Populist spree on the way to the campaign

As correctly predicted by the Brazilian media, the International Worker's Day changed the tone of president's Dilma Rousseff speech. She was more aggressive, stating that her government has done a lot in terms of raising the minimum salary and reducing unemployment (which is true -- the problem is that this policy is not sustainable). The president promised the continuity of the raises in salaries together with the state paid pensions, the correction of the income tax table (which, roughly put, means less people will pay taxes) and a 10% increase in the benefits paid by Bolsa Família, the main federal income distribution program.

Analysts heard by Folha de S. Paulo and O Globo saw this speech as a sign of weakness from the president. She had to put a monetary incentive for the voter because she was running short on allies they said. In fact, on the week before the announcement Dilma declared she was going to dispute the reelection with or without the political allies.

Eduardo Campos and Aécio Neves also promised
to raise salaries and expand income distribution

The media also calculated the cost the new measures would have for the next government. O Globo stated the total cost would amount to 9 billion reais, while Valor Econômico stated the government would have to find another 1.3 billion reais to make ends meet. The main point is that the populist announcement put further pressure on the government spending reducing the likelihood of any improvement of the country's rating and debt status for the next government, if Dilma is reelected.

Repercussion

On the following day of the speech, the Workers' Party officially chose Dilma as its candidate, thus putting an end to the rumors of former presidente Lula's return. Both candidates from the opposition parties, Eduardo Campos and Aécio Neves also promised, on their own way, to increase the minimum wage and to keep expanding and increasing the income distribution programs of the government. They also joined forces to file a lawsuit against Dilma, accusing the president of using the public time on the television to anticipate the political campaign.

The movements so far reveal the true intention from all candidates is to assure the sympathy from the core voters (the emerging middle class and the lower income workers) while remaining still to vague to discuss an actual plan for the country. This comes as no surprise to anyone that knows how the Brazilian elections work, but it is still somewhat disappointing as mr. Steinbruch (counselor to the presidency and CEO of the steel industry CSN) well put in his column today in Folha de S. Paulo.

Dilma vote intentions keep falling as rumors of Lula's return arise

Ricardo Noblat, columnist for O Globo wrote this monday that Lula and Dilma are waging a secret battle for the right to be the Workers' Party (PT) next candidate to the elections this year. According to Noblat, Lula has always envisioned coming back to the presidential seat (no matter how many times he declared he was done with it)  and that was why he chose Dilma to be his successor, a political nobody until 2011 when she started appearing next to Lula in big cerimonies.

But now that Dilma has become used with power, Lula would have a hard time dissuading her from her rightful reelection, unless she keeps going down the vote intention polls, which is precisely what we are seeing in this year. Last saturday Datafolha (the research institute from Folha de S. Paulo) showed the vote intentions for Dilma went down to 38% from 44% on the previous poll, in a scenario where Aecio Neves (PSDB senator) and Eduardo Campos (PSB, and currently governor of the state of Pernambuco) would be the president's main challengers.

André Vargas asked for a removal from the vice-presidency
of the Chamber of Deputies after complaints

Truth or not, it seems the situation is getting worse to Dilma every week. Last week Globo Television showed PT deputy André Vargas (that until this monday occupied the vice-presidency of the Camber of Deputies) in what it seemed to be a  lobbying negotiation with a convicted money dealer, Alberto Youssef. The investigation started after Vargas was getting a ride on Youssef private jet. This monday, Vargas asked for a 60 removal from his position as vice-president.

In the World Cup front, the news are not positive also. In Rio, an union from the workers of the constructing business started a strike and stopped the already delayed work for the World Cup and the Olympic Games this monday. In São Paulo the work in the World Cup stadium were stopped last month after the third death of a construction worker on the site. The stadium may be inaugurated in the end of this month.

Bad news for Dilma were again good news for the market. This monday, following the wave of popularity decrease the dolar hit a five month low against the real. Economists heard by O Estado de S. Paulo interpreted this as a sign that investors see a chance of change for better in the Brazilian government -- in a similar reaction to what happened when the president suffer a popularity decrease. Of course the market may be also responding to the 25 basis points increase on the country's interest rates decided by the Brazilian Central Bank on april 3rd.