So down. Before we get started today, we just wanted to take a moment to let everyone know about something new from Bloomberg. Do you want to hear what it is? Go for it? Well. Starting now, you can actually use our Io s app or Bloomberg's Google Chrome extension to scan any news story on any website, instantly revealing relevant news and market data from Bloomberg and other sources related to the companies and the people you're reading about. So really, no matter where you're reading the news, you can bring the power of Bloomberg's news and data with you. It's pretty amazing. Download our Io s app or search for the Bloomberg extension on the Chrome Store to try it out. Learn more at Bloomberg dot com, backslash lens. What the heck is going on in Brazil? Didn't they just remove one president amid alleged corruption, Then the vice president took over. Now he's facing demands he quit. He reportedly okayed hush money to a former House speaker, who of course is himself in jail for graft impeaching. Dil Marussef, the previous president, was supposed to put an end to the country's problems at least according to one narrative, and all the while the economy, one of the world's largest, continues to contract the country's worst recession. Welcome to Bloomberg Benchmark, a show about the global economy. I'm Daniel Moss, executive editor for Economics in New York, and I'm Scott Landman, an aclothic editor with Bloomberg in Washington. You know, Scott, you thought politics in the US had become divisive. Yet here we are, for the second time in a year, we have to sort through this Brazilian thicket of economic and political difficulties. Thank god we have Viviani Rodriguez here with us, managing editor at Bloomberg for Latin American economic and government news. In a way, I'm sorry to say, we're welcoming you back a second time to talk about this. Yes, it is almost like stranger than fiction than I mean. To be honest, I finally difficult to believe that both Brazilians expected to be living the situation again just about twelve months after you impeach the president in a very traumatic form. Now you're probably the best person of Bloomberg to decipher all this for us. You were born in sal Polo. You reside in New York, You've lived and reported in Brazil, Argentina, Mexico, and now you're in change of not just Latin American economics, but Latin American government as well. So look, help us out here. The narrative went, once we get rid of President Dilma Russov, all the country problems will be solved and the economy can take off. What. Yes, there's there's two waste of seeing this question, right. I mean, there was a lot of instability, giving the situation of Russef and the Workers Party in the build up for the for the impeachment, actually the country was just completely unmanageable and governable. So people really wanted to see that situation addressed, and a lot of people, especially markets, right said, while the moment Roussef goes, the moment the Workers Parties goes from Brazil presidency, I mean, everything will be served in the markets will take off, Everything would be just fine. Obviously, what happened is that the state of poor state of Brazil economy was so tremendous, right, that the lift back that economy from the depths of a horrific recession proved way more difficult than anyone has anticipated, especially in the absence of some sort of commodity boom helping in economy like Brazil. But also the fact that the Brazilian political system it's really flawed, and that that corruption has been running rampant in the system, and that is not something that you eradicate. So in one go, Viv, can you elaborate on that for a minute and put all that in some historical context for us? I mean, what is it deep in the political and economic structure of Brazil that produces these lurches from crisis to crisis and it produces so much corruption as you just mentioned, well, I mean crisis to crisis, I would say, I mean, obviously these are emerging market economies, I mean heavily dependent on commodity prices. So if you once you want to lie just economically speaking, I mean it's it's Brazil is not alone in that dependence of externalist stimulus, right, But I believe your question is more related to the fact is there's something in Brazil and the political system that put us uh in this situation? Again? Yes, I know, right, I mean it is still pretty much you and say a new democracy, new democracy, giving that the country has got back from from the dictatorship in right, some of these governments and some of these party systems, is we have that thirty five parties in Brazil. It's it's a very fractured congress. And there's just a way of doing business in the countries that has always meddled and and and put you big money, big government and big companies together, right and and for a lot of people in Brazil, especially people in the political class in congress, just just the way business has always been done. Can this be traced back to its time as a Portuguese colony? Well, perhaps it's a little bit of a stretch. I mean, there is a culture obviously of the very big states owning very big companies and big enterprise, a system whereas where bureaucracy is very large and everywhere you go, you turn and you have a government arm there. So it's it's probably fair to say that you a system of you know, buying someone to issue a stamp for you to get something done. I mean it's probably happening for the past five years, but in this particular case, I mean it's it's just that in the last ten fifting years, I mean, it became really institutionalized as you involved, pretty much everybody