Brazil's economy on the brink of total collapse
1990Scott Adams-Cooper 1990-01Read it in the scan (PDF at ETOL), page 14 →
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Brazilian president-elect Fernando Collor de Mello inherits an economic situation on the verge of hyperinflation. The impending economic collapse will further pauperize the nation's overwhelmingly poor population.
Paying off the foreign debt has been the catalyst for hyperinflation in Latin America. Workers and peasants bear the brunt-through austerity measures like wage freezes, deep cuts in social services, and trade concessions to the big capitalist countries that cause massive price increases. Hyperinflation sparked food riots in Argentina last spring, as grocery prices doubled and tripled almost hourly.
Brazil's $112 billion foreign debt is the largest of all the semi-colonial nations.
Although interest payments have been suspended, inflation grows and external pressure to impose further austerity measures continues. Meanwhile, Brazil's income distribution is as unequal as that of the poorest African countries. Favelas— horrible slums-expand around the major cities. Millions of children are malnourished.
November inflation was 41.4 percent. The yearly rate is expected to hit 1300 percent. Money loses more than 1 percent of its value every 20 hours. Gasoline costs $2.23 a gallon. For many items in stores, clerks phone the factory to find out the current price.
A recent government white paper on economic reform said that "the country is on the edge of a social explosion. The symptoms of deterioration are so grave we are obliged to forecast a catastrophe capable of happening in the short term."
Collor campaigned early for giving Brazil a blast of capitalism. He proposes expanding the economic system that has put 80 percent of Brazilians at or below the poverty line.
This is capitalism's prescription for the impending collapse of Brazil's economy.
is from the period of 1979 to 1984, when the United States raised international interest rates."
Hence, Lula announced he was willing to pay off close to $70 billion of debt to the imperialist banks, which would have required imposing strict austerity measures on the population.