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Surprise, Surprise | Infowar and Foreign Investment

13269158 (1)

Source: Carta Maior

By: Saul Leblon

Topic: Infowar comes home

After years of abusing the adversative construction — “The country in good shape, but” … – economic journalism is now full of “surprisings.”

It is on this term that they have so precariously balanced their own credibility.

For example: the FGV informs us this week that consumer confidence is at its highest point in five months.

This bit of news is inconsistent with the alarmist outlooks printed during that five-month period.

And not just in relation to that indicator.

GDP also “surprised” us in the second quarter as the headlines mumbled about economic growth much higher than predicted by the duly objective press: 3.3% over the result in the same quarter of the previous year.

Employment was another source of “surprises” in August with a 26% increase in the offer of formal employment.

Tax revenues were also notable for their disagreement with the gloomy prognosis of the conservative press. 

Tax revenues hit a record high last month, at nearly 3% over August 2012.

This was a “surprise,” despite the R$ 51 billion in tax breaks used to foment production.

And finally, there is interventionism, deemed unacceptable by the criteria of the financial press, which for years has prophesied “imminent fiscal desequilibrium” caused by the “spendthrift Workers Party.”

To the surprise of readers everywhere, this is not what has happened so far.

What comes next will be hellish.

Before, the headlines registered surprise at the return of inflation to the limit set by the Banco Central, in July and August.

And still consumers are unafraid to tax risks.

In a near-paradox, they have paid off their debts and increased their spending. 

The Brazilian retail market “surprised” us, growing 1.4% between January and August, compared with the same period in 2012, as last week’s headlines disdained to report.

All in all, a contrary movement has crossed the bridge to make life hell for the evangelists of imminent collapse.

Ben Bernanke, president of the Fed, threw a fit last Wednesday.

The incentive to liquidity in the U.S. will not be over anytime soon, he announced, without setting a time limit, meaning it could take us through 2014.

Columnists who savor the inevitable upward pressure on the SELIC rate to contain the effect of pressure on the currency, associated with the rate hike in the U.S., swallowed hard and admitted: 

The Fed surprised us. 

But the recurrent presence of this surprise effect in the headlines should not be understood as a symptom of something it is not. 

Brazil does have serious structural problems.

It is just that these are not quite the same problems listed by a media frightened by the unimportance of its verdicts and how seldom their “solutions” are adopted. 

The Brazilian economic machine resents the deadly exchange-rate overvaluation that inhibits exports and exports demand. 

External accounts suffer, as well, from the erosion of commodity prices. 

Industry, which is out of date in terms of technology, is watching as its products are crushed in the marketplace by imports. 

Infrastructure screams for attention and the necessary model for investment necessary to the progress of very large projects are late in coming.

Above all, Brazil lacks a poltical strategy, negotiated with society in order to successfully navigate the transition from (1) an economy planned for the sake of one-third of its citizens and (2) another in which the mass market has assumed a structural role and scale.

Contrary to the preaching of the media, the challenge here is precisely to construct some alternatives to the anachronistic model of liberalization, especially when it comes to capital flows, which deprive development plans of their consistency. 

This was already true in Bretton Woods, in 1944.

A  certain John Maynard Keynes said at the time that even in the context of capitalism — his line of work, after all — one could not serve three gods at the same time. 

By which he meant: freedom of capital; free trade; and autonomy of monetary policy — that is, setting interest rates, the decisive trigger of an investment cycle.

An example will illustrate how modern that lesson continues to be. 

At the first signs of a rollback of capital injections in the U.S., the Brazilian Central Bank was compelled to raise rates. 

In order to ensure the country remained attractive  to gunshy investors, the BC took the variable that could turn speculative into productive capial and gave it a sound beating. 

And vice-versa, as in this case.

To understand the role the media monopoly had in reaching this crosssroads is crucial to reacting effectively to the siege of the conservative agenda. 

To what degree is it possible to structure the agenda of development, centering your efforts exclusively on the economic plane, as has been done, without altering the clamorous lack of equality in the diffusion of ideas?

To what degree does the manipulation of social discernment, conditioned by a spherical machine for the diffusion of rent-seeking behavior, limit the palette of solutions to the crisis? 

Recapitulating: Five years ago we lived through the largest collapse of capitalismo since 1929. 

It was a masterpiece produced by the credo of the minimal State, and associated with the suicidal delegation of social destiny to self-regulated markets. 

Returning to the State its proper role — which includes, among other obligations, the control of capital in order to protect the economy from the roller coaster ride of globalized finance — is part of the solution. 

It remains, however, sacrificed on the altar of deregulation, by the same journalism that once produced adversatives, and now artfully flexes the verb “to surprise.”

Surprise. It sounds almost like a synonym for “proven wrong.” 

Not necessarily in its premises. 

But in the reality it does its best to deprive of its authority.