and every branch in the government has been very especially financing the big conceptions to the big business. Uh. I mean you could see, you know, all these companies ocuatives and just paying so many deputies and and and ministers and everybody just in order to get things done. Now, this is a very fast moving story. Put us inside the room. What supposedly happened and you just talked about getting a stamp for something, all of a sudden we're talking about a meat packing company. Well, what what happened in this particular situation. Let's contextualize this. I mean, you have to remember that for the last three years in Brazil you have an ongoing and massive probe Old car Wash. We can discuss the name shortly, but this this basically what happened here is that there's a group of prosecutors of federal prosecutors started really unearthing and prosecuting and going after big cover up schemes and kickback schemes, initially involving mostly the state oil company Petrol Brass right, But as they started digging forward, I mean he started seeing that this type of kickback scheme, you know, it was almost major companies in Brazil were involved with all of this and with the government, you know, with the bags of money following in both directions. Here in this particular case, I made it. What happened last week is that you had two executives connected to JBS, which is the world's largest meat producing company. Um. These men are billionaires and and as you can imagine, run a a immensely large and powerful company in Brazil, like Brazilian stake precisely, and they basically recorded a conversation sation with with the president in which allegedly the president gave his endorsement for these executives to keep paying hush money to the menu sited earlier on the former Speaker of the House at Lord Laconia, who is now in jail, to just keep quiet, right uh. And they presented this recording to prosecutors in car wash as evidence trying to cut some sort of plea bargain agreements here to avoid prosecution or you know, or avoid jail. Vivn Dan, you know, I'm old enough to remember when we covered Brazil as one of the four Brick countries Brazil, Russia, India and China that were known as the emerging markets where you get pretty solid economic growth driven in part by commodity boom. And uh. You know, Brazil's economy had been growing at a pretty nice rate some years ago. And you know, I wonder how much of this corruption or how much of this is coming to light because you have an economic situation now where Brazil's economy has actually been shrinking and it's just not the leading light that it used to be. Well, it's definitely part of the problem. The economy started to slow a couple of years ago, and this aggravated the problems of doom or receive for sure. I mean she had to handle unemployment and death sits and so on and so forth. But there's no doubt also that the crisis itself aggravated the problem. Right, So now we're in a situation a little bit the chicken and the egg, right. I mean, the tragedy in all of this is that we were beginning to see after we're near for the first time, uh at last month, the beginning of some green shoots here. I mean, there's been some progress, especially in inflation front. The central bank has been very aggressive to contain inflation. Interest rates were going down, so you were seeing people beginning to feel more comfortable in taking longer term financing, for example, and right now you have brought the country again to a complete stand still. We were on the verge of voting very key important reforms, especially the pension reformer, was expected to be put to to a vote incoming days, and now the finance minister just said it's going to take it to very least weeks if I mean at all, we're going to see these passing. What's some shape or form so obviously just does not bode well at all for Brazil, So viv just so we can be completely clear about this. What troubles Brazil's political class is not corruption per se, but poor economic performance. If you want to extrapolate mid seventies in the US, the economy wasn't doing well. Nixon left late nineties, economy doing well, Bill Clinton stays, Brazil economy doing poorly, ruceph leaves economy is still doing poorly. Tema question mark, well, I mean, it's harder to put together a position right and to get your voice heard. If the economy is booming, you know, you better have things they are very very strong in order to get people's attention right. But when economies are weak, I mean, people started going they're going to start investigating why they're a weak to begin with, and people want to be they want more accountability of the money that is out there, and that's when they started poking around and realized that a lot of the money. In the case of Brazil, it started disappearing. Right Remember Dilma was impeached by and large by the meddling with the country's physicals accounts. I think it's we shouldn't say that, you know, they wouldn't be corruption in Brazil, it's just the weak economy. I I disagree with you in that one. I do think that it was easier to hide that much easier to hide that when things are going fine. Right now that things are not going well, I mean, it's it's just become way more difficult to uh to high that you were stealing villions and villions from from taxpayers. Viv can you talk a little bit about the divisions we've seen between the what the markets are saying and what the public thinks. I mean, you had a pretty significant run up in the country's stock market over the past year as markets saw the new president's reform plans as as a way to boost the economy, and