Economy

Brazil 2014: Best Of Times, Worst Of Times

As the Brazil's "commodities supercycle" grinds to a halt, Dilma Rousseff's economic policy has failed to find a new path. Is World Cup excitement enough to avoid a national bust?

In Sao Paulo
In Sao Paulo
Thierry Ogier

-Analysis-

SAO PAULO — Is unanimity always stupid? Playwright Nelson Rodrigues, whose philosophy inspired generation after generation of Brazilians, famously said that it was. Today, it’s impossible not to think of this aphorism when listening to what’s being said about Brazil.

After praising former President Lula da Silva for his reforms and eloquent style, everybody from the OECD to the IMF to the Institute of International Finance is now bashing the country. The Economist, which four years ago illustrated Brazil’s booming economy with an image turning Rio’s famous statue of Christ The Redeemer into a rocket taking off, recently re-used the same illustration. This time, the rocket was nose-diving.

President Dilma Rousseff’s record is indeed disappointing. While Brazil’s growth had been stratospheric, it now stands at an anemic 2%. Deficits are deepening. Inflation is too high. What’s more, investors believe the current government isn’t doing what it should to right the ship.

The demonstrations in June highlighted the limits of the “Brazilian miracle,” which in the last 10 years led to a meaningful decrease in poverty and social inequalities. Suddenly, thousands of people who had never protested before took to the streets to express their disillusionment over an increased cost of living and poor public services.

And yet, the progress made both in economic and social terms over the last decade is undeniable. The unemployment rate is below 6%, and economists are talking of a full employment situation. The minimum wage was raised in successive steps, which, along with the family allowance program (Bolsa Familia), increased the purchasing power of the “new middle class.” Why, then, is there a feeling that this Brazilian model is running out of steam?

First of all, because the world has changed. Brazil is a great raw materials exporter and has benefited significantly from the “commodities supercyle,” boosting its commercial balance. But this era of abundance, driven in part by China’s hunger, is over. Like other emerging economies, Brazil’s development is slowing, and the situation could worsen once the United States decides to tighten its monetary policy.

Rousseff strays

In Brazil itself, a consensus seems to be emerging with regard to economic policy after decades of crisis, and it includes a sort of orthodox potion with three main ingredients: budgetary discipline with the goal of achieving primary surplus (before debt service), inflation targeting, and a floating exchange rate. Rousseff, however, has started taking some liberties with these best practice guidelines.

The deterioration of public finances was temporarily hidden by financial sleight of hand, but it now lies in plain sight. The budgetary deficit reached 3.3% of gross domestic product (GDP) in September. For the second consecutive month, Brazil even registered a primary deficit — even though its goal is to have surpluses of 2.1% of its GDP for the whole year.

After the global financial crisis, Lula, who left office in 2011, carried out a bold policy to revive the economy. Public banks rose to the front line to support credit. But the transfers of about $100 billion from the Treasury to the Brazilian Development Bank (BNDES) in the last five years have inflated gross public debt. According to the IMF, it now stands at 68% of GDP — although Brazil contests these figures — while the average for emerging economies is 35%.

The crisis was used as a pretext for the reinvention of the state development model,” claims Gustavo Franco, former president of the country’s central bank.

On the surface, the situation is bordering on disaster. The current account balance deficit is at 3.6% of GDP. More worrying still: The strong flow of direct foreign investments is no longer enough to cover the deficit, which now stands at $80 billion. As a result, Brazil needs to attract capital just as volatility has returned to the financial markets.

The dollar, which is getting stronger compared to the Brazilian real, only makes things worse by favoring inflation that is now around 6% (the official target being 4.5%). Already, credit rating agencies Moody’s and Standard & Poor’s are threatening to downgrade Brazil, currently two notches above “investment grade.”

Rio, is the party over? (Abetens)

But despite its shortcomings, not all is lost in Brazil. The country has enormous advantages, starting with its oil deposits. It also has ample reserves (amounting to some $375 billion), which should prove enough to withstand a storm on the markets. But the gap is widening between its economic potential and its poor growth performance.

So is there any prospect of change? For now, the timetable seems tight. After the Carnival and the FIFA World Cup in June 2014, there will be the October elections. For now, it’s still unclear whether the “could-do-better” side will make its voice heard against Rousseff, who will certainly be seeking a second mandate.

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food / travel

The True Horrors Behind 7 Haunted Locations Around The World

With Halloween arriving, we have dug up the would-be ghosts of documented evil and bloodshed from the past.

