Mish's Global Economic Trend Analysis: Venezuelan Bolivar Plunges to Record Low on Black Market; Bond Default Coming Up in October?:
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Brasil Socialists Pick Silva As Presidential Candidate
August 17, 2014 10:24 pm
Brazil socialists choose Silva as presidential candidate
Marina Silva, an environmentalist from a poor rubber-tapping family, is set to be named by the Brazilian Socialist Party next week as its presidential candidate, replacing Eduardo Campos who was killed in a plane crash last week.
Members of the PSB party said over the weekend that the decision to back Mr Campos’s running mate was sealed but would only be officially announced when the party convenes next Wednesday, leaving Brazil more time to mourn the death of one of its up-and-coming political stars.
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- Brazil shaken by candidate’s death
- Video Brazilian presidential candidate killed in air crash
- Brazil crash kills presidential candidate
- Ex-governor offers Brazil option for president
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IN AMERICAS POLITICS & POLICY
While some analysts have suggested Marina could pick Mr Campos’s grieving wife to run alongside her for vice-president, PSB congressman Beto Albuquerque has become the favourite to take that position, according to local media.
Tens of thousands of Brazilians turned out on Sunday in Mr Campos’s native city of Recife to pay their respects to the presidential candidate who died when his private jet crashed during bad weather on Wednesday morning, also killing four of his assistants and the two pilots.
“We will not give up on Brazil,” shouted his fans, repeating one of the last phrases Mr Campos said in a television interview the night before he died. Three of his five children held up placards with the same phrase as they accompanied his coffin on the top of a fire engine in the early hours of Sunday morning.
Senior politicians attended the funeral service, including President Dilma Rousseff. She was booed by some in the crowd in a repeat of the humiliating reception she received at the World Cup this year.
While 49-year-old Mr Campos would have struggled to win presidential elections in October this year, many thought he was capable of leading in the future and his death has been treated as a national tragedy. It has also changed the dynamics for the election.
Ms Silva, who won nearly 20 per cent of the vote when she ran as the Green Party’s presidential candidate in 2010, already has a wide national support base and has a higher chance of being voted into office this year, analysts say.
A staunch evangelical Christian and environmental campaigner, she has the backing of the fast-growing evangelical community, many younger Brazilians and the intellectual elite. Her struggle to overcome poverty, disease and illiteracy has widened her appeal.
As a former member of the ruling PT party, she will also be more difficult for Ms Rousseff to attack in the weeks leading up to the election.
However, Ms Silva is likely to meet tough opposition from the powerful agribusiness lobby and she has often isolated voters and fellow politicians with her tough environmental stance. She only joined Mr Campos in October last year after she failed to set up her own party, the Rede Sustentabilidade (Sustainable Network), in time, and had viewed her participation as a test-run for future elections.
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Fernandez Support Wanes As Argentines Focus On Everyday Concerns
August 17, 2014 12:41 pm
FernƔndez support wanes as Argentines focus on everyday concerns
At a gathering of hardline supporters of Argentina’s president, Luis D’ElĆa’s voice cracks with emotion as he celebrates Cristina FernĆ”ndez’s refusal to pay the group of creditors branded the “vulture funds”.
“Much worse than the vultures abroad are the vultures within,” the social activist tells the crowd, referring to domestic opponents who have criticised Ms Fernandez’s decision not to pay the “holdout” creditors, which pushed Argentina into default for the eighth time in its history.
ON THIS TOPIC
- Argentina Unresolved debts
- Argentina v holdouts plus Ƨa change
- Argentina crisis clouds Kirchner’s sunset
- Argentina default triggers swaps payout
IN AMERICAS POLITICS & POLICY
After the default, support for Ms FernĆ”ndez swelled on the perception that she was standing up for Argentina’s interests against an enemy that, in Mr D’ElĆa’s eyes, threatens to undermine the country’s stability and represents the worst of “savage” capitalism.
But amid fears that the default will aggravate a deepening recession, with job losses and shop closures increasingly dominating headlines, the big question is how long the government can survive without cutting a deal with the holdouts, and so put an end to the default.
“If the government sees that there is no urgency [to reach a deal] because the economy is under control and there is no unrest on the streets, it could continue to postpone a deal for some time,” says Alejandro Catterberg, a director at PoliarquĆa, a local polling company, who points out that current problems pale in comparison to previous episodes in Argentina’s crisis-riddled economic history.
For now, the government’s confidence has been boosted by a series of positive opinion polls. According to one from PoliarquĆa this week, only 49 per cent of Argentines believe that the government should obey a New York judge’s order to pay the holdouts, a group of hedge funds who refused to accept restructured debt after the country’s 2001 default. That compares with 65 per cent at the time of the US Supreme Court’s rejection of Argentina’s appeal in June.
Nevertheless, the same poll showed that more than two-thirds of Argentines believe that a failure to reach a deal with the holdouts will bring economic gloom.
Analysts agree that should the market optimism begin to disappear – bond prices have remained high as investors bet that presidential elections in October 2015 will deliver a more market-friendly administration – the government will be forced to find a solution in order to avert a balance of payments crisis, with central bank reserves plumbing record lows.
Amid growing pessimism for the prospects of a deal between the holdouts and the private sector – many now expect the government to wait until the end of the year when a key clause in its bond contracts expires.
Although officials had argued that the so-called Rufo clause prevented the government from negotiating with the holdouts, since this would trigger a torrent of lawsuits from the rest of its bondholders, others argue that a deal would still be politically unacceptable.