you know, the contraction of the economy hasn't been as bad as it was before. And the markets took a pretty big plunge on the news of this latest uh, the latest tape and investigation. And on the other hand, the public perception of Timor's policy has been completely a complete disaster. I mean, they hate him, don't they. What's going on here? You're right? I mean he's an extremely unpopular president. He's approval ratings have been hovering around the ten percent mark, which to try to again to rule on a congress with so many parties is just like almost impossible. And and and you touched on a very interesting point. It has been a big question market for us here as journalists too. I mean, people on the streets hate him. People on the streets by and large do not support his reforms. People are still feeling the pinch of of economic recession. But yet markets just love him, right, and we see these fantastic rally I mean predicated on on the future Brazil boom that have yet to come back, right, I mean, so we we actually even wrote a couple of stories and say, well, our our markets a little bit overshooting here are going a little bit too too aggressive, to too bullish on Brazil, giving that the underlying fundamentals of the country are still far from from where they should be to justify some asset prices, write some asset valuations here, I mean, especially the agrily business sector is doing very well or has recovered considerably, but you have yet to see some portions of Brazilian industry really rebounding. And again that that consumption what we even had a name for it in Brazil, which called milagri but alto, which was the Brazilian miracle. When you started seeing people, you know, using credit cards and buying homes, cars, frades, traveling. I mean, this is we're far from our repeat. So I, like you, I asked myself, where is that optimism coming from? And and again we've been saying that this is a fragile government, and we had proof of this last Wednesday when the first news first were reported about these tapes. I mean, in one hour, this this rally, this bonanza, this belief in Brazil just completely disappeared. Right, So our suspicion and when we talk to people who really analyzed and and and investigate Brazil is that until we actually have new direct elections with very legitimate, incredible candidates and in a very legitimate, incredible government, right voted again directly by by by people. All I mean you, you will see anyone in power to to to be really under attack. That we have elections in Brazil every four years, just like the United States. It's also a fixed term. It's easy to forget this. But Dilma Roussef was elected twice quite comfortably. So if we have fresh elections in Brazil and the economy is still contracting, the car Wash investigation is still alive rattling around, where does that leave us. Well, the first time that she was elected, yes, she was elected quite comfortably. Second time it was a much tighter margin, And that in Brazil is a problem, especially because, as I told you a couple of times, the shake up and in the makeup of the Brazilian Congress. Right. Uh. Also, there's been questions that surfaced throughout the impeachment process about the way that they portray doing the financing, for doing the campaign. The true state of Brazil therese economy and and and it has been agreed by some people and by some of the authorities that the government kind of fiddled with the numbers there, right, so that the economy wasn't doing nearly as well as it was in the build up to the to her re election. So I mean going forward, I mean, and this is what it's really interesting. We were we all thought that this was going to be a transition government, that Tamer was going to be the guy who is going to lay the foundations, and you know, uh, and the bleeding of Brazil stabilized the economy, lay the grounds, force a couple of big, big reforms, and the next group right income to TuS any team, you bring the people to the streets, you vote for the new new president, and you and you have a new country. But now it's all, you know, a big question mark again. But let's say then we get a great election result, a great slate of candidates, whoever they may be, and commodities are still where they are, right, can Brazil be great without commodities? And by the way, why is it still so dependent on commodities? Well, several questions here. First, we don't know if we're going to have elections in two thousand and eighteen or if we're going to have elections much earlier. We've got to see what comes and what happens with these investigations on the president. He's now really hanging by by a thread there, right, but assuming you know, somehow he pulls straight and then we really just get to to the to the earns in two thousand and eighteen, I mean, why are we so dependent in commodity? I mean, look at the makeup of Brazil's as a country. I mean, it's not a problem per said to be dependent on on commodities. I mean, is you're exploring a natural advantages in Actually Brazil's agree business sector is extremely efficient and competitive. So the question here is not whether Brazil should diminish these dependence on commodities, but should what does Brazil do with the money that it generates with the ugly business sector and with the commodity Do we invest in education? Do we promote other industries and services? Now precisely right, where is it going? I mean a good chunk of it. Apparently it has been siphoned to to you know, to just subsidize some of these so called national champions, right, and I mean in massive works and massive corruption that