The Awful Truth About Brazil’s Protests: The ‘Country Of The Future’ Is Still Hostage To Its Past

WOKE UPJust two years ago, as a guest in the Brazilian political talk-show Roda Viva, Eike Batista called Bill Gates “monothematic.”

According to the man who lost the biggest amount of money in the world last year, the founder of Microsoft MSFT -0.06% erroneously dedicated too much of his time to the founding of the company.

Batista, as he explained, was the ultimate modern entrepreneur for creating not one but many companies from the scratch, all at the same time, and with activities in different sectors and destined to be worth billions of dollars each.

Gates’ alleged monotheism has brought him back to the top spot in Forbes’ Worlds Billionaires list, replacing Mexican tycoon Carlos Slim — a task, it must be remembered, that a multitasked Batista promised in 2010 he would perform himself.

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Now worth roughly $6 billion, down from $30 billion in March 2012, Batista has seen the value of his six listed, pre-operational and heavily public-funded companies fall by as much as 78%. And that was in 2013 alone.

The man who wanted to be the richest of them all is clearly on the wane. And so is his native country of Brazil.

Slower growth and high inflation, an appreciating dollar and a possible runaway credit boom facing the country’s banking system have showed the world that, just as Batista, credit crazy Brazil is heading for trouble.

Over the last ten years, the massive increase in credit in Brazil made room for a potential risk of credit crunch for its financial sector. That happened before in countries like Ireland and Greece, who have recently experienced crisis of huge proportions.

Such scenario is unlikely in Brazil due to the country’s government capacity to avoid disaster, as it has the sufficient assets to prevent this, but it could create some difficulties.

There’s already evidence of a housing bubble. Defaults are on the rise and consumer confidence is declining, plus Brazil’s credit-fueled growth is starting to reach its limits — in recent years, the country’s economy has slowed dramatically, from 7.5% in 2010 to a projected growth rate in the -3% territory this year.

Add to that a growing complaint over poor services and World Cup costs, a complicated and inefficient infrastructure program that falls far short of what is needed for a country hoping to break out of the “middle income trap,” and the result is a shock of reality filled with uncertainty and anxiety, the sort of buoyant sentiment that precedes retreat, as the recent events in the country have showed.



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