359 Speaker 1: the moment Roussef goes, the moment the Workers Parties goes 52 00:03:29,400 --> 00:03:33,400 Speaker 1: from Brazil presidency, I mean, everything will be served in 53 00:03:33,480 --> 00:03:37,840 Speaker 1: the markets will take off, Everything would be just fine. Obviously, 54 00:03:38,160 --> 00:03:41,280 Speaker 1: what happened is that the state of poor state of 55 00:03:41,320 --> 00:03:45,120 Speaker 1: Brazil economy was so tremendous, right, that the lift back 56 00:03:45,480 --> 00:03:49,400 Speaker 1: that economy from the depths of a horrific recession proved 57 00:03:49,560 --> 00:03:53,040 Speaker 1: way more difficult than anyone has anticipated, especially in the 58 00:03:53,080 --> 00:03:56,920 Speaker 1: absence of some sort of commodity boom helping in economy 59 00:03:57,280 --> 00:04:01,560 Speaker 1: like Brazil. But also the fact that the Brazilian political 60 00:04:01,640 --> 00:04:06,480 Speaker 1: system it's really flawed, and that that corruption has been 61 00:04:06,600 --> 00:04:09,800 Speaker 1: running rampant in the system, and that is not something 62 00:04:09,840 --> 00:04:13,520 Speaker 1: that you eradicate. So in one go, Viv, can you 63 00:04:13,560 --> 00:04:16,120 Speaker 1: elaborate on that for a minute and put all that 64 00:04:16,160 --> 00:04:19,919 Speaker 1: in some historical context for us? I mean, what is 65 00:04:20,000 --> 00:04:23,839 Speaker 1: it deep in the political and economic structure of Brazil 66 00:04:23,960 --> 00:04:27,400 Speaker 1: that produces these lurches from crisis to crisis and it 67 00:04:27,520 --> 00:04:30,919 Speaker 1: produces so much corruption as you just mentioned, well, I 68 00:04:30,920 --> 00:04:34,040 Speaker 1: mean crisis to crisis, I would say, I mean, obviously 69 00:04:34,080 --> 00:04:37,159 Speaker 1: these are emerging market economies, I mean heavily dependent on 70 00:04:37,200 --> 00:04:40,560 Speaker 1: commodity prices. So if you once you want to lie 71 00:04:40,680 --> 00:04:43,359 Speaker 1: just economically speaking, I mean it's it's Brazil is not 72 00:04:43,440 --> 00:04:47,599 Speaker 1: alone in that dependence of externalist stimulus, right, But I 73 00:04:47,600 --> 00:04:49,599 Speaker 1: believe your question is more related to the fact is 74 00:04:49,600 --> 00:04:53,479 Speaker 1: there's something in Brazil and the political system that put 75 00:04:53,720 --> 00:04:57,560 Speaker 1: us uh in this situation? Again? Yes, I know, right, 76 00:04:57,560 --> 00:05:00,400 Speaker 1: I mean it is still pretty much you and say 77 00:05:00,400 --> 00:05:03,640 Speaker 1: a new democracy, new democracy, giving that the country has 78 00:05:03,680 --> 00:05:08,760 Speaker 1: got back from from the dictatorship in right, some of 79 00:05:08,800 --> 00:05:11,800 Speaker 1: these governments and some of these party systems, is we 80 00:05:11,880 --> 00:05:14,520 Speaker 1: have that thirty five parties in Brazil. It's it's a 81 00:05:14,640 --> 00:05:18,280 Speaker 1: very fractured congress. And there's just a way of doing 82 00:05:18,320 --> 00:05:21,920 Speaker 1: business in the countries that has always meddled and and 83 00:05:21,920 --> 00:05:25,440 Speaker 1: and put you big money, big government and big companies together, 84 00:05:26,040 --> 00:05:28,120 Speaker 1: right and and for a lot of people in Brazil, 85 00:05:28,279 --> 00:05:31,279 Speaker 1: especially people in the political class in congress, just just 86 00:05:31,320 --> 00:05:33,760 Speaker 1: the way business has always been done. Can this be 87 00:05:33,880 --> 00:05:37,840 Speaker 1: traced back to its time as a Portuguese colony? Well, 88 00:05:38,080 --> 00:05:40,200 Speaker 1: perhaps it's a little bit of a stretch. I mean, 89 00:05:40,440 --> 00:05:44,760 Speaker 1: there is a culture obviously of the very big states 90 00:05:44,920 --> 00:05:49,279 Speaker 1: owning very big companies and big enterprise, a system whereas 91 00:05:49,440 --> 00:05:53,040 Speaker 1: where bureaucracy is very large and everywhere you go, you 92 00:05:53,120 --> 00:05:55,839 Speaker 1: turn and you have a government arm there. So it's 93 00:05:56,560 --> 00:05:59,479 Speaker 1: it's probably fair to say that you a system of 94 00:05:59,640 --> 00:06:03,000 Speaker 1: you know, buying someone to issue a stamp for you 95 00:06:03,080 --> 00:06:05,840 Speaker 1: to get something