Taking stock of an electoral shock

I always thought when someone compared Lula to Joe Biden because of the age, that it was an unfair comparison because Lula is sharp.

He's still a vigorous man, I mean, for an eight-year-old.

He exercises a lot.

He's doing a campaign.

He's fulfilling a campaign schedule that me under 40 couldn't in terms of all the traveling he's doing.

So physically, the comparison is really doesn't belong in the realm of possibilities.

Now, when we're talking about economics, I think it fits perfectly.

uncomfortably well for Lula because both men presided over solid macroeconomic data and then they kept they spent months telling people that what they were feeling about their economic situation was wrong and then that maybe they were just measuring themselves against an impossible benchmark offered by social media and that everything was actually fine it's just people that were noticing And I think that this is a trend that I see in many places.

In France, you kind of have that with the Emmanuel Macron administration as well.

A lot of governments that take the macroeconomic data uh as gospel and don't uh scratch beneath the surface because the problem with this kind of statistics is that if i eat a whole chicken and you eat nothing we each had a half chicken on average so i think that uh the the the big macroeconomic data sometimes can uh uh hide uh other problems so um debt servicing has taken a toll on Brazilians.

More than 30% of families' budgets go directly to servicing their debt.

We are seeing an increasing number of companies defaulting on their liabilities.

And all of that creates this snowball effect that everybody feels underwater, even if the data is stellar by any measures.

Although the price of living is gone up.

I mean, food prices are more expensive than they were.

There's a relative amount of inflation.

What's ironic is that Flavio has made a criticism of Lula for interest rates, which is very ironic because the Workers' Party over the past has tried to be able to have control of the central bank and therefore be able to influence interest rates.

and that there's been resistance to that so it hasn't happened and traditionally flavio has insisted that the the central bank be independent but now he's blaming lula for high interest rates which really has no control over but that i mean i think those those are abstractions from what many people who are feeling as you said the tremendous amount of debt and it's very expensive to take out a loan I would push

back on something I don't fully agree with you in the sense that, yes, the central bank is the one that sets the rates, but one of the key components is public spending.

And I talked to Luciano Sobral, who is a very moderate market voice, just a week ago.

And his point is the central bank, which has all directors at the moment, were named by Luiz Inácio Lula da Silva, all of them with no exception.

they were saying that this model of fueling growth through consumption and through the raising income above inflation has reached a point where it is no longer sustainable and the government actually kept the same recipe that Lula applied in his second term.

Because in his first term, Lula had a more liberal, a more neoliberal economic policy that was based on keeping the public books in order.

And that gives stability for the currency, for many things.

I think that this administration undermined Fernando Haddad, the finance minister, who is someone who cannot be accused of not having social concerns, but who is one who cares about austerity, but he was undercut by Chief of Staff Rui Costa, by Glaise Hoffmann, the Workers' Party, former chairwoman.