But whether or not Ms FernĆ”ndez could maintain support should the economy hit the buffers is in doubt. Her appeals to nationalist sentiment are already foundering, as the government unsuccessfully attempts to blame Barack Obama, the US president, for Argentina’s problems by failing to keep unruly judges under control.
“As the days go by, people are returning to their everyday concerns: crime, inflation, job security,” says Ricardo Rouvier, a political scientist in Buenos Aires.
Sergio Massa, Argentine opposition leader, has described such problems as the real “vultures within”.
“The president wants to complete her mandate in the best way possible so that she can rescue the idea of the so-called ‘victorious decade’,” Mr Rouvier says, referring to how Ms FernĆ”ndez describes the period since 2003, when her predecessor and late husband NĆ©stor Kirchner became president.
The slogan is based on the idea that the couple resurrected Argentina from the 2001-02 economic crisis and set the country on the path to lasting prosperity, even though Ms Fernandez is struggling to fight off “stagflation” as her presidency reaches an end in December 2015.
Indeed, the government has engineered a string of abrupt U-turns in the past, implementing policies that it had sworn never to consider – notably January’s devaluation and the deal to compensate Repsol, the Spanish oil company, after expropriating its assets in Argentina in 2012.
“In the end, the Kirchners are pragmatists. If they have to negotiate, they will negotiate,” says Mr Catterberg. “This is not about ideology, or who is good and who is bad. The government just needs a political victory.”
Thursday, August 14, 2014
Brazil air crash kills presidential candidate - FT.com
Brazil air crash kills presidential candidate - FT.com:
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August 13, 2014 6:05 pm
Brazil air crash kills presidential candidate
The Brazilian presidential candidate Eduardo Campos has been killed in an air crash, robbing the country of one of its rising political stars and changing the outlook for the most hotly contested national electionsfor more than a decade.
A private jet carrying Campos, of the centre-left PSB party, crashed in bad weather in the coastal city of Santos on Wednesday, killing all seven people on board, according to SĆ£o Paulo’s fire department.
While opinion polls had shown that Campos was the third-strongest presidential candidate before October’s vote, analysts had expected the business-friendly leftist to gain more votes as his official television campaign got under way.
ON THIS STORY
- Tackling Brazil’s crisis of confidence tops Rousseff challenger’s list
- Brazil voters face dirty politics as usual
- Brazil’s growth deeper into the dumps but voters happy
ON THIS TOPIC
- Brazil injects $20bn into banking sector
- Obituary Norberto Odebrecht, construction executive, 1920-2014
- Brazil holds interest rates steady
- Brazil’s election campaign kicks off
IN AMERICAS POLITICS & POLICY
Some had also forecast a possible alliance with AĆ©cio Neves of the PSDB party in an expected second round in an attempt to unseat Dilma Rousseff, the incumbent president.
Campos’s running mate, Marina Silva, was not on board the aircraft that crashed.
Rafael Cortez, a political scientist at TendĆŖncias, a SĆ£o Paulo-based consultancy, called the politician’s death a tragedy and said: “The repercussions are wide open and there is a potential for big change . . .
“It will depend on who Campos’s replacement will be and whether Marina [Silva] would accept that position.”
Brazilian stocks swung wildly after the news as investors struggled to assess whether Campos’s death would make an opposition victory more or less likely.
Brazil’s benchmark Bovespa index lost early gains on Wednesday and dropped as much as 2.1 per cent before recovering slightly to 1.5 per cent down by the close.
While Ms Rousseff is still the favourite to win, her waning popularity since mass protests last year has been welcomed by investors who dislike her party’s interventionist economic policies.
“It is now likely that [Campos’s] place will be taken by Marina Silva, his running mate, after an extraordinary party convention,” said Tony Volpon, an economist at Nomura.
“We would expect that her candidacy could potentially receive a big initial boost due to the emotional reaction to Campos’s passing away.”
I heard a huge bang and I thought our building would collapse
- Bianca Laino, an 18-year-old local student
In Santos, an industrial coastal town and home to Latin America’s largest port, investigators scoured the scene of the crash for clues to the cause as smoke billowed from the residential area.
“I heard a huge bang and I thought our building would collapse,” said Bianca Laino, an 18-year-old student who was in her school’s classroom when the plane crashed.
“There were policemen everywhere, and then we started to see smoke rising.”
At least six other people, including an 18-month-old baby, were injured when the plane crashed on a gym around 10am following an aborted landing, according to the nearby hospital Irmandade da Santa Casa da MisericĆ³rdia. Many of Brazil’s politicians paid tribute to Campos. Analysts said they expected a polemical battle among some participants to use the crash to their advantage.
Campos, a former governor of the northeastern state of Pernambuco, was attracting only about 10 per cent of the vote, according to the latest polls.
However, analysts have partly put that down to the vast territory of Brazil, where it takes time for politicians to gain recognition nationally.
His official campaign on television – an influential tool in a country with high illiteracy levels – was expected to start next week.
Mr Campos was one of the youngest politicians in Brazil to run for president, celebrating his 49th birthday only three days ago. He leaves behind his wife and five children, the youngest of whom was born with Down’s syndrome this year.
“Eduardo died the same day that our grandfather died nine years ago,” Mr Campos’s brother Antonio Campos said in a Globo television interview on Wednesday. “But he died for his ideas, he died trying to improve Brazil.”
Additional reporting by Thalita Carrico in SĆ£o Paulo
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