took a lot of money from Brazil's economy. I mean, are we in the business? Are are we really competitive in some for example the auto industry, which is to be very, very big in Brazil. Can we do this better than Mexico for example? Big question? I honestly don't know the answer. But is this work? We want to be competitive for example in Brazil? I mean and again I mean do we Why don't we invest more in bio technology? Why don't we invest more in software and services? With with the society so so large and diverse as Brazil society with so many large cities in Brazil, do people own their houses? Do they? Again? Do they go to school and high school and universities? And not nearly as much as a country the size of Brazil and with the the overall GDP that the country processes. No, this is one of the world's stands largest economies, you know, over three in dollars GDP? Why is Brazil not richer right or wealthier in a certain way? Before we wrap this up, I'm just dying to have you remind our listeners what is car wash? How did this investigation get to be called car wash? Now? I've actually been to the gas station that where all this action supposedly unfolded. It's next to a steakhouse, but there's not actually a car wash there. Help us out with them. It's a bit of a mystery, to be honest with you. Yes, I mean the name just stuck and stayed. But it relates to this gas It relates to the gas station in Brazili where some of these people will take you in a car and uh and give you know, all these bags of money and you know, as part of these kickback scheme. And then one day someone also said that, you know, where are you going on, I'm just going to the car wash. So but there's it's all kind of urban legend or lore and on how the name kind of came to be and then now it really stuck, uh and it became car wash. Let me finish with a question that's on my mind of at what point does this become a danger to democracy itself in Brazil all these corruption investigations too. Is the country going to backslide into military rules? There a possibility of electing uh, somebody who's a real you know, more authoritarian than the current system provides, or or does Brazil have a fairly strong system kind of parliamentary system at its core that that will afford such protections. I do think that from from the risks that you are raised here, the one that is potentially, uh you know, with with more of a chance of taking places, is that we could potentially choose a maverick or a very outsider. I wouldn't say an authoritarian, because the checks and balances now in Brazil constitution will prevent a lot of things from happening, for example, But it's just a very populist guy, right or woman who could potentially again, I mean, I'm going to like myself and I'm going to do this. I'm going to hunt everybody down. I'm going to fix all this by taking money from here and distributing. So, I mean, the disenchantment with the political class and the political establishment in Brazil is a reality. So so we are prone now from an outsider to come in and potentially sweep the election, someone with completely unprepared to be sitting at the top place, which, by the way, it's happening elsewhere in the globe right now, so as pert the democracy and military and the army on the street. Again, it's it's just not the conditions in Brazil right now. It isn't people are not going that way. They're not saying only the military can solve this or at least, you know, in a in a consistent form. Brazilians are very attached now to the democratic process, and it will be really difficult for the society to backslide to that degree that they would, uh, you know, endorse in favor you know, such such type of regime. And honestly, not even the army wants that. And and and we don't have a system of armed forces in Brazil organized to take over the country even if they wanted, for example, who wants a shrinking economy on their hands? Precisely, Viviani, great to talk to you. And as Brazil just struggles in this thicket of political and economic chaos, we're probably going to come back to again. Thank you. Then, you know, I thought the points Scott that Viviani made at the end about the army remaining in its barracks is a really critical one. I'm so glad you asked that. That's kind of the key point in the end. You know, we've we've seen some other emerging markets actually go back from democracy into military rule, or at least the one on my mind for example, is is Thailand, so they're you know, they're still being ruled by the military several years into into that regime. You know, it's a it's a really fascinating situation and with all the populism and new leaders around the world, something to keep an eye on. This actual gas station is a source of endless fascination for me. There is no car wash there, but I will say this, Scott. It is a massive gas station and at night it's bathed in a bright, bright white light. I mean, there is plenty of scope for stuff to go on at this gas station because it's vast. It's massive, makes you wonder right. Benchmark will be back next week and until then, you can find us on the Bloomberg terminal, Bloomberg dot com, or Bloomberg app, as well as on Apple podcast, Pocketcasts, and Stitcher. While you're there, take a minute to rate and review the show so more listeners can find us and let us know what you thought of the show. You can follow me on Twitter at Scott Landman Dan you are at Moss Underscore Echo and Viv You are at I Am at viv Underscore Rod thirteen. Benchmark is produced by Sarah Patterson and the head of Bloomberg Podcast is Alec McCabe. Thanks for listening, See you next time.

