This page has been archived and commenting is disabled.
Market Panics After Arrest Of Brazilian Lawmaker: "Never Have We Had So Little Certainty About Tomorrow"
Last week, the CEO of LatAm's largest independent investment bank was arrested. As we reported on Wednesday, billionaire Andre Esteves - who once joked that BTG Pactual would be “better than Goldman” - was escorted by an officer into the federal police building in Rio de Janeiro after being arrested at his home. Also detained was Delcidio Amaral, Rousseff’s “guy” in the Senate. Here, in Bloomberg’s words, is what the pair allegedly did:
“Amaral tried to convince former Petrobras director Nestor Cervero, who was arrested in January, to not mention him or Esteves in testimony to federal prosecutors, according to a document of the accusations read aloud in Brasilia Wednesday by Judge Teori Zavascki. Cervero’s family would have received 50,000 reais ($13,000) every month in the proposal, and Esteves 'would bear the burden of financial aid.'The offer also included a promised 4 million-real payment to Cervero’s lawyer."
Got it. The two men tried to bribe Cerverco not to implicate them in the seemingly never-ending Carwash investigation (more than a 100 people have been arrested in the space of 18 months). Shares of BTG promptly crashed and as Joao Augusto de Castro Neves, director of Latin America for political consulting firm Eurasia Group said last week, “BTG Pactual has exposure to the oil and gas sector, and the arrest of its CEO is the first time the Lava Jato probe raises the earnest prospect of financial contagion.”
Yes, “the earnest prospect of financial contagion,” like when clients pull a third of their money from your fixed income funds in the space of 48 hours. As Bloomberg pointed out on Friday, “Grupo BTG Pactual SA’s clients took 4.2 billion reais ($1.1 billion) out of some of the bank’s most liquid fixed-income funds in the two days following the arrest of Esteves.”
Earlier today, Globo suggested that Esteves is also being investigated for links to businessman Jose Carlos Bumlai who was arrested in the capital last Tuesday on suspicion of brokering a number of unsavory deals and inappropriately name dropping former President Luiz Inacio Lula da Silva. That particular investigation (which also involves Petrobras) looks set to ensnare Brazil's development bank. Commenting on recent events, Eurasia says "the potential indictment of former president Lula and senior members of the PMDB ... could force Rousseff from office."
As bad as all of this most certainly is, those who follow the country closely are more worried about the implications of Amaral's arrest than they are about anything else. Brazil is of course in the midst of a dramatic economic downturn that's left the country to suffer through the worst inflation-growth outcome (i.e. stagflation) in more than a decade. Unemployment and inflation are soaring (annual headline IPCA inflation at 10.28%, unemployment at 7.9% in August, up from just 4.7% a year earlier) while output is plunging (IBC-Br monthly real GDP indicator down 6.1% Y/Y in September) and the market is losing confidence in the government's ability to end a political stalemate on the way to shoring up the fiscal books and hitting primary surplus targets.
But hitting budget targets and avoiding deficits means getting austerity by lawmakers and that's been complicated immeasurably by House Speaker Eduardo Cunha's crusade to have Rousseff impeached and also by calls for Cunha to step down in connection to several secret Swiss bank accounts. In short, just about the last thing Brazil needed was for a senator to get arrested as it raises the distinct possibility that sitting lawmakers are no longer above the law. Here's Bloomberg:
When a world-renowned banker and a congressman were busted last week as part of the biggest corruption scandal in Brazil’s history, the international spotlight naturally fell on the young tycoon, Andre Esteves.
Yet to long-time Brazil watchers, it was the detention of the legislator -- a ruling party dealmaker named Delcidio Amaral -- that marked a far more worrisome development for a country desperately seeking to contain a deepening financial and political crisis. His arrest not only delayed government efforts to resolve this year’s budget dispute, but it also dispelled a long-held belief that sitting lawmakers are all but untouchable because of a quirk in Brazilian law that affords politicians special treatment in criminal investigations.
While that can be seen as a true silver lining in the scandal -- a sign that a legislative branch rife with alleged corruption will no longer be tolerated -- it also injects a wild card into the crisis: Who will fall next and where will it all end? With the heads of both houses being investigated, it raises the possibility that Brazil’s political apparatus could unravel before ever passing the spending cuts and tax increases needed to restore investor confidence and ward off a new round of credit-rating downgrades.
More than a quarter of the deputies in the lower house are facing criminal lawsuits or probes before the Supreme Court, according to Congresso Em Foco, an online publication that specializes in legislative news.
In other words, an already intractable political stalemate has now been transformed into a situation wherein everyone is looking over their shoulder meaning the entire political apparatus will henceforth be too paranoid to legislate anything, let alone controversial austerity measures. Here's the reaction in the BRL:
Meanwhile, the country's finances continue to deteriorate as the consolidated public sector deficit came in at BRL11.5 billion in October. As Goldman (the real one, not the Esteves version where executives go to jail) notes, "the central government continues to struggle and so far, beyond the severe cuts in investment spending and higher taxes, there has been little tangible progress in the much-needed fiscal consolidation."
