

Brazil's president

Dilma's first big test


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Mr Ripley

Imperfeito you have your facts are completely incorrect.

You don't have 'pure capitalism' if you bail out the losers. You don't have a free market if you bail out the losers.

Where do you think the bad loans originated from? The government wanted to see more people gaining mortages whilst they absorbed the political and economic capital.

Your assessment of the crisis is blind and wild.


Mr Ripley,

Milton’s point is very interesting specially this one:
“if you provided all the welfare money straight to the people it was designed to help - they would be among the rich”. Great! Now I ask you: you who? I mean how could one do without an administrator? Robots? I ‘d rather discuss efficiency than chasing rainbows like this.
Now a point of yours which is not firmly grounded in facts:
“But as socialism steadily consumes the free society as it has done in America and other countries - the problems are clear to see. Not problems caused by the market “
I haven’t heard this line much after 2008. The last American economic crisis was not caused by socialism at all - Quite the opposite. It was caused by the market insufficiently REGULATED. Put plainly - The market was too free and thus CONSUMED an entire American bank. Not to mention the harms in the economic balance of many countries that trusted their savings in US papers. Those who still believe in dollar bailed US out. Pure capitalism is blind and wild. This is clear to see. Pure liberalism is a fantasy as is anarchy. Maybe it will worth what rhetoric says it does in a 100 thousand years time when human beings possibly will reach another level of evolution and consciousness. For the time being I suggest you and the other readers an alternative for your point of view: Read “Our Fantasy Nation?” By NICHOLAS D. KRISTOF. http://www.nytimes.com/2011/06/05/opinion/05kristof.html?_r=1&src=ISMR_H...


Great pic!
After the Palocci blow, Dilma has to fix her denture!

This case shows how pathetic Dilma's government is and how politicians like Palocci can still get away with things. I guess eventually he will be fired, but he will not be prosecuted for such blatantly case of illegal accummulation of wealth. Anyway, another sad point of this situation is that it made clear who's boss: Dilma will "consult" with Lula, our Putin (in all senses), before she takes any "decision"...


Unfortunately Dilma was kidnapped by PMDB and by part of PT (her own party).
She had to accept Mr Palocci's name, pointed by PT (or by Mr Lula). Mr Palocci once again is involved in something foggy. He does not have moral enough to sit in his chair and maybe he never had.
He must be replaced by someone who really can help president Dilma. Today, as he did in the past during the president Lula's administration, he's the troubled guy - someone who creates more problems than solutions.
Dilma knows that Ciro Gomes (PSB) is the one who fits in Palocci's chair. However his name gives goosebumps in PMDB. Mr Gomes knows extremely well the three big parties: PMDB, PT and PSDB. He doesn't mind to tell the truth on TV or during a closed-doors meeting and because that he is hated by all three parties, which is the best feature he could ever have.
He's the guy who the old-fashioned and worse politicians in Brazil hate the most (such as Mr Sarney - Senate's president and Mr Temer - the vice president).
Both were once publically defined by Mr Gomes as: "the worse kind of politicians" and "the mobsters' bosses". That's the kind of truth that I was talking about.
President Dilma knows Mr Gomes very well and she knows she can trust him. However his name became something like "He-Who-Must-Not-Be-Named". There's no chance to have Mr Gomes in that chair. Unless president Dilma is willing to fight the biggest war of the Brasilia's history.
On the other hand everybody knows that she cannot trust in PMDB (the vice president's party neither in Mr Palocci), which means that she will be forced to give whatever PMDB will ask.

Mr Ripley

Imperfeito says - "People that mention “old inflationary days” are just economics illiterates unworthy of further attention"

Milton Friedman argued that inflation was voted for, a tax citizens get their legislators to put in place. People want to see the prices of the things they sell to keep rising - they want inflation.