So down. Before we get started today, we just wanted to take a moment to let everyone know about something new from Bloomberg. Do you want to hear what it is? Go for it? Well. Starting now, you can actually use our Io s app or Bloomberg's Google Chrome extension to scan any news story on any website, instantly revealing relevant news and market data from Bloomberg and other sources related to the companies and the people you're reading about. So really, no matter where you're reading the news, you can bring the power of Bloomberg's news and data with you. It's pretty amazing. Download our Io s app or search for the Bloomberg extension on the Chrome Store to try it out. Learn more at Bloomberg dot com, backslash lens. What the heck is going on in Brazil? Didn't they just remove one president amid alleged corruption, Then the vice president took over. Now he's facing demands he quit. He reportedly okayed hush money to a former House speaker, who of course is himself in jail for graft impeaching. Dil Marussef, the previous president, was supposed to put an end to the country's problems at least according to one narrative, and all the while the economy, one of the world's largest, continues to contract the country's worst recession. Welcome to Bloomberg Benchmark, a show about the global economy. I'm Daniel Moss, executive editor for Economics in New York, and I'm Scott Landman, an aclothic editor with Bloomberg in Washington. You know, Scott, you thought politics in the US had become divisive. Yet here we are, for the second time in a year, we have to sort through this Brazilian thicket of economic and political difficulties. Thank god we have Viviani Rodriguez here with us, managing editor at Bloomberg for Latin American economic and government news. In a way, I'm sorry to say, we're welcoming you back a second time to talk about this. Yes, it is almost like stranger than fiction than I mean. To be honest, I finally difficult to believe that both Brazilians expected to be living the situation again just about twelve months after you impeach the president in a very traumatic form. Now you're probably the best person of Bloomberg to decipher all this for us. You were born in sal Polo. You reside in New York, You've lived and reported in Brazil, Argentina, Mexico, and now you're in change of not just Latin American economics, but Latin American government as well. So look, help us out here. The narrative went, once we get rid of President Dilma Russov, all the country problems will be solved and the economy can take off. What. Yes, there's there's two waste of seeing this question, right. I mean, there was a lot of instability, giving the situation of Russef and the Workers Party in the build up for the for the impeachment, actually the country was just completely unmanageable and governable. So people really wanted to see that situation addressed, and a lot of people, especially markets, right said, while the moment Roussef goes, the moment the Workers Parties goes from Brazil presidency, I mean, everything will be served in the markets will take off, Everything would be just fine. Obviously, what happened is that the state of poor state of Brazil economy was so tremendous, right, that the lift back that economy from the depths of a horrific recession proved way more difficult than anyone has anticipated, especially in the absence of some sort of commodity boom helping in economy like Brazil. But also the fact that the Brazilian political system it's really flawed, and that that corruption has been running rampant in the system, and that is not something that you eradicate. So in one go, Viv, can you elaborate on that for a minute and put all that in some historical context for us? I mean, what is it deep in the political and economic structure of Brazil that produces these lurches from crisis to crisis and it produces so much corruption as you just mentioned, well, I mean crisis to crisis, I would say, I mean, obviously these are emerging market economies, I mean heavily dependent on commodity prices. So if you once you want to lie just economically speaking, I mean it's it's Brazil is not alone in that dependence of externalist stimulus, right, But I believe your question is more related to the fact is there's something in Brazil and the political system that put us uh in this situation? Again? Yes, I know, right, I mean it is still pretty much you and say a new democracy, new democracy, giving that the country has got back from from the dictatorship in right, some of these governments and some of these party systems, is we have that thirty five parties in Brazil. It's it's a very fractured congress. And there's just a way of doing business in the countries that has always meddled and and and put you big money, big government and big companies together, right and and for a lot of people in Brazil, especially people in the political class in congress, just just the way business has always been done. Can this be traced back to its time as a Portuguese colony? Well, perhaps it's a little bit of a stretch. I mean, there is a culture obviously of the very big states owning very big companies and big enterprise, a system whereas where bureaucracy is very large and everywhere you go, you turn and you have a government arm there. So it's it's probably fair to say that you a system of you know, buying someone to issue a stamp for you to get something done. I mean it's probably happening for the past five years, but in this particular case, I mean it's it's just that in the last ten fifting years, I mean, it became really institutionalized as you involved, pretty much everybody