Inside Poveglia Island's abandoned asylum

Laure Gautherin and Carl-Johan Karlsson

When Hallows Eve was first introduced as a Celtic festival some 2,000 years ago, bonfires and costumes were seen as a legitimate way to ward off ghosts and evil spirits. Today of course, with science and logic being real ghostbusters, spine-chilling tales of haunted forests, abandoned asylums and deserted graveyards have rather become a way to add some mystery and suspense to our lives.

And yet there are still spooky places around the world that have something more than legend attached to them. From Spain to Uzbekistan and Australia, these locations prove that haunting lore is sometimes rooted in very real, and often terrible events.

Shahr-e Gholghola, City of Screams - Afghanistan

photo of  ruins of Shahr-e Gholghola,

The ruins of Shahr-e Gholghola, the City of Screams, in Afghanistan

Dai He/Xinhua via ZUMA Wire


According to locals, ghosts from this ancient royal citadel located in the Valley of Bamyan, 150 miles northwest of Kabul, have been screaming for 800 years. You can hear them from miles away, at twilight, when they relive their massacre.

In the spring 1221, the fortress built by Buddhist Ghorids in the 6th century became the theater of the final battle between Jalal ad-Din Mingburnu, last ruler of the Khwarezmian Empire, and the Mongol Horde led by Genghis Khan. It is said that Khan's beloved grandson, Mutakhan, had been killed on his mission to sack Bamyan. To avenge him, the Mongol leader went himself and ordered to kill every living creature in the city, children included.

The ruins today bear the name of Shahr-e Gholghola, meaning City of Screams or City of Sorrows. The archeological site, rich in Afghan history, is open to the public and though its remaining walls stay quiet during the day, locals say that the night brings the echoes of fear and agony. Others claim the place comes back to life eight centuries ago, and one can hear the bustle of the city and people calling each other.

Gettysburg, Civil War battlefield - U.S.

photo of rocks and trees in Gettysburg

View of the battlefields from Little Round Top, Gettysburg, PA, USA

Unsplash/@nemo23


Even ghosts non-believers agree there is something eerie about Gettysbury. The city in the state of Pennsylvania is now one of the most popular destinations in the U.S. for spirits and paranormal activities sight-seeing; and many visitors report they witness exactly what they came for: sounds of drums and gunshots, spooky encounters and camera malfunctions in one specific spot… just to name a few!

The Battle of Gettysburg, for which President Abraham Lincoln wrote his best known public address, is considered a turning point in the Civil War that led to the Union's victory. It lasted three days, from July 1st to July 3rd, 1863, but it accounts for the worst casualties of the entire conflict, with 23,000 on the Union side (3,100 men killed) and 28,000 for the Confederates (including 3,900 deaths). Thousands of soldiers were buried on the battlefield in mass graves - without proper rites, legend says - before being relocated to the National Military Park Cemetery for the Unionists.

Since then, legend has it, their restless souls wander, unaware the war has ended. You can find them everywhere, on the battlefield or in the town's preserved Inns and hotels turned into field hospitals back then.

Belchite, Civil War massacre - Spain

photo of sunset of old Belchite

Old Belchite, Spain

Belchite Town Council


Shy lost souls wandering and briefly appearing in front of visitors, unexplainable forces attracting some to specific places of the town, recorded noises of planes, gunshots and bombs, like forever echoes of a drama which left an open wound in Spanish history…

That wound, still unhealed, is the Spanish Civil War; and at its height in 1937, Belchite village, located in the Zaragoza Province in the northeast of Spain, represented a strategic objective of the Republican forces to take over the nearby capital city of Zaragoza.

Instead of being a simple step in their operation, it became the field of an intense battle opposing the loyalist army and that of General Francisco Franco's. Between August 24 and September 6, more than 5,000 people were killed, including half of Belchite's population. The town was left in rubble. As a way to illustrate the Republicans' violence, Franco decided to leave the old town in ruins and build a new Belchite nearby. All the survivors were relocated there, but they had to wait 15 years for it to be complete.

If nothing particular happens in new Belchite, home to around 1,500 residents, the remains of old Belchite offer their share of chilling ghost stories. Some visitors say they felt a presence, someone watching them, sudden change of temperatures and strange sounds. The ruins of the old village have been used as a film set for Terry Gilliam's The Adventures of Baron Munchausen - with the crew reporting the apparition of two women dressed in period costumes - and Guillermo del Toro's Pan's Labyrinth. And in October 1986, members of the television program "Cuarta Dimensión" (the 4th dimension) spent a night in Belchite and came back with some spooky recordings of war sounds.

