Financial Crisis in Brazil
The crippling devaluation of the Real- from U$1=R$1.2 to U$1=1.91 in less than 2 weeks - plus the hard currencies reserves meldown in Brazil, is having its future effects evaluated here in Brazil. The chief Brazilian bourgeois newspaper, _O Globo_ (owned by the press moghul Roberto Marinho, "The Brazilian Citzen Kane") last Sunday, offered some insight on the issue, which I translate on the fly:
DEVALUATION TO AGGRAVATE INCOME CONCENTRATION
(*O Globo, 31st january 1999)
The earthquake that is hitting the Brazilian economy since the 1st days of the year will *reduce to pieces* [*destroçar*- my emphasis] a part of the population that has never even touched a dollar bill. The traumatic devaluation of the national currency and the inflation [generated by heavy dependency on imported inputs-CR] that tends to attain 10% in yearly rates, will sharpen one of the country sores:income concentration. With a forecast of a fall in GDP, the yearly per-capita income - which had in 1997 attained its all-time high of U$ 5,000- will recede almost U$ 1,000 and return to the levels *of the 1st. year of the Real plan*" [that's to say 1994; emphasis mine]"
An adjoining graph gives values: At the begining of the 80s, p/c income had attained U$ 2,189; with the early 80s recession, it immediately fell to 1,496, recovering to 3,081 in 1991, with the period of fiscal laxness and public spending during the Sarney government (which brought, as a side effect, hyperinflation).Financial adjustment during the Collor government (including freezing of financial assets) made it fall to U$ 2,506 in 1992.World economic recovery, plus the R$ scheme, led to a recovery- mediocre, but steady- to the said 1997 5,037, and to the forecast of a fall to 4,054 in 1999".
In other words, without just one shot, in terms of average living standards, it is as if the last 4 years didn't exist- something one could think possible only in textbooks about "War Communism" (specially in accusatory accounts by R.Pipes et al). But average is just that, average. Since a compression of the mass of wages is going to happen-the Ford plant in Sao Paulo has just laid off 255 of its entire workforce- and financial gains are to increase in returns over capital investment (the rate offered by public bonds being the 3rd highest world wide) we have the following considerations:
"The wealthiest 10% of the population have *now* no less than one half of national wealth [says the head of the Economic Dept. of the Rio Catholic University]
"- 20% of Brazilian workers earn monthly less than the minimum wage[of roughly U$ 120 *before the devaluation].A country so big cannot have so high poverty levels, compared with the p/c income. And that will worsen"
Well, what is this? Some Trot leaflet interviewing Cde. X? No, it's the greatest bourgeois newspaper interviewing the head of the Economics Dept. of the university where most of the government financial experts had their upbringing and wh