and every branch in the government has been very especially financing the big conceptions to the big business. Uh. I mean you could see, you know, all these companies ocuatives and just paying so many deputies and and and ministers and everybody just in order to get things done. Now, this is a very fast moving story. Put us inside the room. What supposedly happened and you just talked about getting a stamp for something, all of a sudden we're talking about a meat packing company. Well, what what happened in this particular situation. Let's contextualize this. I mean, you have to remember that for the last three years in Brazil you have an ongoing and massive probe Old car Wash. We can discuss the name shortly, but this this basically what happened here is that there's a group of prosecutors of federal prosecutors started really unearthing and prosecuting and going after big cover up schemes and kickback schemes, initially involving mostly the state oil company Petrol Brass right, But as they started digging forward, I mean he started seeing that this type of kickback scheme, you know, it was almost major companies in Brazil were involved with all of this and with the government, you know, with the bags of money following in both directions. Here in this particular case, I made it. What happened last week is that you had two executives connected to JBS, which is the world's largest meat producing company. Um. These men are billionaires and and as you can imagine, run a a immensely large and powerful company in Brazil, like Brazilian stake precisely, and they basically recorded a conversation sation with with the president in which allegedly the president gave his endorsement for these executives to keep paying hush money to the menu sited earlier on the former Speaker of the House at Lord Laconia, who is now in jail, to just keep quiet, right uh. And they presented this recording to prosecutors in car wash as evidence trying to cut some sort of plea bargain agreements here to avoid prosecution or you know, or avoid jail. Vivn Dan, you know, I'm old enough to remember when we covered Brazil as one of the four Brick countries Brazil, Russia, India and China that were known as the emerging markets where you get pretty solid economic growth driven in part by commodity boom. And uh. You know, Brazil's economy had been growing at a pretty nice rate some years ago. And you know, I wonder how much of this corruption or how much of this is coming to light because you have an economic situation now where Brazil's economy has actually been shrinking and it's just not the leading light that it used to be. Well, it's definitely part of the problem. The economy started to slow a couple of years ago, and this aggravated the problems of doom or receive for sure. I mean she had to handle unemployment and death sits and so on and so forth. But there's no doubt also that the crisis itself aggravated the problem. Right, So now we're in a situation a little bit the chicken and the egg, right. I mean, the tragedy in all of this is that we were beginning to see after we're near for the first time, uh at last month, the beginning of some green shoots here. I mean, there's been some progress, especially in inflation front. The central bank has been very aggressive to contain inflation. Interest rates were going down, so you were seeing people beginning to feel more comfortable in taking longer term financing, for example, and right now you have brought the country again to a complete stand still. We were on the verge of voting very key important reforms, especially the pension reformer, was expected to be put to to a vote incoming days, and now the finance minister just said it's going to take it to very least weeks if I mean at all, we're going to see these passing. What's some shape or form so obviously just does not bode well at all for Brazil, So viv just so we can be completely clear about this. What troubles Brazil's political class is not corruption per se, but poor economic performance. If you want to extrapolate mid seventies in the US, the economy wasn't doing well. Nixon left late nineties, economy doing well, Bill Clinton stays, Brazil economy doing poorly, ruceph leaves economy is still doing poorly. Tema question mark, well, I mean, it's harder to put together a position right and to get your voice heard. If the economy is booming, you know, you better have things they are very very strong in order to get people's attention right. But when economies are weak, I mean, people started going they're going to start investigating why they're a weak to begin with, and people want to be they want more accountability of the money that is out there, and that's when they started poking around and realized that a lot of the money. In the case of Brazil, it started disappearing. Right Remember Dilma was impeached by and large by the meddling with the country's physicals accounts. I think it's we shouldn't say that, you know, they wouldn't be corruption in Brazil, it's just the weak economy. I I disagree with you in that one. I do think that it was easier to hide that much easier to hide that when things are going fine. Right now that things are not going well, I mean, it's it's just become way more difficult to uh to high that you were stealing villions and villions from from taxpayers. Viv can you talk a little bit about the divisions we've seen between the what the markets are saying and what the public thinks. I mean, you had a pretty significant run up in the country's stock market over the past year as markets saw the new president's reform plans as as a way to boost the economy, and