This page has been archived and commenting is disabled.

Depression Tracker: Unemployment Soars In Latin America's Most Important Economy

Tyler Durden's picture




 

If there’s anything Brazil certainly does not need, it’s more bad news. 

The country is, in many ways, a symbol of the great EM unwind catalyzed by falling commodity prices, plunging currencies, reduced demand from China, a looming Fed hike, and, most recently, a yuan devaluation, with the latter being particularly painful for Brazil:

As we’ve documented extensively, the situation is made immeasurably worse by political instability. President Dilma Rousseff is "enjoying" an approval rating of just 8% as the public calls for her impeachment amid allegations of fiscal book cooking and corruption at Petrobras where she was Chairwoman from 2003 until 2010. 

The economic news - which was already bad enough between a harrowing bout of staglflaton and dual deficits on the fiscal and current accounts - just got a lot worse as unemployment spiked to 7.5%, well ahead of consensus and the worst in five years. Here’s FT:

Here's another economic snapshot of Brazil that is probably not going to do much to help lift President Dilma Rousseff's approval ratings.

 

Unemployment in Latin America's largest economy rose for the seven straight month, hitting 7.5 per cent in July.

 

That's up from 6.9 per cent in June and much worse than the 7 per cent the market had forecast and the highest since May 2010.

 

The real fell by as much as 0.8 per cent in early morning trading.

 

The jump in unemployment - the biggest in five months - is the latest sign of the country's deepening economic malaise.

Rousseff's comments to Handelsblatt that the country will remain mired in recession for another 6-12 months didn't do anything to make the outlook seem any brighter.

Meanwhile, Rousseff scored a victory on Wednesday when the Senate approved a bill to cut payroll tax breaks." That should help "to reduce a gaping fiscal deficit and restore confidence in her government's accounts," Reuters notes, adding that "Rousseff has struggled to pass austerity measures through a rebellious Congress, with the lower house approving bills that raise spending introduced by Speaker Eduardo Cunha, who broke with her coalition and defected to the opposition last month."

But Cunha may not be a stumbling block for too much longer, because as Bloomberg reported early this morning (citing Folha de S. Paulo), Brazil's Attorney-General is set to "charge Cunha for corruption Thursday". The charges, Bloomberg continues, are "part of [the] 'Carwash' investigations into dealings at Petrobras." Here are the implications, courtesy of Bloomberg strategist Davison Santana: 

  • Attorney-General expected to charge Cunha for corruption today; O Globo reports that hard evidence was found with help from Swiss authorities
    • Cunha may be forced to step down from House presidency, depending on strength of evidence; Lawmakers already preparing request for his removal, according to Valor
    • Cunha has been one of the biggest hurdles to President Rousseff’s agenda in Congress; his exit may mean a smoother political environment, as there isn’t likely to be any other strong opposition name to fill his shoes
  • Possibility of better political scenario doesn’t guarantee an easy path for Rousseff, as economic outlook continues to deteriorate; July unemployment rate at 7.5% vs 7% est., 6.9% prior, worst July figure since 2009
  • Senate passed yday a bill that that unwinds payroll tax breaks; text was approved with the changes proposed in the Lower House, which reduces its budget impact but accelerates revenue increase
    • If Senate had decided to amend bill, it would need to return for fresh approval in Lower House, delaying whole process
    • Bill is first of a series of austerity measures; expectation of their approval in Senate led to better performance by BRL last week

Lest we should lose track of why this is important, recall that Brazil is looking to close a yawning budget gap on the way to ameliorating at least one part the following conundrum:

As BofAML put it on Wednesday, "monitoring the upcoming political events amid increasing political and economic uncertainties is important [as] these events [are] possible triggers to improve governability and spur a rebound in confidence, a necessary condition for an inflection in economic growth." They continue: "Even after the government revised the primary fiscal target, risks remain to the 0.15% of GDP print, as some measures waiting to be voted on in Congress could increase public spending if approved."

On that note, here's a look at key upcoming events: 

Of course none of this may end up mattering because as we saw last weekend, Brazilians are in no mood to wait around on a fix from a government they don't trust and whether they realize it or not, China's devaluation means the situation is very likely to deteriorate further, as tipped by Brazil's trade ministry last week. So in the end the most important indicator in determining if and when the country will descend into absolute choas, is this one:

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 08/20/2015 - 12:44 | 6447633 JustObserving
JustObserving's picture

Can they not lie like the land of the free and say unemployment is 5.3% when it is something like 23% or higher?

At the present time, there are 210 million adult Americans between the ages of 16 and 68—to take a plausible measure of the potential work force. That amounts to 420 billion potential labor hours, if we accept the convention that all adults are at least theoretically capable of holding a full-time job (2,000 hours/year) and pulling their share of society’s need for production and work effort.

By contrast, during 2014 only 240 billion hours were actually supplied to the US economy, according to the BLS estimates. Technically, therefore, there were 180 billion unemployed labor hours, meaning that the real unemployment rate was 42.9%, not 5.5%!

http://davidstockmanscontracorner.com/the-warren-buffett-economy-why-its...

