High Yield Business Sectors in Brazil

After 1976, tho, the state's developmental capacities started to fade away. It totally ditched the whole long-term planning and investments from 1974 and went for that international clout, you know, keeping those foreign reserves sky high. Ironically, in its quest for clout worldwide, the state became hella incapable of mediating the connection between the local and global economy, especially in its financial vibes, and was lowkey forced to dip from the direct and regulatory moves by which the state controlled the flow of investment within the country. OMG, we gotta make it clear that the state wasn't like, backing off when it came to its role of creating a space for making mad money. It was like totally going from being the OG planner and supporter of industrialization to becoming a tool for all that speculative and rent-seeking accumulation of both domestic and international capital.

Anyway, like, the governments of developed countries didn't even care about the external debt crisis caused by their monetarist and supply-side policies, ya know?

First and foremost, like, capital inflows, which since the reforms of 1964-1967 had been seen as, like, an instrument of development by, like, increasing domestic credit and extending its horizons, should now be sterilised by issuing public bonds. Capital inflows became like, just a flex to show how legit our international game is and how we're killing it with our domestic policies. Like, bruh, the contracts gotta be secure AF. We need an anti-inflation policy that's all about restricting credit, cutting back on spending and investments, and most importantly, keeping it real with interest rates. In all these new priorities, the public institutions were likely to play a way bigger role, not smaller. OMG, in this context, like, given the state's share in the total expenditure, the state's investments through public enterprises and direct administration became hella instrumental to, like, reduce domestic absorption, while public financial institutions were, like, super instrumental in reducing domestic credit.  The second section will flex that, like, even though they talk about how market forces are better than planning, the governments of developed countries actually decided to swoop in and intervene in the settlement of the external debt through the IMF to avoid a total meltdown of the foreign banks. Even like, neoliberal economists were all about political intervention in the market to, like, save the international financial system from going bankrupt (Lal 1997[1983]

Like, public prices and tariffs became, like, a way to control inflation instead of, like, funding public investments.

 Furthermore, the cap of public enterprises for indebtedness was used to flex on capital inflow to offset the current account deficits. Last but not least, public bonds and the interest rates they paid became an instrument of capital flex while physical and technical flex lost clout to speculative flex. The outcome was like, totally obvious after the 1982 external debt crisis when the IMF's adjustment programs were like, fully implemented. After the epic fail of trying to fix things on their own, the Brazilian policymakers hopped on the neoliberal bandwagon and started saying that the external debt crisis happened because of messed up domestic policies and that they needed to rethink their whole state-led development thing. An important consequence of this like, totally misled conclusion was that, by like, blaming government failures, the neoliberal policies of the 90s just straight up ignored the unexpected and not cool consequences of unrestricted money moves for developing countries. A delusional perspective towards capital flows like totally came back when the capital flows themselves made a comeback in the 90s. Pay mad attention, it's gonna be lit later paid to the way in which Brazilian policymakers totally ghosted the lessons of the debt crisis of the 1980s. But, like, before we get into that, it's hella important to talk about how the Brazilian state had to flex and give up its own vibe, and the economy's ability to get stuff done, all for the sake of dealing with the mad external debt and fixing up the private sector. The next chapter gonna spill the tea on the vibes and goals of the external debt negotiations, and how they gonna affect us at home.

Weathering the External Debt Crisis: The Neoliberal Way, fam

In 1982, Mexico's default on its external debt was like, a total disaster that caused a major debt crisis and it spread like wildfire through the Brazilian economy. It was like, a big yikes, you know?78 OMG, like in the 80s, Brazil was totally struggling with low economic growth, which was like sooo stagnant, and they had this crazy high inflation that was almost hyperinflation, and their public deficits were like, super high and just kept getting worse. OMG, neoliberal economists be like blaming the super lame economic performance and major financial instability of the 80s on Brazilian policymakers not being down with free-market reforms. SMH. This chapter is like, nah, hear me out, but a lot of the issues the Brazilian economy had in the 80s were all about how they were trying to deal with their debt crisis, you know? They were following what the IMF and foreign creditors wanted, and it caused a whole bunch of trouble. The Brazilian state had to flex its own financial wealth, financial stability and hence the sustained long-term growth of the economy to comply with the net transfer to pay the debt servicing to foreign creditors.