you know, the contraction of the economy hasn't been as bad as it was before. And the markets took a pretty big plunge on the news of this latest uh, the latest tape and investigation. And on the other hand, the public perception of Timor's policy has been completely a complete disaster. I mean, they hate him, don't they. What's going on here? You're right? I mean he's an extremely unpopular president. He's approval ratings have been hovering around the ten percent mark, which to try to again to rule on a congress with so many parties is just like almost impossible. And and and you touched on a very interesting point. It has been a big question market for us here as journalists too. I mean, people on the streets hate him. People on the streets by and large do not support his reforms. People are still feeling the pinch of of economic recession. But yet markets just love him, right, and we see these fantastic rally I mean predicated on on the future Brazil boom that have yet to come back, right, I mean, so we we actually even wrote a couple of stories and say, well, our our markets a little bit overshooting here are going a little bit too too aggressive, to too bullish on Brazil, giving that the underlying fundamentals of the country are still far from from where they should be to justify some asset prices, write some asset valuations here, I mean, especially the agrily business sector is doing very well or has recovered considerably, but you have yet to see some portions of Brazilian industry really rebounding. And again that that consumption what we even had a name for it in Brazil, which called milagri but alto, which was the Brazilian miracle. When you started seeing people, you know, using credit cards and buying homes, cars, frades, traveling. I mean, this is we're far from our repeat. So I, like you, I asked myself, where is that optimism coming from? And and again we've been saying that this is a fragile government, and we had proof of this last Wednesday when the first news first were reported about these tapes. I mean, in one hour, this this rally, this bonanza, this belief in Brazil just completely disappeared. Right, So our suspicion and when we talk to people who really analyzed and and and investigate Brazil is that until we actually have new direct elections with very legitimate, incredible candidates and in a very legitimate, incredible government, right voted again directly by by by people. All I mean you, you will see anyone in power to to to be really under attack. That we have elections in Brazil every four years, just like the United States. It's also a fixed term. It's easy to forget this. But Dilma Roussef was elected twice quite comfortably. So if we have fresh elections in Brazil and the economy is still contracting, the car Wash investigation is still alive rattling around, where does that leave us. Well, the first time that she was elected, yes, she was elected quite comfortably. Second time it was a much tighter margin, And that in Brazil is a problem, especially because, as I told you a couple of times, the shake up and in the makeup of the Brazilian Congress. Right. Uh. Also, there's been questions that surfaced throughout the impeachment process about the way that they portray doing the financing, for doing the campaign. The true state of Brazil therese economy and and and it has been agreed by some people and by some of the authorities that the government kind of fiddled with the numbers there, right, so that the economy wasn't doing nearly as well as it was in the build up to the to her re election. So I mean going forward, I mean, and this is what it's really interesting. We were we all thought that this was going to be a transition government, that Tamer was going to be the guy who is going to lay the foundations, and you know, uh, and the bleeding of Brazil stabilized the economy, lay the grounds, force a couple of big, big reforms, and the next group right income to TuS any team, you bring the people to the streets, you vote for the new new president, and you and you have a new country. But now it's all, you know, a big question mark again. But let's say then we get a great election result, a great slate of candidates, whoever they may be, and commodities are still where they are, right, can Brazil be great without commodities? And by the way, why is it still so dependent on commodities? Well, several questions here. First, we don't know if we're going to have elections in two thousand and eighteen or if we're going to have elections much earlier. We've got to see what comes and what happens with these investigations on the president. He's now really hanging by by a thread there, right, but assuming you know, somehow he pulls straight and then we really just get to to the to the earns in two thousand and eighteen, I mean, why are we so dependent in commodity? I mean, look at the makeup of Brazil's as a country. I mean, it's not a problem per said to be dependent on on commodities. I mean, is you're exploring a natural advantages in Actually Brazil's agree business sector is extremely efficient and competitive. So the question here is not whether Brazil should diminish these dependence on commodities, but should what does Brazil do with the money that it generates with the ugly business sector and with the commodity Do we invest in education? Do we promote other industries and services? Now precisely right, where is it going? I mean a good chunk of it. Apparently it has been siphoned to to you know, to just subsidize some of these so called national champions, right, and I mean in massive works and massive corruption that