done. I mean it's probably happening for 96 00:06:06,400 --> 00:06:10,359 Speaker 1: the past five years, but in this particular case, I 97 00:06:10,400 --> 00:06:13,880 Speaker 1: mean it's it's just that in the last ten fifting years, 98 00:06:13,880 --> 00:06:17,159 Speaker 1: I mean, it became really institutionalized as you involved, pretty 99 00:06:17,200 --> 00:06:20,120 Speaker 1: much everybody and every branch in the government has been 100 00:06:20,279 --> 00:06:25,840 Speaker 1: very especially financing the big conceptions to the big business. Uh. 101 00:06:26,160 --> 00:06:28,800 Speaker 1: I mean you could see, you know, all these companies 102 00:06:28,800 --> 00:06:32,960 Speaker 1: ocuatives and just paying so many deputies and and and 103 00:06:33,200 --> 00:06:36,160 Speaker 1: ministers and everybody just in order to get things done. Now, 104 00:06:36,200 --> 00:06:39,600 Speaker 1: this is a very fast moving story. Put us inside 105 00:06:39,680 --> 00:06:43,480 Speaker 1: the room. What supposedly happened and you just talked about 106 00:06:43,520 --> 00:06:46,080 Speaker 1: getting a stamp for something, all of a sudden we're 107 00:06:46,120 --> 00:06:49,800 Speaker 1: talking about a meat packing company. Well, what what happened 108 00:06:49,800 --> 00:06:53,039 Speaker 1: in this particular situation. Let's contextualize this. I mean, you 109 00:06:53,080 --> 00:06:55,039 Speaker 1: have to remember that for the last three years in 110 00:06:55,080 --> 00:07:01,440 Speaker 1: Brazil you have an ongoing and massive probe Old car Wash. 111 00:07:01,680 --> 00:07:06,080 Speaker 1: We can discuss the name shortly, but this this basically 112 00:07:06,080 --> 00:07:09,120 Speaker 1: what happened here is that there's a group of prosecutors 113 00:07:09,120 --> 00:07:12,960 Speaker 1: of federal prosecutors started really unearthing and prosecuting and going 114 00:07:13,000 --> 00:07:17,960 Speaker 1: after big cover up schemes and kickback schemes, initially involving 115 00:07:18,200 --> 00:07:22,520 Speaker 1: mostly the state oil company Petrol Brass right, But as 116 00:07:22,560 --> 00:07:24,800 Speaker 1: they started digging forward, I mean he started seeing that 117 00:07:25,040 --> 00:07:28,800 Speaker 1: this type of kickback scheme, you know, it was almost 118 00:07:29,200 --> 00:07:31,520 Speaker 1: major companies in Brazil were involved with all of this 119 00:07:31,680 --> 00:07:34,400 Speaker 1: and with the government, you know, with the bags of 120 00:07:34,400 --> 00:07:38,360 Speaker 1: money following in both directions. Here in this particular case, 121 00:07:38,800 --> 00:07:40,680 Speaker 1: I made it. What happened last week is that you 122 00:07:40,760 --> 00:07:44,640 Speaker 1: had two executives connected to JBS, which is the world's 123 00:07:44,680 --> 00:07:48,640 Speaker 1: largest meat producing company. Um. These men are billionaires and 124 00:07:48,640 --> 00:07:52,560 Speaker 1: and as you can imagine, run a a immensely large 125 00:07:52,680 --> 00:07:57,240 Speaker 1: and powerful company in Brazil, like Brazilian stake precisely, and 126 00:07:57,280 --> 00:08:01,800 Speaker 1: they basically recorded a conversation sation with with the president 127 00:08:02,320 --> 00:08:08,200 Speaker 1: in which allegedly the president gave his endorsement for these 128 00:08:08,240 --> 00:08:12,360 Speaker 1: executives to keep paying hush money to the menu sited 129 00:08:12,400 --> 00:08:15,840 Speaker 1: earlier on the former Speaker of the House at Lord Laconia, 130 00:08:15,840 --> 00:08:19,320 Speaker 1: who is now in jail, to just keep quiet, right uh. 131 00:08:19,360 --> 00:08:23,400 Speaker 1: And they presented this recording to prosecutors in car wash 132 00:08:23,800 --> 00:08:26,640 Speaker 1: as evidence trying to cut some sort of plea bargain 133 00:08:27,200 --> 00:08:31,520 Speaker 1: agreements here to avoid prosecution or you know, or avoid jail. 134 00:08:32,040 --> 00:08:35,240 Speaker 1: Vivn Dan, you know, I'm old enough to remember when 135 00:08:35,640 --> 00:08:40,240 Speaker 1: we covered Brazil as one of the four Brick countries Brazil, Russia, 136 00:08:40,400 --> 00:08:44,160 Speaker 1: India and China that were known as the emerging markets 137 00:08:44,200 --> 00:08:48,040 Speaker 1: where you get pretty solid economic growth driven in part 138 00:08:48,080 --> 00:08:52,559 