By LUIS FERNANDO NOVOA GARZON*
The fiscal framework was drawn up in the opposite direction of the winning program of the elections, as if negotiating a dignified surrender: handing over the full ransom to the kidnappers.
“Circus dogs jump when the handler cracks the whip, but the truly well-trained dog is the one who somersaults when there is no whip” (George Orwell).
The armed coup with its plan to execute Lula, Alckmin, Moraes and Dirceu is the opposite of the financial coup that planned to liquidate the Brazilian social security system in a single package. Shouldn't the negligent and sabotaging conduct of monetary and exchange rate policy by the president of the Central Bank, in collusion with the financial oligopolies, also be classified as an attempt to abolish the democratic rule of law?
There is no distinction, neither in logic nor in reasoning, between Operation Green and Yellow Dagger and this market operation that plans to stab social rights consolidated in the country. The market's commanding cry denotes this cohesion: “the cut needs to be in the flesh”. Faria Lima bet big on Jair Bolsonaro in 2022 and continues not to accept his defeat. Thus, they place the bill for the unfinished antisocial program on the lap of the nominal winner of the elections.
While the coup plotters in uniform wanted to pave the way for the establishment of a central crisis cabinet that would annul the result of the 2022 general elections, the long dagger of the markets remains raised to annul the president-elect's program, eliminating irrefutable obligations with the funding of health and education, with the floor of welfare and social security benefits and with adjustments to the minimum wage, the salary bonus and the Continuous Benefit Payment (BPC).
The coup draft refers to the incessant fight for “legal certainty” and the need to recognize the existence of a supra-legal right, that is, a presupposed, natural right, above the Constitution and its rules. The unspeakable DDD (de-index, de-link and de-obligate) program of the markets is a practical unfolding of these authoritarian legal premises. The so-called “four lines” are mobile and frame the de facto configurations, defined economically and/or militarily.
Unity in sabotaging constitutional powers
Inflation is the only thing that cannot happen; everything else can happen, including high interest rates and exchange rates – which, in the end, produce the inflation that cannot happen. Investors openly make their prophecies, combine or falsify results to reap the winning bets in the end. Insider trading pays off and makes fortunes; just look at the secret behind the upward trajectory of new banks and non-banking institutions that emerged after the 2008 crisis.
The austerity stance is supported by a disguised obsession with reaching the center of the inflation target, a target defined at levels that are known to be unattainable at any given time, which results in severe punishments for the country and far from austere rewards for the owners of the betting shops.
With the coup cycle restarted in 2016, the deconstitutional process accelerated. Meirelles' Bridge to the Future combined with Guedes' Plano Mais Brasil resulted in the unified formula of financial gangsterism: the DDD program. With health and education spending no longer mandatory, it is up to each government to decide what should be passed on. With the minimum wage de-indexed and pensions and social benefits unlinked, adjustments become conditional gifts.
It is important not to forget that the constitutionalization of these obligations and links, in 1988, was the solution found by the working class after decades of struggle to maintain essential public services and minimum income levels in a country with an employers' association incapable of committing to guaranteeing fundamental services and rights.
What can we say about the symmetrical modeling of the actions of the Central Bank and market agents? In the words of the ruler of the fourth power, “it is not appropriate to confront what the market is saying”, but rather, by elimination, the opposite is appropriate: to stimulate and not prevent the dysfunctional movement of the foreign exchange market. The shameless rally that led to the dollar’s surge and the upward bias of the interest rate was triggered shortly after the announcement of the necessary emergency contributions to Rio Grande do Sul and the explicitness of unforgivable dissent at the COPOM meeting in the first half of 2024, when the dollar’s rise begins, as can be seen in the graph below.
The rollercoaster ride of the dollar in the last six months, which led the dollar to surpass the 6 reais barrier on the eve of the announcement on November 27, expresses the punitive pedagogy of the markets against noise and unforeseen movements coming from the federal government. And the Central Bank is undaunted, refraining from intervening in the future interest and exchange rate markets. With Gabriel Galípolo's term in office in sight, the pieces on the Congress board are moving to protect this autonomy in the form of outsourcing the agency to officialize its status as a prescription counter for rentierism. The Constitutional Amendment Bill will proceed in inverse proportion to how seriously the new president of the Central Bank will take the Institution's mission, namely: to be the guardian of the currency's purchasing power and the promotion of society's economic well-being.
A character in three acts
Inside and outside the government, the standard motto is repeated, ignoring financial expenses, “Brazil needs to fit within the budget”. The motto that was applicable in the times of residual prosperity, “put the poor in the budget”, is no longer heard, much less the original motto, “participatory budgeting through popular deliberative councils”. Faced with the unspeakable, words and actions are measured. Whoever repeats the greatest desire of capital at every moment, earns an extra bonus. Fernando Haddad ran for the Ministry of Finance knowing the role he would play. 22 years ago, Antonio Palocci took over the same Ministry, duly advised by the PSDB financiers, with Armínio Fraga at the helm. The Letter to Brazilians was just a by pass for Lula's election and inauguration in the midst of yet another induced storm.
