Opinion

Anatole Kaletsky

Should Brazilians cheer if they lose the World Cup?

Anatole Kaletsky
Jun 13, 2014 19:22 UTC

Brazil's President Rousseff attends a meeting of the Brazilian Forum on Climate Change in Brasilia

As the World Cup kicks off in Sao Paolo this week, the home team is the runaway favorite, with a 45 percent chance of winning the tournament, according to Nate Silver on FiveThirtyEight and 48.5 percent probability according to the statistical boffins at Goldman Sachs. But apart from the bookmakers — who stand to lose a fortune if Brazil wins, since they are offering odds of around 3 to 1, instead of the 1 to 1 suggested by Silver’s and Goldman’s calculations — another, more surprising, group is secretly rooting against the favorite: Brazil’s own financial and business community, along with much of the country’s middle class.

That, at least, was my strong impression after two weeks visiting companies and financial institutions in Brazil. This unusual reversal of national spirit does not represent a breakdown of patriotism. Rather the opposite.

Brazil’s next presidential election is in October, and virtually everyone in business and finance believes that President Dilma Rousseff, the incumbent, must be defeated to save the economy. Whenever a new opinion poll shows a narrowing lead for Dilma (as Brazilians invariably call her), share prices jump. Yet still she remains well ahead of both her opponents.

Brazil's President Rousseff walks during the opening ceremony of the Arena das Dunas stadium in NatalThe best hope of defeating her may be an embarrassing World Cup setback. This would shatter national complacency — and with it, the president’s support.

The problem for Rousseff’s detractors is that, despite Brazil’s deteriorating economic performance since 2011, she represents the same party and ideology as her predecessor, Lula da Silva, who was president from 2003 to 2010. Rousseff is credited with the achievements of da Silva’s eight-year tenure, when Brazil was probably the world’s best performing “middle income” emerging economy.

Behind the wave of market anxiety

Anatole Kaletsky
Feb 6, 2014 23:33 UTC

What has caused the sudden anxiety attack that overwhelmed financial markets after the New Year? We may find out the answer at 8.30 on Friday morning, Eastern Standard Time.

Almost all agree that the market turmoil has been linked to alarming events in several emerging economies — including Turkey, Thailand, Argentina and Ukraine — that has spilled over into concerns about more important economies, such as China, Russia, South Africa, Indonesia and Brazil.

But why has near-panic hit so many emerging markets at the same time?

There seem to be four broad explanations. Whether this current volatility marks the end of the straight-line ascent in asset prices that started in March 2009, or whether it is just another opportunity to “buy on dips,” will largely depend on the relative importance of each of these factors.

  •