Speaker 1: by commodity boom. And uh. You know, Brazil's economy had 139 00:08:52,600 --> 00:08:56,040 Speaker 1: been growing at a pretty nice rate some years ago. 140 00:08:56,240 --> 00:08:59,840 Speaker 1: And you know, I wonder how much of this corruption 141 00:09:00,160 --> 00:09:03,120 Speaker 1: or how much of this is coming to light because 142 00:09:03,160 --> 00:09:07,760 Speaker 1: you have an economic situation now where Brazil's economy has 143 00:09:07,760 --> 00:09:11,280 Speaker 1: actually been shrinking and it's just not the leading light 144 00:09:11,480 --> 00:09:14,560 Speaker 1: that it used to be. Well, it's definitely part of 145 00:09:14,600 --> 00:09:17,000 Speaker 1: the problem. The economy started to slow a couple of 146 00:09:17,160 --> 00:09:20,199 Speaker 1: years ago, and this aggravated the problems of doom or 147 00:09:20,280 --> 00:09:24,640 Speaker 1: receive for sure. I mean she had to handle unemployment 148 00:09:24,920 --> 00:09:28,000 Speaker 1: and death sits and so on and so forth. But 149 00:09:28,360 --> 00:09:32,600 Speaker 1: there's no doubt also that the crisis itself aggravated the problem. Right, 150 00:09:32,600 --> 00:09:34,040 Speaker 1: So now we're in a situation a little bit the 151 00:09:34,120 --> 00:09:36,440 Speaker 1: chicken and the egg, right. I mean, the tragedy in 152 00:09:36,440 --> 00:09:38,960 Speaker 1: all of this is that we were beginning to see 153 00:09:39,200 --> 00:09:42,560 Speaker 1: after we're near for the first time, uh at last month, 154 00:09:42,640 --> 00:09:45,040 Speaker 1: the beginning of some green shoots here. I mean, there's 155 00:09:45,040 --> 00:09:48,920 Speaker 1: been some progress, especially in inflation front. The central bank 156 00:09:48,960 --> 00:09:52,160 Speaker 1: has been very aggressive to contain inflation. Interest rates were 157 00:09:52,200 --> 00:09:54,920 Speaker 1: going down, so you were seeing people beginning to feel 158 00:09:54,960 --> 00:09:59,160 Speaker 1: more comfortable in taking longer term financing, for example, and 159 00:09:59,360 --> 00:10:01,560 Speaker 1: right now you have brought the country again to a 160 00:10:01,559 --> 00:10:04,800 Speaker 1: complete stand still. We were on the verge of voting 161 00:10:04,960 --> 00:10:09,199 Speaker 1: very key important reforms, especially the pension reformer, was expected 162 00:10:09,240 --> 00:10:12,800 Speaker 1: to be put to to a vote incoming days, and 163 00:10:12,840 --> 00:10:14,800 Speaker 1: now the finance minister just said it's going to take 164 00:10:14,800 --> 00:10:18,440 Speaker 1: it to very least weeks if I mean at all, 165 00:10:18,520 --> 00:10:21,160 Speaker 1: we're going to see these passing. What's some shape or 166 00:10:21,160 --> 00:10:24,400 Speaker 1: form so obviously just does not bode well at all 167 00:10:24,480 --> 00:10:27,959 Speaker 1: for Brazil, So viv just so we can be completely 168 00:10:28,120 --> 00:10:34,240 Speaker 1: clear about this. What troubles Brazil's political class is not 169 00:10:34,400 --> 00:10:40,240 Speaker 1: corruption per se, but poor economic performance. If you want 170 00:10:40,240 --> 00:10:44,440 Speaker 1: to extrapolate mid seventies in the US, the economy wasn't 171 00:10:44,440 --> 00:10:51,080 Speaker 1: doing well. Nixon left late nineties, economy doing well, Bill 172 00:10:51,120 --> 00:10:57,880 Speaker 1: Clinton stays, Brazil economy doing poorly, ruceph leaves economy is 173 00:10:57,920 --> 00:11:02,960 Speaker 1: still doing poorly. Tema question mark, well, I mean, it's 174 00:11:03,000 --> 00:11:06,559 Speaker 1: harder to put together a position right and to get 175 00:11:06,600 --> 00:11:09,400 Speaker 1: your voice heard. If the economy is booming, you know, 176 00:11:09,480 --> 00:11:12,640 Speaker 1: you better have things they are very very strong in 177 00:11:12,720 --> 00:11:16,480 Speaker 1: order to get people's attention right. But when economies are weak, 178 00:11:16,920 --> 00:11:19,640 Speaker 1: I mean, people started going they're going to start investigating 179 00:11:19,640 --> 00:11:21,600 Speaker 1: why they're a weak to begin with, and people want 180 00:11:21,600 --> 00:11:24,600 Speaker 1: to be they want more accountability of the money that 181 00:11:24,800 --> 00:11:27,320 Speaker 1: is out there, and that's when they started poking around 182 00:11:27,360 --> 00:11:28,920 Speaker 1: and realized that a lot of the money. In the 183 00:11:28,960 --> 00:11:32,960 Speaker 1: case of Brazil, it started disappearing. Right Remember Dilma was 184 00:11:33,080 --> 00:11:36,320 Speaker 1: impeached by and large by the meddling with the country's 185 00:11:36,320 --> 00:11:40,800 Speaker 1: physicals accounts. I think it's we shouldn't say that, you know, 186 00:11:41,040 --> 00:11:45,640 Speaker 1: they wouldn't be corruption in Brazil, it's just the weak economy. 