Overall, the public sector fiscal deficit widened to 9.50% of GDP and the general government debt-to-GDP ratio rose to 66%, up from 58.9% at the end of 2014 (remember, Barclays says the figure could rise as high as 105% by 2021 under a "stressed" scenario).
As for whether Brazil will be able to get its fiscal house in order in time to avoid another downgrade, we'll close with the following from Gabriel Petrus, a political analyst at business consulting firm Barral M Jorge, who spoke to Bloomberg on Sunday:
"The idea that the political leaders have a plan to pull the country out of this crisis died because their very own future is at stake. Never before in history have we had so little certainty about tomorrow."
»
- 671 reads
- Printer-friendly version
- Send to friend
- advertisements -
pretty soon 1 greek hooker + 1 brazilian hooker < 1 venti cup of coffee from starbucks
Pretty soon you will be able to get them all AT Starbucks.
Then we will have arrived in the Brawndo period of devolution.
pods
"ill take a tall dark roast, 2 brazilians, and a chocolate chip cookie please!"
Arresting politicians is like a holding call in Football. You could call it on every play if you wanted to. It's just that the penalty flag isn't usually thrown- unless somebody even more powerful WANTS them arrested.
"You're under arrest."
"Why?"
"We'll figure that out later."
well, Brazil still has the vast profits to look forward to that they will reap for years and years to come after hosting the Olympics, right? lol ;-)
" Rest assured. No Banker or Politician was harmed in the making of this disaster. "
END OF flights to MIA / FLL to go to the condo for weekend partying / shopping jaunts
Wealth evaporates
ISIS is selling women for $10. Of course you never know what's underneath those burqas.
I know... I had a friend buy one of those, and he got areally well behaved goat...
Good one.
But these stories are always about what a friend does.
$10 is to much - didn't you see the Greek students article?
Big titties, no whammies! Big titties, no whammies! Big titties, no whammies!
Oh!....... shit.
ME and Hindu women appear to me to throw in the towel after breeding. Shapeless and almost always overweight after the first child, and that's all she wrote. Many Amerikan women are following this recent trend, however.
Pretty soon, Merica may need to invade, to "save the children".
Government done in secret is the number one cause of Crony Capitalism and the widening wage gap,
AKA the disappearing middle class...
Bye, bye world......
http://beforeitsnews.com/conspiracy-theories/2015/11/us-gives-their-prox...
Check this legitimate ways to mak? money from home, working on your own time and being your own boss... Join the many successful people who have already used the system. Only reliable internet connection needed, no prior experience neccessary, that's why where are here. Start here... www.wallstreet34.com
There is a long-held belief that sitting and past lawmakers (Corzine, Hillary, et al) are all but untouchable because of a lack in US law that affords politicians special treatment in criminal investigations.
Fixed it!
Things get much worse, it will fix itself!
Brazil needs to import 100,000 refugees and things will be 'fixed.'
Olympics are gonna really suck. How about some Cuban baseball teams playing US pros. That or nearly naked Brazillian girls as cheerleaders at some sport.
Olympic in Brazil? Bad idea! It will be a disaster. Rio? It could explode, or worse, Brazil's police and troops will shoot hundreds to keep them in the shanty towns and slums. Blood all over the place. Rio 2016 is a bad, bad idea.
Are there any triathlon events? By the time the water they ingest during the swimming part meets their guts (probably during the running part) it ought to be quite a show.
"And you can see most runners from this point are using the modified clenched cheek gait, which is good."
pods
Move the marathons and bike races to the favelas.
Last man standing wins.
They also recently refused to test their polluted waters, then had one of the worst river contamination in history. Good luck with your EbolaAIDS liberals. Great job keeping all of those dicktators in Qatar and Brazil in power.
But long distance swimmers will have a convenient Baby Ruth whenever they tire out.
If they started arresting all the government crooks, there would be no government left... sounds like a plan to me.......
Arresting bankers is a good idea and in this economic environment panic is always rational.
There are already many thousands of Brazukas calling for the military to take over government and kick-out the political elites.
If the net gets close to Rousseff, that will quite likely happen.
It won't be the same as the military dictatorships of the 70s/80s conjured up by the CIA, but will likely attempt to hold-the-fort during a transition process until they find some new honest politicians. Not so easy in Brazil.
Maybe they could hire a drug lord from one of the favelas...
Or one of the Policia Militar/Federal who control the drug lords.
no such thing as an honest politician.
if you're honest, you live your own life and respect others.
if you're a politician, you try to live other peoples' lives for them.
Ho Hum --- Buy the dip. Fed and ECB have your back. Easy Money.
2016 Olympics in Rio will introduce blood sport as a new event.
They could have the finance thieves jump out of windows, and have other bankers, etc(maybe import a few of the wall st bitches) standing on the ground... the idea being the more on the ground they hit, the more points they get. Whats that you say, you dont want to jump (you FUCKER), then you can watch while we throw your family out, instead...
Jump you fucking cunts...
At least, they are arresting folks and trying to fix things the best they can!