The level of infrastructure investment and investments as a whole in Brazil continue to fall in relative terms.. expenditures continue to rise. The reality of this type of government is steady to emerge - with an unavoidable and costly bill. When we discuss the problems of America we refer namely to "entitlement spending" which now includes an additional 50 trillion dollars that needs to be found to meet those medicare/social security spending obligations over the next two decades. Put plainly - governments are not borrowing money to "build stuff". They are borrowing money to pay administrators. To highlight Milton again, in the 1970's he describes in a lecture how if you provided all the welfare money straight to the people it was designed to help - they would be among the rich (higher than the average salary in America) but it doesn't go to those people - the money finds its way into the administration of those programmes. It creates a new special class, a government administrator who is well paid. It helps the adminstrator more than those it was designed to help. Productivity across all countries continues to fall partly due to this. We are becoming less productive as a society and Brazil has been no different.

We are always talking about mixed systems - the largest body of the market in Brazil is "free" (as it is elsewhere) and thank god for that. But as socialism steadily consumes the free society as it has done in America and other countries - the problems are clear to see. Not problems caused by the market - by politicians promising the world so people will elect them. In the long run it's always a bankrupt policy - the money runs out.

The challenges Brazil faces as a whole are no different than many other countries in this respect. We have got to be responsible as a society and use our resources most carefully. If we spend our lives at the mall consuming junk we are not building the society of tomorrow. If Brazilians think you can buy first world status at the mall they are highly mistaken. You've got to build it.

Many of the institutions, parks, libraries, museums you will find in the "developed world" resulted from the actions of private individuals and did not evolve from government programmes.


Palocci was not appointed by Dilma because she liked him, but because Lula had plans to politically revive him. When ministers in Lula government, they were on opposite sides on economic issues. So it won't be especially painfull for her to dismiss him. Politically, she will gain from his departure, because the strategy mounted by him to deal with the Congress allies has not worked. Palocci is not consensus even inside the Worker's Party, where many brand him as a neoliberal (yes, that's not a compliment yet in this party). His dismissal won't be a victory of the opposition either, since its prominent 'leaders' have not said a word against Palocci.


Good article. I gotta some corrections to suggest though for the sake of precision. First of all I don’t agree with all this worry about slowing the economy down. If low unemployment is pushing up inflation – which I think may be the case – our job is just to define the tolerable limits. Let the fever help the body a bit. I think it’s a price worth paying to a certain extent. People that mention “old inflationary days” are just economics illiterates unworthy of further attention. Second is about TE suspicion that Dilma can’t stand on her feet. I believe something different. Dilma behaves like this because she doesn’t want to upset Lula’s views and plans. If left completely alone she would quickly find her own way which probably wouldn’t include Palocci. As for Palocci I’m sure that all this fuss derives from the opposition inability to raise real issues. He was relatively so poor that anything he did after his term as ministry would 20-fold his personal possessions!. Nevertheless, I think it’s a good opportunity for him to step down. He is a boring figure, too patient and cold with the people who is accusing him. People whose own lists of sins and wrongdoings are as long as long can be. I think Lula should free Dilma and Dilma “free” Palocci and Brazilians free Brazil from this kind of opposition.
I know my inbetween point is so grey that don’t please neither Petistas nor PSDbistas but this is my honest reading of this situation.
FROM Brazil – Ubá-MG

Fabio C

Right...Dilma does not control Congress despite the majority the “allied” base gives (which is fine, she is not suppose to control Congress anyway but the fact is that she is suppose to have an overwhelming majority), does not control the "allied" based which is in truth in PMDB pocket and is made out of people who guide themselves by their personal and regional interests, does not control her own party which in reality is controlled by Lula and Dirceu...what does she control? The drawers of her desk?

As I have said, Dilma is just a front, an apparatchik.
Is very difficult for people who have a conscience to deal with Brazilian reality, the contradiction is so obvious is exasperating, and the solution is as clear as it is elusive. The capacity the Brazilian people have to shot themselves in the foot never ceases to amaze me.

Our good fortune is that Brazil is a naturally wealthy country and Western European oriented, wasn’t for that today we would be like Pakistan.


Fabio C, I am afraid I did not make myself clear. Or you did not paid attention to what I have written.

I agree that Palocci has the credibility that few - or none - in the government have. If he leaves, Dilma will lose her most competent Minister.

Dilma can fire Palocci, of course. Have I written that she could not?

Do you believe PMDB is backing Palocci? Really? What gives you that impression?