187 00:11:45,679 --> 00:11:48,679 Speaker 1: I I disagree with you in that one. I do 188 00:11:48,800 --> 00:11:52,280 Speaker 1: think that it was easier to hide that much easier 189 00:11:52,280 --> 00:11:55,720 Speaker 1: to hide that when things are going fine. Right now 190 00:11:55,760 --> 00:11:58,040 Speaker 1: that things are not going well, I mean, it's it's 191 00:11:58,080 --> 00:12:01,559 Speaker 1: just become way more difficult to uh to high that 192 00:12:01,600 --> 00:12:05,320 Speaker 1: you were stealing villions and villions from from taxpayers. Viv 193 00:12:05,360 --> 00:12:08,040 Speaker 1: can you talk a little bit about the divisions we've 194 00:12:08,080 --> 00:12:11,520 Speaker 1: seen between the what the markets are saying and what 195 00:12:11,640 --> 00:12:15,120 Speaker 1: the public thinks. I mean, you had a pretty significant 196 00:12:15,200 --> 00:12:17,640 Speaker 1: run up in the country's stock market over the past 197 00:12:17,760 --> 00:12:22,320 Speaker 1: year as markets saw the new president's reform plans as 198 00:12:22,400 --> 00:12:24,480 Speaker 1: as a way to boost the economy, and you know, 199 00:12:24,520 --> 00:12:27,880 Speaker 1: the contraction of the economy hasn't been as bad as 200 00:12:27,920 --> 00:12:30,960 Speaker 1: it was before. And the markets took a pretty big 201 00:12:31,000 --> 00:12:34,680 Speaker 1: plunge on the news of this latest uh, the latest 202 00:12:34,720 --> 00:12:38,400 Speaker 1: tape and investigation. And on the other hand, the public 203 00:12:38,440 --> 00:12:43,520 Speaker 1: perception of Timor's policy has been completely a complete disaster. 204 00:12:43,600 --> 00:12:46,280 Speaker 1: I mean, they hate him, don't they. What's going on here? 205 00:12:46,840 --> 00:12:50,400 Speaker 1: You're right? I mean he's an extremely unpopular president. He's 206 00:12:50,640 --> 00:12:53,920 Speaker 1: approval ratings have been hovering around the ten percent mark, 207 00:12:54,360 --> 00:12:57,120 Speaker 1: which to try to again to rule on a congress 208 00:12:57,160 --> 00:13:00,640 Speaker 1: with so many parties is just like almost impossible. And 209 00:13:00,640 --> 00:13:02,720 Speaker 1: and and you touched on a very interesting point. It 210 00:13:02,760 --> 00:13:05,400 Speaker 1: has been a big question market for us here as 211 00:13:05,480 --> 00:13:09,240 Speaker 1: journalists too. I mean, people on the streets hate him. 212 00:13:09,360 --> 00:13:11,760 Speaker 1: People on the streets by and large do not support 213 00:13:11,880 --> 00:13:16,000 Speaker 1: his reforms. People are still feeling the pinch of of 214 00:13:16,160 --> 00:13:21,040 Speaker 1: economic recession. But yet markets just love him, right, and 215 00:13:21,120 --> 00:13:24,240 Speaker 1: we see these fantastic rally I mean predicated on on 216 00:13:24,559 --> 00:13:28,920 Speaker 1: the future Brazil boom that have yet to come back, right, 217 00:13:29,240 --> 00:13:31,320 Speaker 1: I mean, so we we actually even wrote a couple 218 00:13:31,360 --> 00:13:33,480 Speaker 1: of stories and say, well, our our markets a little 219 00:13:33,480 --> 00:13:37,240 Speaker 1: bit overshooting here are going a little bit too too aggressive, 220 00:13:37,280 --> 00:13:41,520 Speaker 1: to too bullish on Brazil, giving that the underlying fundamentals 221 00:13:41,559 --> 00:13:45,160 Speaker 1: of the country are still far from from where they 222 00:13:45,200 --> 00:13:48,080 Speaker 1: should be to justify some asset prices, write some asset 223 00:13:48,160 --> 00:13:51,880 Speaker 1: valuations here, I mean, especially the agrily business sector is 224 00:13:52,240 --> 00:13:55,600 Speaker 1: doing very well or has recovered considerably, but you have 225 00:13:55,720 --> 00:13:59,600 Speaker 1: yet to see some portions of Brazilian industry really rebounding. 