The Finance Minister in PT governments is always a separate character, since he embodies the bulk of the contradictions of the attempt to manage crises of peripheral capitalism with repertoires and influences not necessarily related to its organic core.
To assess the variations in the role of this Mephistophelian character, I turn to the introduction of The 18th Brumaire of Louis Bonaparte in which Marx builds on Hegel to emphasize that yes, the great facts/characters of history are staged twice, but with differences in quality: in the first staging, as a tragedy; and in the second, as a farce. The gloss refers to the counterrevolution of the 18th Brumaire promoted by Napoleon in 1799, as an event/character of a tragic nature, as a result of a certain clash of forces that led to the end of the first revolutionary cycle in France. The farce of the coup of Louis Napoleon, the usurping nephew, in 1851, depended on the fabrication of rebounds and echoes of the first event, which then came to define the representation of the coup.
In the enthronement of Antonio Palocci as the transmission belt of the markets within the Lula government, the tragic component predominated. Palocci, as Finance Minister, was the embodiment of the agreement between the financial banks and the center-left coalition that came to power in 2002. On the one hand, the renunciation of economic destabilization by the large external and internal banks, on the other, the renunciation of the still possible rupture. Palocci was the incarnate commitment to grant the hegemony of financial capital the banner of “state policies” without further questioning.
The “Levy Moment” is the name given to the abrupt orthodox conversion following the adoption of the so-called “new economic matrix” during Dilma Rousseff’s first term, which was nothing more than tangential measures, in the absence of accumulated social strength to confront the markets. Re-elected and sworn in, Dilma Rousseff, under declared threat of a coup, ceded the economic area to a direct appointment by the financial markets. Who would endorse the farce of superminister Levy as a guarantor of the “credibility” of the country’s economy? The same investors who were already calculating the gains from a possible revenge against the determinations and impediments defined by the 1988 Constitution?
That year, the “There Will Be No Coup” front was formed. At the same time, the popular camp did not accept the economic policy tailored to prevent the liberal right-wing coup that would be carried out in the name of “fiscal responsibility”. Fighting Levy’s fiscal adjustment also meant fighting the coup that was underway.
In 2023, Fernando Haddad put his successive contouring tactic into action. The fiscal framework was crafted in the opposite direction of the winning program of the 2022 elections, while at the same time opening up room for increased revenue. He then managed and dealt with the artificial expectations orchestrated by the Central Bank as if negotiating a dignified surrender. He tried to show the kidnappers that he would actively collaborate in delivering the full ransom.
He adopted his terms, infused rationality into his unreasonable ones, gathered admissible internal records and external records recommended by the OECD and multilateral forums. In one of his last cards, he presented the comparative advantages of a liberal centrist government versus an authoritarian liberal government. “It’s one thing for Milei to do this. It’s another thing for Lula to do this,” said Fernando Haddad in the preliminaries to the announcement of the claimed package.
The comparison is not gratuitous. Javier Milei's adjustments were already priced in, the volume of protests and demonstrations against them in Argentina, not so much. On the other hand, a fiscal adjustment in Brazil with Lula's approval generates additionalities in terms of social acceptance and passivity. Therefore, the announced package could not be without a sign of Lula's historic commitment to workers – the prospect of exemption for the base of the pyramid up to R$5,000 linked to the extra taxation of the super-rich.
Fetishized markets are attributed strong emotions: anxious, disappointed and vengeful. They do not want to give up the whole package, with a shallow and definitive pruning of social security. It is clear that the desired cut is not just accounting, but a cut in half, in the very sense of being, in detachment even from the phantasmatic ties with the social struggle.
For a new place of convocation
In a government cornered by convergent coups, and which clings to a policy of depoliticization and demobilization in order to be recognized as the last bastion of liberal democracy in the country, what predominates is selective silence.
Beyond the contours, maneuvers and containments, we need to insist on the conception and construction of another place of convocation to give substance to an anti-capitalist and anti-fascist agenda in Brazil. A place with the capacity to attract the millions of people dispossessed by the policies imposed by neo-extractivism and ultra-liberalism. Otherwise, we will continue to narrate the conversion of the very broad front into a platform for normalization via Tarcísio de Freitas or via Fernando Haddad, whichever is more instrumental for the markets.
Ruptures do not announce themselves, they erupt as an expression of living social forces in radiating waves of influence, direction and culture. Life beyond work, life beyond political machines. The opening of spaces for encounter and convergence of these forces has already begun.
*Luis Fernando Novoa Garzon is a professor in the Department of Social Sciences at the Federal University of Rondônia.
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