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Brazil Faces Unemployment "Crisis", As Retail Sales Plunge, Rousseff Blasts "Coup-Mongers"
Brazilian President Dilma Rousseff got a rare bit of respite on Tuesday when a Supreme Court justice granted an injunction that delays a lower house vote which could have paved the way for impeachment proceedings.
House speaker Eduardo Cunha has remained defiant, vowing to exercise his “constitutional prerogative” to review impeachment requests.
Of course Cunha has his own set of problems. Allegations of corruption tied to the discovery of Swiss bank accounts have led to calls for his resignation and that, in turn, has Rousseff’s “aides fear[ing] the speaker could try to speed up the impeachment process.” As Reuters notes, if Cunha accepts even one of three impeachment petitions he has on his desk, “a parliamentary commission with representatives of all parties would analyze it and put it to a lower house vote.”
It is essentially a race against time to see if the house ethics committee will force his resignation before he can secure the lower house support to force a Senate impeachment trial.
For her part, Rousseff has accused the opposition of “coup-mongering” following last week’s ruling by the TCU that she cooked the fiscal books.
Meanwhile, as the intractable political stalemate keeps investors on edge regarding whether the government will be stable enough to enact the reforms needed to plug the budget gap, the economy continues to crumble.
We got a look at retail sales for August today and the picture was not pretty. Core retail sales fell by a larger-than-expected 0.9% month on month and July was revised lower to -1.6%. Broad retail sales fell 2.0% auto sales crashed 5.2%. Annually, core fell by 6.9% broad by 9.6% yoy. Here’s Goldman with the takeaway:
The near-term outlook for private consumption and retail sales remains negative owing to the significant deceleration of credit flows from both private and public banks, high levels of household indebtedness, declining job creation and real wage growth, higher interest rates, higher taxes (including via inflation), higher utility and transportation tariffs, heightened economic and political uncertainty and very depressed (record low) consumer confidence.
So pretty much everything that could possibly go wrong is going wrong.
And speaking of "high levels of household indebtedness and declining job creation", Bloomberg is out with a look at how the Brazilian dream of a middle class life - complete with homeownership, a car, and of course a high level of debt - has turned into a nightmare on the back of the deteriorating labor market. Here's more:
In the smog-filled, run-down industrial hubs that ring the southern end of Sao Paulo, Brazil’s next big crisis is taking root.
The labor market, long the country’s lone economic bright spot as growth stagnated, is suddenly deteriorating rapidly, driving unemployment all the way up to 7.6 percent from a record-low 4.3 percent at the end of 2014. Nowhere are the layoffs that are fueling that surge more acute than here, in this gritty complex of steel, auto and auto-parts factories built decades ago by the likes of Ford Motor Co. and Volkswagen AG. Sao Paulo is now losing almost 20,000 jobs each and every month, the state’s industrial federation estimates.
Talk privately with Brazil’s most senior bankers and nearly all of them will point to unemployment as a crucial concern. For starters, it’s underpinning the national dissatisfaction that is fanning calls for the impeachment of President Dilma Rousseff and creating policy paralysis in the capital city of Brasilia. More importantly, in a country that has based its growth model in recent years on a credit-fueled boom in consumer spending, it threatens to both deepen the recession -- already the worst since 1990 -- and leave millions of Brazilians scrambling to repay their loans.
This is the situation that Rossini Santos finds himself in.
A 43-year-old steel worker, Santos had loaded up on debt to finance his new middle-class lifestyle. First, it was an $80,000 mortgage back in 2009 to buy a little, one-story home near the factory he worked at. Then, in early 2014, it was a $17,000 loan to purchase a Chevrolet Prizm. Just months later, though, trouble began to brew when his employer, a maker of castings for auto parts, filed for bankruptcy. The company kept operating but was limping along, and in August, Santos was fired with dozens of other workers. He’s now collecting 1,380 reais ($360) in unemployment insurance a month, just one-third of his steel worker’s salary.
“And now I have a mortgage and a car loan,” he said. “And with no wage, I have to tighten my belt.”
In a week-long series of informal conversations with Sao Paulo bankers, unemployment came up time and again as they laid out the reasons that the recession and financial crisis could intensify. They’re worried that the increase in the jobless rate has just begun; that it’s eroding consumer demand, leaving once-crowded shopping malls empty; and that, ultimately, it could drive up loan defaults.
Over the past decade, Latin America’s largest economy underwent a spectacular credit boom that helped pull some 40 million Brazilians into the middle class. Total loans in the banking sector climbed five-fold over that time to 3.1 trillion reais. Family household indebtedness, as a percent of annual income, jumped to 46 percent from 20 percent. Borrowing costs are rising now -- the benchmark rate’s up to 14.25 percent -- as policy makers try to curb inflation, and loan delinquencies are starting to inch up too. In August, they accounted for 3.1 percent of all loans, the most in two years.