226 00:13:59,840 --> 00:14:02,560 Speaker 1: And again that that consumption what we even had a 227 00:14:02,640 --> 00:14:05,319 Speaker 1: name for it in Brazil, which called milagri but alto, 228 00:14:05,600 --> 00:14:08,559 Speaker 1: which was the Brazilian miracle. When you started seeing people, 229 00:14:09,000 --> 00:14:13,079 Speaker 1: you know, using credit cards and buying homes, cars, frades, traveling. 230 00:14:13,280 --> 00:14:16,600 Speaker 1: I mean, this is we're far from our repeat. So I, 231 00:14:16,760 --> 00:14:21,440 Speaker 1: like you, I asked myself, where is that optimism coming from? 232 00:14:21,520 --> 00:14:24,080 Speaker 1: And and again we've been saying that this is a 233 00:14:24,120 --> 00:14:28,400 Speaker 1: fragile government, and we had proof of this last Wednesday 234 00:14:28,400 --> 00:14:31,640 Speaker 1: when the first news first were reported about these tapes. 235 00:14:31,680 --> 00:14:35,200 Speaker 1: I mean, in one hour, this this rally, this bonanza, 236 00:14:35,320 --> 00:14:39,960 Speaker 1: this belief in Brazil just completely disappeared. Right, So our 237 00:14:40,080 --> 00:14:43,200 Speaker 1: suspicion and when we talk to people who really analyzed 238 00:14:43,280 --> 00:14:46,600 Speaker 1: and and and investigate Brazil is that until we actually 239 00:14:46,640 --> 00:14:53,400 Speaker 1: have new direct elections with very legitimate, incredible candidates and 240 00:14:53,400 --> 00:14:58,200 Speaker 1: in a very legitimate, incredible government, right voted again directly 241 00:14:58,280 --> 00:15:01,480 Speaker 1: by by by people. All I mean you, you will 242 00:15:01,520 --> 00:15:05,080 Speaker 1: see anyone in power to to to be really under attack. 243 00:15:05,720 --> 00:15:09,440 Speaker 1: That we have elections in Brazil every four years, just 244 00:15:09,520 --> 00:15:13,640 Speaker 1: like the United States. It's also a fixed term. It's 245 00:15:13,680 --> 00:15:17,480 Speaker 1: easy to forget this. But Dilma Roussef was elected twice 246 00:15:18,320 --> 00:15:22,480 Speaker 1: quite comfortably. So if we have fresh elections in Brazil 247 00:15:23,560 --> 00:15:27,560 Speaker 1: and the economy is still contracting, the car Wash investigation 248 00:15:27,680 --> 00:15:33,400 Speaker 1: is still alive rattling around, where does that leave us. Well, 249 00:15:33,480 --> 00:15:35,520 Speaker 1: the first time that she was elected, yes, she was 250 00:15:35,600 --> 00:15:38,960 Speaker 1: elected quite comfortably. Second time it was a much tighter margin, 251 00:15:39,520 --> 00:15:42,400 Speaker 1: And that in Brazil is a problem, especially because, as 252 00:15:42,440 --> 00:15:45,320 Speaker 1: I told you a couple of times, the shake up 253 00:15:45,360 --> 00:15:49,280 Speaker 1: and in the makeup of the Brazilian Congress. Right. Uh. Also, 254 00:15:49,320 --> 00:15:53,800 Speaker 1: there's been questions that surfaced throughout the impeachment process about 255 00:15:54,040 --> 00:15:57,480 Speaker 1: the way that they portray doing the financing, for doing 256 00:15:57,480 --> 00:16:01,240 Speaker 1: the campaign. The true state of Brazil therese economy and 257 00:16:01,240 --> 00:16:03,320 Speaker 1: and and it has been agreed by some people and 258 00:16:03,360 --> 00:16:06,080 Speaker 1: by some of the authorities that the government kind of 259 00:16:06,360 --> 00:16:09,040 Speaker 1: fiddled with the numbers there, right, so that the economy 260 00:16:09,120 --> 00:16:11,720 Speaker 1: wasn't doing nearly as well as it was in the 261 00:16:11,760 --> 00:16:15,600 Speaker 1: build up to the to her re election. So I 262 00:16:15,640 --> 00:16:18,360 Speaker 1: mean going forward, I mean, and this is what it's 263 00:16:18,360 --> 00:16:21,360 Speaker 1: really interesting. We were we all thought that this was 264 00:16:21,360 --> 00:16:23,880 Speaker 1: going to be a transition government, that Tamer was going 265 00:16:23,880 --> 00:16:26,720 Speaker 1: to be the guy who is going to lay the foundations, 266 00:16:26,800 --> 00:16:31,360 Speaker 1: and you know, uh, and the bleeding of Brazil stabilized 267 00:16:31,360 --> 00:16:33,840 Speaker 1: the economy, lay the grounds, force a couple of big, 268 00:16:33,880 --> 00:16:37,160 Speaker 1: big reforms, and the next group right income to TuS 269 00:16:37,240 --> 00:16:39,960 Speaker 1: any team, you bring the people to the streets, you 270 00:16:40,080 --> 00:16:42,480 Speaker 1: vote for the new new president, and you and you 271 00:16:42,560 --> 00:16:45,920 Speaker 1: have a new country. But now it's all, you know, 272 00:16:46,000 --> 00:16:50,480 Speaker 1: a big question mark again. But let's say then we 273 00:16:50,600 --> 00:16:53,800 Speaker 1: get a great election result, a great slate of candidates, 274 00:16:54,560 --> 00:16:59,920 Speaker 1: whoever they may be, and commodities are still where they are, right, 275 00:17:00,360 --> 00:17:05,120 Speaker 1: can Brazil be great without commodities? And by the way, 276 00:17:05,200 --> 00:17:09,240 Speaker 1: why is it still so dependent on commodities? Well, several 277 00:17:09,320 --> 00:17:14,040 Speaker 1: questions here. First, we don't know if we're going to 278 00:17:14,080 --> 00:17:16,160 Speaker 1: have elections in two thousand and eighteen or if we're 279 00:17:16,160 --> 00:17:18,760 Speaker 1: going to have elections much earlier. We've got to see 280 00:17:18,800 --> 00:17:22,000 Speaker 1: what comes and what happens with these investigations on the president. 281 00:17:22,080 --> 00:17:26,119 Speaker 1: He's now really hanging by by a thread there, right, 282 00:17:26,119 --> 00:17:29,560 Speaker 1: but assuming you know, somehow he pulls straight and then 283 00:17:29,600 --> 00:17:32,080 Speaker 1: we really just get to to the to the earns 284 00:17:32,080 --> 00:17:34,879 Speaker 1: in two thousand and eighteen, I mean, why are we 285 00:17:34,920 --> 00:17:37,359 Speaker 1: so dependent in commodity? I mean, look at the makeup 286 00:17:37,400 --> 00:17:39,280 Speaker 1: of Brazil's as a country. I mean, it's not a 287 00:17:39,359 --> 00:17:43,720 Speaker 1: problem per said to be dependent on on commodities. I mean, 288 00:17:43,800 --> 00:17:47,760 Speaker 1: is you're exploring a natural advantages in Actually Brazil's agree 289 00:17:47,800 --> 00:17:52,639 Speaker 1: business sector is extremely efficient and competitive. So the question 290 00:17:52,680 --> 00:17:57,159 Speaker 1: here is not whether Brazil should diminish these dependence on commodities, 291 00:17:57,400 --> 00:18:00,119 Speaker 1: but should what does Brazil do with the money that 292 00:18:00,200 --> 00:18:03,560 Speaker 1: it generates with the ugly business sector and with the 293 00:18:03,600 --> 00:18:06,600 Speaker 1: commodity Do we invest in education? Do we promote other 294 00:18:06,680 --> 00:18:11,520 Speaker 1: industries and services? Now precisely right, where is it going? 295 00:18:11,920 --> 00:18:14,080 Speaker 1: I mean a good chunk of it. Apparently it has 296 00:18:14,119 --> 00:18:17,399 Speaker 1: been siphoned to to you know, to just subsidize some 297 00:18:17,480 --> 00:18:20,480 Speaker 1: of these so called national champions, right, and I mean 298 00:18:20,520 --> 00:18:23,640 Speaker 1: in massive works and massive corruption that took a lot 299 00:18:23,640 --> 00:18:26,560 Speaker 1: of money from Brazil's economy. I mean, are we in 300 00:18:26,640 --> 00:18:29,719 Speaker 1: the business? Are are we really competitive in some for 301 00:18:29,760 --> 00:18:33,320 Speaker 1: example the auto industry, which is to be very, very 302 00:18:33,359 --> 00:18:35,840 Speaker 1: big in Brazil. Can we do this better than Mexico 303 00:18:35,960 --> 00:18:39,000 Speaker 1: for example? Big question? I honestly don't know the answer. 304 00:18:39,000 --> 00:18:40,960 Speaker 1: But is this work? We want to be competitive for 305 00:18:41,000 --> 00:18:44,480 Speaker 1: example in Brazil? I mean and again I mean do 306 00:18:44,560 --> 00:18:47,440 Speaker 1: we Why don't we invest more in bio technology? Why 307 00:18:47,640 --> 00:18:50,679 Speaker 1: don't we invest more in software and services? With with 308 00:18:50,760 --> 00:18:54,800 Speaker 1: the society so so large and diverse as Brazil society 309 00:18:54,800 --> 00:18:58,440 Speaker 1: with so many large cities in Brazil, do people own 310 00:18:58,480 --> 00:19:01,959 Speaker 1: their houses? Do they? Again? Do they go to school 311 00:19:01,960 --> 00:19:06,640 Speaker 1: and high school and universities? And not nearly as much 312 00:19:06,680 --> 00:19:09,840 Speaker 1: as a country the size of Brazil and with the 313 00:19:09,840 --> 00:19:13,000 Speaker 1: the overall GDP that the country processes. No, this is 314 00:19:13,040 --> 00:19:15,480 Speaker 