Brazil is the opposite of the US in almost everything, I always thought that Brazil which main activity seemed to be Carnival and soccer was a joke... but now I think that is the US the real joke in the Americas, and the Americans the clowns...
Brazil main thing is Carnival, the US in the other hand, the police state and land of the 'free', has the biggest killing machine that the World ever saw.... and it's destroying the whole planet with it... Now you tell me who is the real freak here...
"Market Panics" and the S&P 500 is down .22 %; keep it up :)
Brazilian state of Rio Grande do Sul [80-90% German-Italian] has a SERIOUS secession movement percolating along...where you want to go if Brazil goes el busto.
http://www.pampalivre.info/
Gaucho country.
Some v/serious flooding in recent months along with Santa Catarina.
Mail order Brazil BUTTS, send me one.
DON'T BE FOOLED BY BRASZILIAN IMF-GOLDMAN SACHS PATSIES. BRASZIL AND THE UKRAINE ARE HEADING TOWARDS THE SAME ROAD.
1.The 300-year old monetary fraud of the Rogue States When the Rogue British could not access the giant Bolivian market (La Paz was out of range of the British cannon fire), they ordered their Braszilian and Chliean puppets to share Bolivian territories by force with the support of the British navy of Queen Victoria in 1867. Bolivia was reduced one third, to what it is today, without their coastland stolen by the Chilean with the help of the British navy and chunks of territories stolen by Braszil under orders from Queen Victoria.
2. In 1760, Adam Smith took notice of the first constitution (Republic) undertaken and penned by John Adams, Benjamin Franklin, Alexander Hamilton, John Jay, Thomas Jefferson, James Madison, and George Washington. Then Adam Smith took a look at what was already going on in Santo Domingos since November, 22nd, 1493 and Virginia in 1607 and Massachussetts in 1617. It was clear as cristal that:
2.1. The Santo Domingos outpost was doomed to judges having governing powers as inherited by their Emperors said Adam Smith.
2.2. The first Constitution of 1760 did away with the doomed Latin American tradition inherited from the Romans. Now the Citizens in the US, had governing powers under the constitution , and empowered by the Supreme Court.
When we notice the success of the anti-rogue states in legal elections since 2002 in Braszil, for the first time after 500-years, as represented by the worker/labor party of Roussef/Lula, we realize how right Adam Smith was.
3.0. The Braszilian courts are infested by judges with governing powers representing the Nato-IMF-Fed.Reserve, exactly like what happened in the Ukraine where a legally elected leftists (organic) won the elections and was ousted by Nato-IMF-Fed marchers.
3.1. While corruption is rapidly being reduced in Braszil, the Courts and the Pinochet Brasilian police are prosecuting only the worker-labor party with doctored proof and evidence and the Bill of Rights and constitution do not exist for the leftists.
3.2. Most of the Nato-judges in power have been caught red handed in massive corruption scandals and nobody dare prosecute them. They are in power and like in other Latin American States, the Nato-Imf judges are persecuting the winners in election simply because their henchmen have lost the elections.
3.3. Nato-Imf are sabotaging the economy and Soros , like Emil Wanta is manipulating the currency and defenders of:
3.3.1. Monetary Fraud
3.3.2. Subsequent Ponzi Currencies.
3.3.3. Bubbled Economy, Population and Ecological devastation.
The Braszilian courts are infested by judges with governing powers representing the Nato-IMF-Fed.Reserve...............yes the judges are sell outs. The judiciary is bought and paid for . Google also judicia corruption in Ghana .In all capitast countries there is huge incentive for judicial corruption on big cases with ansolute civil immunity.
BTG is also hooked up with Abengoa
This shit needs a soundtrack.....in fact, the Política is as described here. This is Brasil as-is. These people and their friends have siphoned R$ Billions and billions over the past 13 years as Brasil leveraged up mainly vis a vis Petrobras. Instead of implanting a viable petroleum industry they and everyone else who could carved out a slice and left nothing useful to support paying off the debt. The scale of the pillage is vastly more than enough to make objective and durable improvement to the well being of many millions of citizens. You know, schools, roads and hospitals. Instead these resources went offshore to the very narrow benefit of the insinuated. Governance at its finest.TThe real shame is that these people carry on like they deserve tobsteal because they are who they are and they've been doing it for generations. The difference in the present is simply the scale of the loot made available by PBR debt.
.
Salah, thanks for info, I support the idea. Santa Catarina is very similar, al lot of heritage from Europe - blond girls with blue eyes)) These two states should do just fine separately. Actually, Santa Catarina has an advantage:) Food and water security, amazing life supporting energy and nature, some excellent life hedge properties still available there - http://visa4brazil.com/
Law makers, eh. How about "Law enforcers" ???? We don't need no new stinkin's laws! Politician's job is to enforce the ones already in place for God's sake!
Tyler - there is hope for you, Dude. when unknown Turkish hackers dwstroy your Web site, and Janet Yellen shoots out your tires ... just move to Brazil. Become the Minister of Finance. Presto ... total immunity.
What could go wrong???