Tuesday, June 10, 2014

Why Lula Was Better For Brazil Than Dilma

Say what you want about the Workers'  Party, or the PT of Brazil, but the blue collar, quasi-illiterate, nine fingered leader of the Brazilian Workers' Party, Luiz Inacio Lula da Silva, was a whole lot better than his successor, Dilma Rousseff.

The market is now pretty unanimous on who to blame for Brazil's investment woes these days, both from portfolio and corporate investors, and that lies firmly on the shoulders of the Dilma administration.

Let's back up for a second.  In 2002, the Intercontinental Hotel in downtown Sao Paulo, a hop, skip and a jump away from Avenida Paulista, hundreds of media and union workers lined up waiting for Lula to make his first speech as president elect. Cameras from Globo and SBT television lined the wall. I stood maybe thirty feet from the stage, waiting. I remember some guy who was in a machinist union talking my ear off about Lula. I was there for The Boston Globe. Lula arrived late after beating José Serra in the second round; cities around the country had the Lula campaign jingle cranking at full blast for days. I remember the lyrics: "É so você querer/que amanhã melhor assim será/agora é Lula/agora é Lula, Lulaaaaa."

It was a song that promised  hope.  Brazilians know this: Lula was Obama before Obama. And even though the market hated him, sending the local currency, the real, to four to one, Lula quickly become the pragmatic capitalist. He put a former Bank Boston CEO in charge of the Central Bank, Henrique Meirelles. Meirelles promised to destroy Brazilian inflation and lower interest rates. He did.

Under Lula, the economy improved, people got richer, the poor earned their daily bread, Brazil discovered an oil rich Venezuela under thousands of feet of Atlantic Ocean bedrock, and Goldman Sachs said Petrobras shares were going to $60. Every credit rating agency granted Brazil investment grade status for the first time. Other than China, this was the emerging market you wanted. People could not get enough of this country. People could not get enough of Lula. He was a rock star. Brazil was his stage. People were happy.

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