1: one of the world's stands largest economies, you know, over 315 00:19:15,560 --> 00:19:19,520 Speaker 1: three in dollars GDP? Why is Brazil not richer right 316 00:19:19,640 --> 00:19:23,440 Speaker 1: or wealthier in a certain way? Before we wrap this up, 317 00:19:23,960 --> 00:19:28,960 Speaker 1: I'm just dying to have you remind our listeners what 318 00:19:29,280 --> 00:19:32,720 Speaker 1: is car wash? How did this investigation get to be 319 00:19:32,840 --> 00:19:36,320 Speaker 1: called car wash? Now? I've actually been to the gas 320 00:19:36,359 --> 00:19:42,040 Speaker 1: station that where all this action supposedly unfolded. It's next 321 00:19:42,040 --> 00:19:45,439 Speaker 1: to a steakhouse, but there's not actually a car wash there. 322 00:19:45,560 --> 00:19:48,000 Speaker 1: Help us out with them. It's a bit of a mystery, 323 00:19:48,080 --> 00:19:50,640 Speaker 1: to be honest with you. Yes, I mean the name 324 00:19:50,720 --> 00:19:54,440 Speaker 1: just stuck and stayed. But it relates to this gas 325 00:19:54,720 --> 00:19:57,040 Speaker 1: It relates to the gas station in Brazili where some 326 00:19:57,119 --> 00:20:00,440 Speaker 1: of these people will take you in a car and 327 00:20:00,640 --> 00:20:03,480 Speaker 1: uh and give you know, all these bags of money 328 00:20:03,520 --> 00:20:06,080 Speaker 1: and you know, as part of these kickback scheme. And 329 00:20:06,080 --> 00:20:08,120 Speaker 1: then one day someone also said that, you know, where 330 00:20:08,119 --> 00:20:09,720 Speaker 1: are you going on, I'm just going to the car wash. 331 00:20:09,960 --> 00:20:13,240 Speaker 1: So but there's it's all kind of urban legend or 332 00:20:13,320 --> 00:20:15,760 Speaker 1: lore and on how the name kind of came to 333 00:20:15,840 --> 00:20:19,280 Speaker 1: be and then now it really stuck, uh and it 334 00:20:19,320 --> 00:20:22,720 Speaker 1: became car wash. Let me finish with a question that's 335 00:20:22,760 --> 00:20:26,520 Speaker 1: on my mind of at what point does this become 336 00:20:26,760 --> 00:20:31,760 Speaker 1: a danger to democracy itself in Brazil all these corruption 337 00:20:31,920 --> 00:20:37,000 Speaker 1: investigations too. Is the country going to backslide into military rules? 338 00:20:37,000 --> 00:20:40,480 Speaker 1: There a possibility of electing uh, somebody who's a real 339 00:20:41,200 --> 00:20:45,320 Speaker 1: you know, more authoritarian than the current system provides, or 340 00:20:45,440 --> 00:20:48,879 Speaker 1: or does Brazil have a fairly strong system kind of 341 00:20:48,920 --> 00:20:53,560 Speaker 1: parliamentary system at its core that that will afford such protections. 342 00:20:53,600 --> 00:20:56,040 Speaker 1: I do think that from from the risks that you 343 00:20:56,440 --> 00:21:00,840 Speaker 1: are raised here, the one that is potentially, uh you know, 344 00:21:01,080 --> 00:21:03,159 Speaker 1: with with more of a chance of taking places, is 345 00:21:03,200 --> 00:21:07,560 Speaker 1: that we could potentially choose a maverick or a very outsider. 346 00:21:07,840 --> 00:21:11,600 Speaker 1: I wouldn't say an authoritarian, because the checks and balances 347 00:21:11,600 --> 00:21:15,000 Speaker 1: now in Brazil constitution will prevent a lot of things 348 00:21:15,000 --> 00:21:18,439 Speaker 1: from happening, for example, But it's just a very populist guy, 349 00:21:18,640 --> 00:21:21,440 Speaker 1: right or woman who could potentially again, I mean, I'm 350 00:21:21,480 --> 00:21:23,439 Speaker 1: going to like myself and I'm going to do this. 351 00:21:23,560 --> 00:21:26,080 Speaker 1: I'm going to hunt everybody down. I'm going to fix 352 00:21:26,119 --> 00:21:29,040 Speaker 1: all this by taking money from here and distributing. So, 353 00:21:29,440 --> 00:21:33,199 Speaker 1: I mean, the disenchantment with the political class and the 354 00:21:33,240 --> 00:21:37,040 Speaker 1: political establishment in Brazil is a reality. So so we 355 00:21:37,080 --> 00:21:40,320 Speaker 1: are prone now from an outsider to come in and 356 00:21:40,359 --> 00:21:46,080 Speaker 1: potentially sweep the election, someone with completely unprepared to be 357 00:21:46,920 --> 00:21:51,400 Speaker 1: sitting at the top place, which, by the way, it's 358 00:21:51,440 --> 00:21:54,920 Speaker 1: happening elsewhere in the globe right now, so as pert 359 