Remora

The chatter between members of the governing classes, up to June of this year, had been that Lula da Silva, the labor candidate for president in Brazil, had to be defeated. The threats became as thuggish as the manicured set gets. Here's what George Soros had to say:


According to Rossi's reporting, published on June 8th in a major Brazilian daily newspaper, Folha de S. Paulo, the markets believe that Luiz In�cio Lula da Silva (the leftist candidate, of the Workers Party, or PT, who is well ahead in the polls) will default on the debt payments if elected. Thus, says Soros, the markets are already betting against Brazil, specifically against the Brazilian currency, the real. If Lula indeed wins in the two rounds of the elections, scheduled to happen on October 6 and 27, the financial situation would be so dramatic that he wouldn't have any option other than defaulting on the debt.

Faced with the intrinsic totalitarianism of such prophecy, Soros acknowledged it, and added: "In
Ancient Rome, only Romans voted. In modern global capitalism, only Americans vote, Brazilians do not."

Soros, much celebrated for the beautiful sentiments about civil society with which he often perfumes the air, gets down to brass tacks here. Even vampires who read John Locke, at the end of the day, want their quota of vein.

However, a change occured after that interview. One wonders if there was a sense that one had been, well, a little too bold. The new line is that Lula is a poodle leftist, in the Tony Blair mould. Indeed, this is a good bet: in the U.S. in the nineties, and in Europe right now, a vote for the left almost guarantees economic policy from the right. The technocrats of the left are bored with labor. They are definitely bored with the urban poor, and their intractable problems -- best to solve them through massive police sweeps. What the technocrats of the left like best are to be interviewed for the Financial Times, and praised for their "bravery" in standing up to (otherwise known as betraying) their constituencies.

This is the line taken by Franklin Foers in The New Republic (an article that is not, alas, on-line) After explaining that Wall Street is "freaked" about the prospect of Lula, Foers provides the reassuring contrarian note:

"The markets have cause for displeasure: None of Brazil's three candidates are fervent devotees of the Washington Consensus. But their fears of Lula are out of date. The IMF bailout conditions $24 billion worth of loans on budget surpluses, severely limiting any future president's inclination toward reckless spending. What's more, Lula isn't significantly more protectionist or anti-globalization than his competitors. In fact, unlike Gomes and Serra, who are scrambling to move beyond their center-right bases by pandering to working-class resentments, Lula is moving to the center in a bid to win over skeptical middle-class voters. Ironically, the onetime radical may be the best hope for neoliberalism in Brazil."

Well, yesterday was the first step in Lula's probable ascent to the presidency. Here's the NYT:


"Mr. da Silva had never won more than a quarter of the first-round vote in three previous attempts at the presidency. Though he forced a runoff in his first try, in 1989, voters in the past have always been suspicious of his party's socialist platform and questioned his qualifications for office. For this campaign, however, Mr. da Silva revamped both his image and his program. He backed away from earlier threats to repudiate Brazil's foreign debt and to break with international lending organizations like the International Monetary Fund, emphasizing instead measures that would allow Latin America's largest country to export more and therefore generate more jobs and growth.

Mr. Serra, in contrast, as the candidate of the multiparty coalition that has governed this nation of 175 million for nearly eight years, has had to bear the burden of popular dissatisfaction with rising unemployment and a stalled economy. He has also been seriously weakened by disarray within the government camp and by and his own lack of charisma compared to Mr. da Silva."

One of the questions that has to be hanging here is: how is one to deal with an international financial system that did what it did in Argentina? That is, found a system of inefficiencies and left a desert? If it wasn't obvious before, by now the end of history thesis so beloved of the globalization crowd has been stripped of its pompous Hegelian subtext and laid bare for what it is: a collection note from a debt collector. Argentine debt, looked at in the light of day (a block of hours much deplored by the Vampirish set), has a somewhat freakish appearance -- what on earth induced the international lenders to loan out that much, and what on earth induced the government to take that much? Obviously, it was a way of paying for the New Deal State while installing the Chilean state. While, in the U.S., eight trillion dollars can evaporate in three years (as they have, in the markets) and the cars just keep on selling, Argentina doesn't have that scale. Whether the U.S. will continue to have the leverage of scale is a question the Soroses of the world don't want to ask right now. Brazil, in the eighties, famously leveraged its position as one of the grand debtors in much the way English dukes used to leverage their gambling debts at Harrolds. But if there is a capital strike against Brazil -- and the odds are pretty good that there will be one -- LI wonders if that gambit will work.

That is a sad note to end on. We aren't actually that pessimistic. We are rather cheered by Lula's victory. But our political anhedonia, right now, is nearly terminal.