247 – In an article published this Monday (28), banker Luiz Cezar Fernandes, one of the founders of the BTG Pactual bank, warns that Brazil may decree a default on its public audience.
Fernandes says that the domestic public debt will reach 100% of the country’s Gross Domestic Product already in the possession of the next government. “The situation will be unsustainable, generating complete ungovernability”, he warns.
“In order to avoid a banking race, large banking institutions will have to oblige their clients to withdraw their savings in cash or in installments. Otherwise, we will have an even more serious situation than that experienced today by Venezuela”, he adds. the banker, in defending the deepening of neoliberal measures to avoid default.
The caution of market agents with the country’s fiscal misfortune caused the Ibovespa to drop further on Monday (28), returning to the level of 95 thousand points. At 14:14, the Ibovespa fell 1.75%, to 95,304 points. The financial volume was R $ 14.82 billion. Meanwhile, the commercial dollar rose 1.42% to R $ 5.632 when buying and to R $ 5.633 when selling. The future dollar due in October registered gains of 1.57%, to R $ 5.652.
Read the full article below:
Tighten your pocket: the default is coming
By Luiz Cezar Fernandes
The next government will inevitably be seduced by a default on public debt
The growth of the domestic public debt will reach 100% of the Gross Domestic Product – GDP of Brazil, already in the possession of the next government. The situation will be unsustainable, generating complete ungovernability.
Banks, now cartelized in 5 large organizations, have been frighteningly reducing loans to the private sector and have been increasing, in inverse proportion, the investment in government bonds.
Countries that recently went into default, such as Greece, did not cause major internal impacts, as their debt was mainly external and largely dispersed, including in central banks, mutual and pension funds.
The case of Brazil is essentially different. A default of our internal debt will result in the bankruptcy of the system, reaching from large banks to individuals, through family offices and the like. In order to avoid a bank run, large banking institutions will necessarily have to prevent their customers from withdrawing their savings in cash or in installments. Otherwise, we will have an even more serious situation than that experienced today by Venezuela.
Brazilian society still thinks that the government never gave and never will default, but the memory is short. In the 1980s, the default was disguised, since titles such as Eletrobrás, Instituto do Açúcar e Álcool – IAA and the National Superintendence of Merchant Marine – Sunamam, among others, remained insolvent, creating the famous ‘rotten coins’.
Furthermore, the Guarantee Fund for Length of Service – FGTS, which should be a protection for workers when dismissed, has been systematically confiscated from that of recent years, without any challenge from the unions. His remuneration today is equivalent to half the rate of the savings account, implying, in practice, a confiscation of more than 50% of his assets in the last 15 years. More recently, another 10% confiscation was created by the National Treasury, increasing to 50% the amount to be collected in the case of unfair dismissal.
There are also other confiscations that are not even noticed. An example is the “CIDE”, which was created for the maintenance of the road network, but which did not have a single cent of its resources invested in its original purposes. The Tax on Financial Operations – IOF – is another aberration, which prevented the growth of the private debt market and has helped in the very high concentration in the private debt banking sector, which already exceeds the limit of 92% of all credit in Brazil.
Oblivious to government measures, the factorings market, nowadays disguised as Credit Rights Funds – FIDCS, occupied the remaining part of that market. Now, with the IOF, the Government is once again attacking the income from these funds, further hampering the growth of the credit market.
There is no more to be taxed and to be confiscated. There will only be CALOTE or the adoption of reforms – tax, social security, etc. – already.