You have asked "is the government divided?" The answer can be found on the Forest Code voting. Dilma commanded congressmen to vote no, they voted yes.

In my pinion, Dilma is the target and Palocci's enrichment is the weapon. The crisis was probably started by Jose Dirceu or someone from PT that is powerful and does not like Palocci. Most people bet on Dirceu, myself included.

The timing was perfect because the Congress is not happy with Dilma. Not at all, particularly PT and PMDB. Therefore, the Palocci's crisis has grown a lot and very fast.

Now it is a crisis between Dilma and the allied Congress base (mainly PT and PMDB). Congressmen believe they have not received the "attention they deserve." In other words: Dilma is not following their requests to appoint friends to key government positions.

The crisis is big and Dilma is losing the Congress support. That is why Lula returned: that puts the PT project in risk.

Dilma is the president, but she does not control the Congress. The allied Congress base is extremely thirsty for power and Dilma has been slow to appoint people suggested by the Congress. That is the problem Dilma must solve, otherwise there will be a one crisis after another.

I am glad you believe my nick makes sense - whatever sense it makes to you...


This is what happens when a successor government reaps the benefits of a predecessor's policies. Having coasted along for a few years on the Real program, now the socialists do not know what to do and have a President that is just a backroom apparachik who knows nothing and has run nothing. Poor Brasil. It must suffer through a socialist government which is inclined to do all the wrong things. So sad.

Fabio C

Cola, out of your note only your nick makes sense. We all know that Palocci was victim of friendly fire, but it clearly undermines Dilma. She is the president, can’t she sack him? You say the timing was perfect...What timing?! She doesn’t have enough power to dismiss an awkward member of her cabinet? Can’t she call him in her office and ask him to resign due to family reasons? Why this episode has to be so traumatic with PMDB backing Palocci and PT undermining him. Is the government divided?

Palocci has a credibility that very few in the government have; he is Dilmas chief of staff with free transit within the market! His departure does undermine Dilma. Why is it that Lula had to come out from retirement to calm things down? Again, Dilma is the president, can’t she do it herself?

Dilma is just an apparatchik brought to the limelight by Lula. We might end up in the hands of Temer and Sarney. Who will replace Palocci? Delubio, Dirceu or Erenice?

It is clear that the Brazilian people have made a very poor choice last November, the Real Plan has given all the political dividends it could and is now over, and Dilma doesn’t know what to do about it.

Neither she nor PT. Oh well...there will be elections in 2014. Hopefully!!!!


Palocci's wounding has not hurt the president. It is the other way around.

In reality, Palocci's wounding has grown into a crisis because the President is not complying with the increasing congressmen demand for appointing names for key positions at the Executive Government.

Palocci's wounding was very well orchestrated. The timing was perfect and the confidential information was only available to Executive Government servants and politicians. The information was probably given to the press by someone from the Government's party - friendly fire.

Fabio C

Is also good to know that Palocci is victim of friendly fire. There has been a meeting of PT national commission and its members don’t believe Palocci will survive this episode, they have even privately mentioned names of people who could replace Palocci when he eventually goes.

The party is very upset because Palocci’s consultancy office made R$20million (£7.7million) during election time when he was the man in charge of fund raising. He bought an office suit for R$6.6million (£2,500million) at a time when party candidates where taking debts to finish the campaign.

This is all very familiar, we have seem this soup opera before.

Fabio C

And so we have reached the end of the Real Plan, the stabilization plan that financially organized Brazil and brought us back to the international market as a viable nation. Now what?

From now on reality will be very different from the time when Lula was reaping all the glory brought by Plano Real as if it was his. The party is over and PT will have to implement those so famous reforms, which have for so long been postponed, under the risk of returning to the old inflationary days.

I also take this opportunity to repeat what I said about Dilma BEFORE the elections, she is no more than an apparatchik brought from the shadows by Lula. Dilma is Lulas Medvedev and the result is right on front of us: she just CAN’T do it! Dilma is a person to be in the back office, so much that Lula had to come back from retirement to play politics in her place.

Is also evident that PT is not that insurmountable machine as many thought. PMDB is the real power as they have the skill and the numbers to approve or reject as they like at the Federal Congress.

Dilma as president is a lame duck.


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