took a lot of money from Brazil's economy. I mean, are we in the business? Are are we really competitive in some for example the auto industry, which is to be very, very big in Brazil. Can we do this better than Mexico for example? Big question? I honestly don't know the answer. But is this work? We want to be competitive for example in Brazil? I mean and again I mean do we Why don't we invest more in bio technology? Why don't we invest more in software and services? With with the society so so large and diverse as Brazil society with so many large cities in Brazil, do people own their houses? Do they? Again? Do they go to school and high school and universities? And not nearly as much as a country the size of Brazil and with the the overall GDP that the country processes. No, this is one of the world's stands largest economies, you know, over three in dollars GDP? Why is Brazil not richer right or wealthier in a certain way? Before we wrap this up, I'm just dying to have you remind our listeners what is car wash? How did this investigation get to be called car wash? Now? I've actually been to the gas station that where all this action supposedly unfolded. It's next to a steakhouse, but there's not actually a car wash there. Help us out with them. It's a bit of a mystery, to be honest with you. Yes, I mean the name just stuck and stayed. But it relates to this gas It relates to the gas station in Brazili where some of these people will take you in a car and uh and give you know, all these bags of money and you know, as part of these kickback scheme. And then one day someone also said that, you know, where are you going on, I'm just going to the car wash. So but there's it's all kind of urban legend or lore and on how the name kind of came to be and then now it really stuck, uh and it became car wash. Let me finish with a question that's on my mind of at what point does this become a danger to democracy itself in Brazil all these corruption investigations too. Is the country going to backslide into military rules? There a possibility of electing uh, somebody who's a real you know, more authoritarian than the current system provides, or or does Brazil have a fairly strong system kind of parliamentary system at its core that that will afford such protections. I do think that from from the risks that you are raised here, the one that is potentially, uh you know, with with more of a chance of taking places, is that we could potentially choose a maverick or a very outsider. I wouldn't say an authoritarian, because the checks and balances now in Brazil constitution will prevent a lot of things from happening, for example, But it's just a very populist guy, right or woman who could potentially again, I mean, I'm going to like myself and I'm going to do this. I'm going to hunt everybody down. I'm going to fix all this by taking money from here and distributing. So, I mean, the disenchantment with the political class and the political establishment in Brazil is a reality. So so we are prone now from an outsider to come in and potentially sweep the election, someone with completely unprepared to be sitting at the top place, which, by the way, it's happening elsewhere in the globe right now, so as pert the democracy and military and the army on the street. Again, it's it's just not the conditions in Brazil right now. It isn't people are not going that way. They're not saying only the military can solve this or at least, you know, in a in a consistent form. Brazilians are very attached now to the democratic process, and it will be really difficult for the society to backslide to that degree that they would, uh, you know, endorse in favor you know, such such type of regime. And honestly, not even the army wants that. And and and we don't have a system of armed forces in Brazil organized to take over the country even if they wanted, for example, who wants a shrinking economy on their hands? Precisely, Viviani, great to talk to you. And as Brazil just struggles in this thicket of political and economic chaos, we're probably going to come back to again. Thank you. Then, you know, I thought the points Scott that Viviani made at the end about the army remaining in its barracks is a really critical one. I'm so glad you asked that. That's kind of the key point in the end. You know, we've we've seen some other emerging markets actually go back from democracy into military rule, or at least the one on my mind for example, is is Thailand, so they're you know, they're still being ruled by the military several years into into that regime. You know, it's a it's a really fascinating situation and with all the populism and new leaders around the world, something to keep an eye on. This actual gas station is a source of endless fascination for me. There is no car wash there, but I will say this, Scott. It is a massive gas station and at night it's bathed in a bright, bright white light. I mean, there is plenty of scope for stuff to go on at this gas station because it's vast. It's massive, makes you wonder right. Benchmark will be back next week and until then, you can find us on the Bloomberg terminal, Bloomberg dot com, or Bloomberg app, as well as on Apple podcast, Pocketcasts, and Stitcher. While you're there, take a minute to rate and review the show so more listeners can find us and let us know what you thought of the show. You can follow me on Twitter at Scott Landman Dan you are at Moss Underscore Echo and Viv You are at I Am at viv Underscore Rod thirteen. Benchmark is produced by Sarah Patterson and the head of Bloomberg Podcast is Alec McCabe. Thanks for listening, See you next time.