Marxist Wrecks Brazil Economy
(p. A6) "The Brazilian model celebrated just a few years ago is turning into a slow-motion train wreck," said Mansueto Almeida, a prominent commentator on economic policy. "Our political leaders want to point fingers at China or some external villain, but they cannot escape the fact that this self-inflicted crisis was made in Brazil."
Even with the country's legacy of economic turmoil, some historians say that Ms. Rousseff's track record on economic growth ranks among the worst of any Brazilian president's over the last century.
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Hoping to prevent Brazil from cooling too much after the sizzling boom of the previous decade, Ms. Rousseff, 67, a former Marxist guerrilla who was tortured during the military dictatorship in the 1970s and took office in 2011, doubled down on bets that she could stave off a severe slowdown by harnessing a web of government-controlled banks and energy companies.
Ms. Rousseff pressured the central bank to reduce interest rates, fueling a credit spree among overstretched consumers who are now struggling to repay loans. She cut taxes for certain domestic industries and imposed price controls on gasoline and electricity, creating huge losses at public energy companies.
Going further, she expanded the sway of Brazil's colossal national development bank, whose lending portfolio already dwarfed that of the World Bank. Drawing funds from the national treasury, the bank, known as the B.N.D.E.S., increased taxpayer-subsidized loans to large corporations at rates that were often significantly lower than those individuals could obtain from their banks.
Ms. Rousseff's critics argue that she also began using funds from giant government banks to cover budget shortfalls as she and her leftist Workers' Party headed into elections.
"They deliberately destroyed the public finances to obtain re-election," said Antônio Delfim Netto, 87, a former finance minister and one of Brazil's most influential economists. Taking note of the government's inability to rein in spending as a budget deficit expands, Mr. Delfim Netto and other economists are warning that officials may simply opt to print more money, stirring ghosts in an economy once ravaged by high inflation.
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Unemployment is expected to climb even higher as the authorities ponder ways to cut a federal bureaucracy that grew almost 30 percent from 2003 to 2013, to 600,000 civil servants.
A pension crisis is also brewing, partly because of laws that allow many Brazilians to start receiving retirement benefits in their early 50s, even though life expectancy has increased and the fertility rate has fallen, limiting the number of young people to support the aging population.
"How can a person who is 52 years old be able to retire with a pension?" Luiz Fernando Figueiredo, a former central bank official, asked reporters. "These things have to be confronted. If not, the country will become another Greece."
Parts of Brazil's business establishment are in revolt, openly expressing disdain. Exame, a leading business magazine, devotes an entire section called "Only in Brazil" to documenting problems with the public bureaucracy.
These examples include a $120 million light-rail system in the city of Campinas that lies abandoned because of poor planning, and a measure requiring companies to obtain a special license before allowing employees to work on Sundays.
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(Note: ellipses, and bracketed word and date, added.)
(Note: the online version of the story has the date SEPT. 10, 2015, and has the title "As a Boom Fades, Brazilians Wonder How It All Went Wrong.")