00:21:54,960 --> 00:21:59,520 Speaker 1: the democracy and military and the army on the street. Again, 360 00:21:59,600 --> 00:22:02,520 Speaker 1: it's it's just not the conditions in Brazil right now. 361 00:22:02,760 --> 00:22:05,879 Speaker 1: It isn't people are not going that way. They're not 362 00:22:05,920 --> 00:22:08,840 Speaker 1: saying only the military can solve this or at least, 363 00:22:09,119 --> 00:22:11,880 Speaker 1: you know, in a in a consistent form. Brazilians are 364 00:22:11,960 --> 00:22:15,480 Speaker 1: very attached now to the democratic process, and it will 365 00:22:15,520 --> 00:22:19,359 Speaker 1: be really difficult for the society to backslide to that 366 00:22:19,480 --> 00:22:24,240 Speaker 1: degree that they would, uh, you know, endorse in favor 367 00:22:24,720 --> 00:22:27,439 Speaker 1: you know, such such type of regime. And honestly, not 368 00:22:27,520 --> 00:22:30,240 Speaker 1: even the army wants that. And and and we don't 369 00:22:30,240 --> 00:22:33,480 Speaker 1: have a system of armed forces in Brazil organized to 370 00:22:33,600 --> 00:22:36,920 Speaker 1: take over the country even if they wanted, for example, 371 00:22:37,280 --> 00:22:41,720 Speaker 1: who wants a shrinking economy on their hands? Precisely, Viviani, 372 00:22:41,920 --> 00:22:45,639 Speaker 1: great to talk to you. And as Brazil just struggles 373 00:22:45,680 --> 00:22:49,520 Speaker 1: in this thicket of political and economic chaos, we're probably 374 00:22:49,520 --> 00:22:58,560 Speaker 1: going to come back to again. Thank you. Then, you know, 375 00:22:58,640 --> 00:23:01,239 Speaker 1: I thought the points Scott that Viviani made at the 376 00:23:01,400 --> 00:23:04,439 Speaker 1: end about the army remaining in its barracks is a 377 00:23:04,480 --> 00:23:08,080 Speaker 1: really critical one. I'm so glad you asked that. That's 378 00:23:08,160 --> 00:23:10,439 Speaker 1: kind of the key point in the end. You know, 379 00:23:10,480 --> 00:23:14,639 Speaker 1: we've we've seen some other emerging markets actually go back 380 00:23:14,720 --> 00:23:18,240 Speaker 1: from democracy into military rule, or at least the one 381 00:23:18,280 --> 00:23:22,359 Speaker 1: on my mind for example, is is Thailand, so they're 382 00:23:22,400 --> 00:23:25,479 Speaker 1: you know, they're still being ruled by the military several 383 00:23:25,560 --> 00:23:29,520 Speaker 1: years into into that regime. You know, it's a it's 384 00:23:29,520 --> 00:23:32,800 Speaker 1: a really fascinating situation and with all the populism and 385 00:23:33,480 --> 00:23:36,199 Speaker 1: new leaders around the world, something to keep an eye on. 386 00:23:37,000 --> 00:23:41,080 Speaker 1: This actual gas station is a source of endless fascination 387 00:23:41,200 --> 00:23:43,879 Speaker 1: for me. There is no car wash there, but I 388 00:23:43,920 --> 00:23:46,960 Speaker 1: will say this, Scott. It is a massive gas station 389 00:23:47,560 --> 00:23:51,480 Speaker 1: and at night it's bathed in a bright, bright white light. 390 00:23:51,600 --> 00:23:55,199 Speaker 1: I mean, there is plenty of scope for stuff to 391 00:23:55,280 --> 00:23:59,280 Speaker 1: go on at this gas station because it's vast. It's massive, 392 00:24:00,320 --> 00:24:03,880 Speaker 1: makes you wonder right. Benchmark will be back next week 393 00:24:03,960 --> 00:24:06,480 Speaker 1: and until then, you can find us on the Bloomberg terminal, 394 00:24:06,480 --> 00:24:09,480 Speaker 1: Bloomberg dot com, or Bloomberg app, as well as on 395 00:24:09,560 --> 00:24:13,639 Speaker 1: Apple podcast, Pocketcasts, and Stitcher. While you're there, take a 396 00:24:13,640 --> 00:24:16,040 Speaker 1: minute to rate and review the show so more listeners 397 00:24:16,040 --> 00:24:18,520 Speaker 1: can find us and let us know what you thought 398 00:24:18,560 --> 00:24:20,960 Speaker 1: of the show. You can follow me on Twitter at 399 00:24:21,160 --> 00:24:25,719 Speaker 1: Scott Landman Dan you are at Moss Underscore Echo and 400 00:24:25,880 --> 00:24:30,160 Speaker 1: Viv You are at I Am at viv Underscore Rod thirteen. 401 00:24:30,720 --> 00:24:33,320 Speaker 1: Benchmark is produced by Sarah Patterson and the head of 402 00:24:33,320 --> 00:24:37,040 Speaker 1: Bloomberg Podcast is Alec McCabe. Thanks for listening, See you 403 00:24:37,080 --> 00:24:37,520 Speaker 1: next time.