Gur Emir, a conquerer’s mausoleum - Uzbekistan

photo of Gur Emir (Tomb of Timur) i

Gur Emir (Tomb of Timur) in Samarkand, Uzbekistan

Chris Bradley/Design Pics via ZUMA Wire


The news echoed through the streets and bazaars of Samarkand: "The Russian expedition will open the tomb of Tamerlane the Great. It will be our curse!" It was June 1941, and a small team of Soviet researchers began excavations in the Gur-Emir mausoleum in southeastern Uzbekistan.

The aim was to prove that the remains in the tomb did in fact belong to Tamerlane — the infamous 14th-century conqueror and first ruler of the Timurid dynasty who some historians say massacred 1% of the world's population in 1360.

Still, on June 20, despite protests from local residents and Muslim clergy, Tamerlame's tomb was cracked open — marked with the inscription: "When I Rise From the Dead, The World Shall Tremble."

Only two days later, Nazi Germany invaded the Soviet Union, with the people of Samarkand linking it to the disturbing of Tamerlane's peace. Amid local protests, the excavation was immediately wrapped up and the remains of the Turkish/Mongol conqueror were sent to Moscow. The turning point in the war came with the victory in the Battle of Stalingrad — only a month after a superstitious Stalin ordered the return of Tamerlane's remains to Samarkand where the former emperor was re-buried with full honors.

Gamla Stan, a royal massacre - Sweden

a photo of The red house of Gamla Stan, Stockholm, Sweden

The red house of Gamla Stan, Stockholm, Sweden

Unsplash/@hkblind


After Danish King Kristian II successfully invaded Sweden and was anointed King in November 1520, the new ruler called Swedish leaders to join for festivities at the royal palace in Stockholm. At dusk, after three days of wine, beer and spectacles, Danish soldiers carrying lanterns and torches entered the great hall and imprisoned the gathered nobles who were considered potential opponents of the Danish king. In the days that followed, 92 people were swiftly sentenced to death, and either hanged or beheaded on Stortorget, the main square in Gamla Stan (Old Town).

Until this day, the Stockholm Bloodbath is considered one of the most brutal events in Scandinavian history, and some people have reported visions of blood flowing across the cobblestoned square in early November. A little over a century later, a red house on the square was rebuilt as a monument for the executed — fitted with 92 white stones for each slain man. Legend has it that should one of the stones be removed, the ghost of the represented will rise from the dead and haunt the streets of Stockholm for all eternity.

Port Arthur, gruesome prison - Australia

a photo of ort Arthur Prison Settlement, Tasmania, Australia

Port Arthur Prison Settlement, Tasmania, Australia

Flickr/Eli Duke


During its 47-year history as a penal settlement, Port Arthur in southern Tasmania earned a reputation as one of the most notorious prisons in the British Empire. The institution — known for a brutal slavery system and punishment of the most hardened criminals sent from the motherland— claimed the lives of more than 1,000 inmates until its closure in 1877.

Since then, documented stories have spanned the paranormal gamut: poltergeist prisoners terrorizing visitors, weeping children roaming the port and tourists running into a weeping 'lady in blue' (apparently the spirit of a woman who died in childbirth). The museum even has an 'incidence form' ready for anyone wanting to report an otherworldly event.

Poveglia Island, plague victims - Italy

a photo of Poveglia Island, Italy

Poveglia Island, Italy

Mirco Toniolo/ROPI via ZUMA Press


Located off the coast of Venice and Lido, Poveglia sadly reunites all the classical elements of a horror movie: plagues, mass burial ground and mental institute (from the 1920's).

During the bubonic plague and other subsequent pandemics, the island served as a quarantine station for the sick and anyone showing any signs of what could be Black Death contamination. Some 160,000 victims are thought to have died there and the seven acres of land became a mass burial ground so full that it is said that human ash makes up more than 50% of Poveglia's soil.

In 1922 a retirement home for the elderly — used as a clandestine mental institution— opened on the island and with it a fair amount of rumors involving torture of patients. The hospital and consequently the whole island was closed in 1968, leaving all the dead trapped off-land.

Poveglia's terrifying past earned it the nickname of 'Island of Ghosts'. Despite being strictly off-limits to visitors, the site has been attracting paranormal activity hunters looking for the apparition of lost and angry souls. The island would be so evil that some locals say that when an evil person dies, he wakes up in Poveglia, another kind of hell.

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