In other words, Brazilian households are massively levered heading into what on some metrics looks like a depression. Copom can't cut to boost the economy because the miserable performance of the BRL threatens inflation targets and confidence has been shaken immeasurably by a political crisis where the two main combatants (Rousseff and Cunha) are both charged with corruption.
As you can see, this is just about the worst situation imaginable at every level (political, economic, and with souring loans, financial as well). The world had better hope this isn't a precursor to what's about to befall EMs across the board, although if global growth and trade continue on their current trajectory, it's difficult to see a way out.
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Swedish and Brazilian babes in one day? Too bad I'm at work.
Looks like a lot more 'pros' working the streets next Olympics.
If ever an example of the haves and hve nots is this shamble of olympics.
The Brazilians know how to boost their TV ratings, aslo:
Sexy Twister Brazilian TV game showhttps://www.youtube.com/watch?v=0ZY7GX6Un88
The say the average male thinks about sex at least once every 5 mintues; for Brazilian males, it's about every second. But I can't blame them.
That is just so liberating to the feminine condition.
What a Progressive's Dreamland
I still haven't managed to read an article today!
I must admit my heart is still in Japan:
https://www.youtube.com/watch?v=m7s3v0WPUgI
Japan is doing EVERYTHING they can to stimulate the birthrate, we see...
(That's kinda a joke, but not really. They have been dropping not-so-subtle hints to "make babies" even in anime and manga aimed at middle-schoolers.)
Awesome video--thanks for the link!
SEX!!! Wait, I lost my train of thought. What was I going to say again? Oh yeah....SEX!!!
What'd the articles say?
What article?
I guess the stuff around the pictures. Kinda like the green shit around the steak.... it's all called garnish
Damn! And neither of 'em have Adam's Apples
https://images.search.yahoo.com/images/view;_ylt=AwrTcX7pkh5WTrUAqOgunIl...!%3F&p=chelsea+clinton+adams+apple&oid=471908347a471d7d05f53f455f62ef85&fr2=piv-web&fr=yhs-mozilla-001&tt=thought+women+didn%26%2339%3Bt+have+%3Cb%3Eadam%26%2339%3Bs%3C%2Fb%3E+%3Cb%3Eapples%3C%2Fb%3E%3F!%3F&b=0&ni=21&no=9&ts=&tab=organic&sigr=11augtcfg&sigb=14lqc37f6&sigi=12q90sudh&sigt=120sukii1&sign=120sukii1&.crumb=P/hPEL00ae1&fr=yhs-mozilla-001&fr2=piv-web&hsimp=yhs-001&hspart=mozilla
It's best if Rousseff blames the infinite spying by the Nobel Prize Winner and the NSA for Brazil's problems. Always blame an external enemy to divert attention.
Thank god such things can never happen here.... (Cue the doom music).....
all Brazil needs to do is copy the fed model and they too can reduce their unemployment rate without actually increasing employment.
I wonder if they'll cancel the Olympics if Brazil implodes.
It all started with their Futbol loss to Deutchland last year.
Solution. Migrate to the United States. Expect as the crisis grows to see new floods of migants headed for the southern borders. Expect us to see a European scale crisis of mass migration within the coming 5 years. One day it will break like a flood, fear of NOT getting in to the USA will grow, and then millions will leave at once to beat the rush, to beat the fear of a closed border. This is JUST what happened in Europe. People raced to get in, out of fear the borders might get harder to get through as migration grew. A race to be American, it is gonna be one giant shit storm for folks down on those borders.
Olympics will still go ahead
Olympics will not go ahead
too bad Brazil can't find a small country where they can bomb churchs, weddings and funerals all in the name of national security, it would provide such a distraction and a boost to the GDP since the tax theft required to support the "war on terroists" is actually counted as GDP. Then they would learn that the more the government steals the higher the GDP.
work on it Brazil.
"too bad Brazil can't find a small country where they can bomb churchs, weddings and funerals all in the name of national security, it would provide such a distraction and a boost to the GDP since the tax theft required to support the "war on terroists" is actually counted as GDP."
Hmmm, thinking along those lines, they should invade Venezuela "to prevent the spread of communism in the region". After the war they can help to "rebuild their struggling oil exports". It seems like a game plan I've heard has been implemented somewhere else.
So Brazil has a corrupt President. America has an illegal alien President. Maybe the legislatures of both countries should make a deal to hang them side-by-side in a public display.
A little bit of inside information: Dilma gave the Judges on average a 73% pay-rise last year. The plebs in the court system haven't had a pay increase for almost 10 years. Only the Judges. The underlings have of course been trying to get an increase of 10% increase spread over 4 years. The Brazillian Media have been spinning the increase sought by the court system plebs as it being THEM who recieved the 73% increase in salary, when it was only the Judges.
So...the Judges are kept sweet with huge pay rises and the government gets to not pay salary increases to the court plebs. A cynic would think that the Judges are being keep happy so that they make favourable decsions for government. But I'm sure that's not the case.