Opinion

The Great Debate

from Breakingviews:

Review: Brazil’s toughest tests lie off the pitch

By Dominic Elliott 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Michael Reid’s astute new book has a stark warning: the country of samba, sex and soccer is teetering on a knife-edge. “Brazil: The Troubled Rise of a Global Power” explains why protests against this year’s World Cup are turning increasingly violent. Reid, a journalist for The Economist, persuasively urges a return to the broad liberal consensus that served Brazil so well between 1994 and 2006.

Brazil taxes and spends like a European country and shares other bad habits with the West. Yet it produces “distinctly Latin American” results, says Reid. GDP per person is still a disappointing $12,000, about two-thirds of the level of Argentina, and it remains the world’s twelfth most unequal country. The masses understandably want more opportunity, as well as better hospitals, schools and public transport.

The book’s central argument is that Brazil’s underlying problem is a dysfunctional political system, built on a “bastardised version of liberalism,” made illegitimate by patrimony and elitism. Reid’s on-the-record interviews with Brazilian presidents past and present sit alongside a masterful analysis of the hard data. Everything points to the urgent need for profound reforms.

Rare economic advantages that provided air cover for an overhaul are evaporating fast. Brazil’s economy briefly replaced the UK’s as the world’s sixth biggest by GDP in 2011. But Chinese demand for Brazil’s commodities is waning, and the population is ageing rapidly after an almost Chinese decline in the birth rate from six to two children per woman over the last two generations. Brazil already spends as much on pensions as southern European countries, and that can only rise.

Rumsfeld’s biggest unknown

USA-AFGHAN/TILLMANBy Joshua Spivak
The opinions expressed are his own.

The knives are out in Donald Rumsfeld’s new memoir, Known and Unknown. In defense of his long public service career and the war in Iraq and Afghanistan, the man who was both the youngest and oldest Defense Secretary clearly believes that a good offense is the best strategy.

While the book is receiving press for the intra-cabinet fights and for Rumsfeld cherry-picking his facts, it ends up being a useful and needed work: In eviscerating fellow members of President George W. Bush’s national security team, Rumsfeld raises questions about how the most critical parts of the executive branch operate.

With the relentlessly negative portrayals of political and military figures and constant complaints about the press and the legislature, it is not obvious that Rumsfeld is looking to make a larger point other than defending his tenure and slashing at adversaries. And slash he does — among the many, many bold-faced names who receive unwelcome shout-outs are long-time Rumsfeld foe George H.W. Bush, Colin Powell, Condoleezza Rice, John McCain, Al Gore (he even takes an early whack at Gore’s father), Jerry Bremer, Eric Shinseki, and, in a golden oldies moment, Nixon’s counsel John Ehrlichman. His assessment of Ehrlichman may be the best line in the book, noting,“Certainty without power can be interesting, and even amusing. Certainty with power can be dangerous.”

Michael Lewis’ Big Short an unsettling experience

Henry Paulson didn’t see it coming. Nor did Timothy Geithner foresee the meltdown of the financial markets. According to Standard & Poor’s President Deven Sharma, testifying before Congress in the fall of 2008: “Virtually no one – be they homeowners, financial institutions, ratings agencies, regulators, or investors – anticipated what is occurring.”

Why? Perhaps “it took a certain kind of person to see the ugly facts and react to them – to discern, in the profile of the beautiful young lady, the face of an old witch,” says Michael Lewis, author of numerous best-sellers including 1980s Wall Street memoir  Liar’s Poker and now The Big Short: Inside the Doomsday Machine (W.W. Norton, $27.95).

Lewis’ new volume is an entertaining and very edifying look at several such insightful people — the tiny handful of investors “for whom the trade became an obsession.” These were unusual, “almost by definition odd” folks, soon to make big money on the cataclysm: There is Steve Eisman, the former Oppenheimer analyst who regularly demonstrated a prodigious “talent for offending people,” notably in a tendency to trash subprime originators as early as 1997.

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