Thu, 08/20/2015 - 12:44 | 6447645 rsnoble
rsnoble's picture

With the size of the protests you can pretty much rest assured they are fucking liars just like the US.

Thu, 08/20/2015 - 12:52 | 6447697 Creepy A. Cracker
Creepy A. Cracker's picture

The least you can do is put a larger, high resolution, version of the click-bait photo in the article.

Thu, 08/20/2015 - 12:54 | 6447707 Modern Cimmerian
Modern Cimmerian's picture

Use the "print version" of this article, just like with every one about Brazil, and you get the full size photo.

Thu, 08/20/2015 - 13:04 | 6447751 l8apex
l8apex's picture

Holy shit.  That's probably the one thing I'm going to learn today.

Thu, 08/20/2015 - 13:32 | 6447905 Creepy A. Cracker
Creepy A. Cracker's picture

Damn!!!... These ZHers are good.

Thu, 08/20/2015 - 13:35 | 6447923 Modern Cimmerian
Modern Cimmerian's picture

Hell, I learned this from some other posting about Brazil, I only pass on the wisdom.

Thu, 08/20/2015 - 14:14 | 6448127 Bunghole
Bunghole's picture

I recommend right clicking on the pic and selecting Search Google for this Image

Scroll down to the image results and you'll see some fine titties and a few nipple slips.

Thu, 08/20/2015 - 14:46 | 6448273 Implied Violins
Implied Violins's picture

The traffic on this article went to zero once the bikini babes hit the top of the front page...interesting. Maybe we DON'T come here for the articles??

Thu, 08/20/2015 - 12:43 | 6447639 Hippocratic Oaf
Hippocratic Oaf's picture

Long VD and syphilis

Thu, 08/20/2015 - 12:47 | 6447664 813kml
813kml's picture

Tungsten medals at the Olympics should save a few bucks.

Thu, 08/20/2015 - 12:47 | 6447665 Beowulf55
Beowulf55's picture

I came for the thumbnail pic........and found it was only a teaser!

Thu, 08/20/2015 - 13:05 | 6447756 l8apex
l8apex's picture

See  Modern Cimmerian's solution above.  

 

Thu, 08/20/2015 - 12:47 | 6447667 Mike Honcho
Mike Honcho's picture

I see my complaint to Tyler about seeing Dilma's ralphish mug instead of exquisite Brazillian beauties has been heeded.

Thu, 08/20/2015 - 12:48 | 6447673 pachanguero
pachanguero's picture

They are fucked...

Thu, 08/20/2015 - 12:49 | 6447677 KnuckleDragger-X
KnuckleDragger-X's picture

Brazil went socialist which merely institutionalizes their problems and the people want change and their gravy train at the same time. Thankfully nothing like that is happening in America......

Thu, 08/20/2015 - 12:50 | 6447678 Chuck Knoblauch
Chuck Knoblauch's picture

BRICS doesn't have a military to defend its financial system.

Or, they are not ready to use it yet.

Brazil cannot serve two masters.

Thu, 08/20/2015 - 12:50 | 6447684 KnuckleDragger-X
KnuckleDragger-X's picture

Nobody has enough if things get bad enough that guns are needed......

Thu, 08/20/2015 - 12:54 | 6447705 Chuck Knoblauch
Chuck Knoblauch's picture

Guns back paper.

Guns back banks.

Force backs everything.

Nothing is free.

Brazil should know that.

Thu, 08/20/2015 - 12:56 | 6447717 Government need...
Government needs you to pay taxes's picture

Quite a refreshing statement, really.  Want freedom?  Take it.

Thu, 08/20/2015 - 13:12 | 6447774 Chuck Knoblauch
Chuck Knoblauch's picture

You were born free.

You defend what already belongs to you.

Defend your life.

Thu, 08/20/2015 - 12:55 | 6447713 Government need...
Government needs you to pay taxes's picture

Cant wait til # of tire-fires burning in the streets is a key leading indicator for the Brazilian economy.

Thu, 08/20/2015 - 13:17 | 6447825 Implied Violins
Implied Violins's picture

They should be using those as neckties. What a waste.

Thu, 08/20/2015 - 13:23 | 6447858 Ms No
Ms No's picture

Another great wave this way cometh.  Lets bus these ones to the states that think it's super to have a nonexistant border.  I personally prefer that we start with Washington State and Oregon.  Cover the buses in rainbows, sparkling hearts and diversity streamers then drop them off in Seattle and hit the gas. 

See how long Washington's free medical care lasts then.   Even when their socialist benefits implode under the weight of immigration they still wont get it but it still would be entertaining. 

 

Thu, 08/20/2015 - 13:50 | 6447998 Anunnaki
Anunnaki's picture

BRICS

Brazil - destabilized, gov't in the beginning of collapse

Russia - tried to crash their currency/oil markets. Try try again

India - "on deck"

China - crushed their currency, cyanide "accident" in Tinjian

South Africa - A lion was killed other than that, who the fuck cares

It wasn't going to be this easy to escape the Ziocartel's clutches

Thu, 08/20/2015 - 15:03 | 6448349 Fuku Ben
Do NOT follow this link or you will be banned from the site!