Opinion – Vinicius Torres Freire: Lula 3 undoes friends and business, loses two months and starts 23 at a loss

The job of rebuilding government and restoring basic human decency is going to be a long one, given the disasters of the dark years, 2019-2022. In public administration, the reports of reasonable people who work in the transition say that the damage is greater than what is already known in areas such as the environment, education, health, science and technology, social assistance (Bolsa Família etc.) or the police.

Of course, in the economy the problems are also bad, some grotesque, like not having money to pay basic mandatory bills. There is no time to lose in any area, but in the economy, the transitional government has backtracked.

The recent damage is by no means irreversible. However, the climate of optimism that was seen until the second round began to break down in the first ten days of November. In the economy, it is possible to do damage even before the beginning of a government.

The measurable optimism was that of financial conditions: interest rates on a downward trend since July, discussions about the possibility of the Central Bank even bringing forward the start of the Selic cut to before the middle of 2023, although the BC’s management did not endorse this people animation of markets. Now, among other problems, the debate is about postponing the first Selic cut to the last quarter of 2023.

It is not the only aspect to take into account, although high interest rates dampen the spirit of expanding businesses and hiring more workers. Apart from the confidence indicators, on the downside, there is no measure of what the business attitude will be, however.

But it is already possible to hear talk of “let’s hold on a little longer”. Executives at big companies say the first quarter will be one of “watching”. Others, more numerous, say that the “budget” (of the companies) for next year was already given some time ago, before the election, in a slight boom, as the economy would lose pace, anyway. The balance of these dozen conversations, as you can see, is not good.

Reports from foreign banks generally remain buoyant about Brazil. It is not uncommon to read the thesis that the country started its monetary adjustment earlier; that public debt has not exploded; that, in comparison with other “emerging countries”, the country even stands out.

Some have already noted that Brazilian “asset performance” has been negatively distorted over the last month (the real has not appreciated, debt securities have lost value, the Stock Exchange even more so). They seem surprised by something, although they shouldn’t be naive about Brazilian political issues.

As far as it is possible to measure, repeat yourself, if you walked backwards. The end of the year is there. Some clarity, only in 2023. Two months lost, excluding the regression.

There was no more decisive indication of what economic policy might be. Fernando Haddad’s first speeches are still vague. It was terrible to nominate Aloizio Mercadante to the BNDES with the spice of humiliating casuistry, to change the law to prevent his nomination from being challenged in court. It gives the impression that the State Law can turn into a rag at any time.

None of this is a prognosis, but it is a bad expectation. It would take a lot of stupidity and effort to revive the damage done by credit policies subsidized by huge public debt, via BNDES, and the general malpractice of Petrobras. But the eternal return of stupidity is a driving force in Brazilian history.

In order not to be so dramatic, returning to the details, it can be said that, to compensate for the climate, there was not even an announcement, an idea, a speech or other carrot that could serve as a distraction, a reason to sustain optimism.