Brazil’s Economy Lays An Egg

Copacabana, Rio de Janeiro, Brazil

The chickens have come home to roost. Now that the World Cup is over in Brazil, the only thing that the country has to show for its massive amount of expenditures on infrastructure to host the Cup are several white elephant stadiums that may never be used again. Correction! I’m assuming the stadiums will be used for local games here and there, but the seats will be mostly empty because the stadiums were built to handle the large crowds of fans. These concrete pieces of engineering marvel may also become abandoned because of the cost of upkeep and then taken over by the less privileged and converted into favelas or slums. In the meantime, the bill is now coming due to pay for these irresponsible expenditures by the Brazilian government. Former president Lula who was once the hero of the country for being in power when many Brazilian people were lifted from poverty and the economy was running on all cylinders during the resource boom is also the same leader who secured the World Cup and the 2016 Olympics Games for Brazil and is the Big Cheese behind mortgaging the country to the hilt to pay for these sporting events.

Lula played fast and loose with the windfall of cash coming into the country. The Chinese are still purchasing gargantuan amounts of such items as iron ore and soybeans from Brazil, but the Chinese are also searching aggressively for other sources for their needs. The Chinese are over the last several years investing in farmland in Africa were the shipping distance is not as great.   Lula had his chance to utilize the money coming into Brazil by the boatload to build better hospitals, schools, roads and other infrastructure projects to enrich the lives of the average person and build a better country, but instead he squandered the fruits of the last decade on projects like spending insane sums of money for the World Cup and the Olympic games.

Another factor that is going to greatly affect the Brazilian economy going forward is that the smart money coming from Wall Street and the rest of the investment community around the world is not going to be as strong as when Brazil was one of the hot emerging countries of the world. The hot shot Wall Street investment bankers do not like to see large protests in the streets.  Brazil is one of the BRIC nations and investors came running to invest in the country the last several years, but the periotic civil unrest and slowing growth in the country gives even the most aggressive global trader severe acid reflux.  The real estate boom has also greatly inflated the price of real estate in Brazil to obscene levels.

Household borrowing has taken off over the last several years and a sizable part of the population is up to their eyeballs in debt. The country has ridden the wave of easy money and now there are bills to pay. The Brazilians as a whole do not have a lot of past experience with credit and many lending institutions will get hurt if people stop paying their credit cards and other forms of long and short term debt.

The cost of living in Brazil is becoming very expensive for the average person as inflation raises its ugly head. The day to day cost of items is severally pinching the population. It is difficult just purchasing what is needed to run the household.  Inflation has historically been the Achilles heel for Brazil and still today Brazil is an incredibly expensive place to live and visit.

The mood in Brazil is now somber and the economy is stagnated. The Brazilians love football and the World Cup, but the everyday person on the street in Brazil can take or leave the Olympic Games. All the population can see is even more good money being spent on sporting events that could have been used for social infrastructure projects.

Finally, the amount of money that has lined the pockets of some of the various companies and some of the bureaucrats involved in the building of stadiums and other construction projects needed for both the World Cup and the Olympic Games is enough to drive the average Brazilian into frenzy and make their blood boil like an egg frying on asphalt during a hot afternoon mid summers day on Copacabana Beach.

Throw all the money around like ingredients on a pizza. Put the pie into the oven or the illicit cash overseas in Miami and were it all goes nobody knows except for the corrupt participants who are involved in the great Brazilian World Cup and Olympic Games Cambalacho. The Brazilian people never had a say in the matter and are now stuck paying the gigantic bill while the scammers who skimmed a sizable slice off the top of the billions for the games are sitting in Miami by their penthouse pools drinking caipirinhas and laughing at all of the Reais they made off the backs of the people of Brazil.

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