The series of financial crises in the late 1990s, such as the Asian crisis, also affected Brazil, by way of consequence. Since the crises brought about widespread concern and a certain level of panic, Brazil’s Central Bank increased interest rate to prevent the Brazilian Real from devaluing too much. As a result, Brazilian economy did not grow much. This was translated into investment cuts in education, health, public safety, sanitation, and housing. The unemployment rate in Sao Paulo reached 20%/.

The violence in major cities, already a growing problem, became even greater. The government had to manage crisis after crisis, a series of hellish financial speculations that hit people’s lives. It was an unfortunate season. People lost hope. They were afraid of losing their jobs. People were also afraid to go out the streets for fear of being attacked or killed.

But the FHC government (Fernando Henrique Cardoso) was competent enough to manage the crisis and handed over a better situation to the current president. In the first two years of the Lula presidency, Brazil grew little. Investors believed that Lula was a socialist. But many things changed.

Brazil strengthened its relations with Mercosur. It created strategic alliances with Middle Eastern countries, Africa and Asia. And, finally, it succeeded, along with India, to create the G20 (the G8’s nightmare). Today, it has finally assumed its role as a regional power, the fruits of the hard work that began in 1994 by FHC.

New financial center;

The Brazilian influence became even stronger with the creation of the BRIC, the acronym for the four largest developing countries (Brazil, India, Russia, and China).

Due to the crises in the late 1990s, the IMF and the United States dictated much of what had to be done: cut spending, privatize, increase interest rates, etc. But after five crises, Brazil had learned the lesson, and in recent years had seen its international reserves surge from USD 40 billion to USD 210 billion.

EMBRAER: Investments of USD 20 billions for the next years

Although Brazil has not grown as much as Russia, China or India has, its economic growth remained solid. The country now has 100 million middle-class people. Last month, a pleasant surprise was revealed: the automobile sector had never sold so many cars in a single month. Last month’s automobile sales were approximately 200,000 for the month alone.

The industries based in Sao Paulo have grown by 10%. And the industrial sector of Sao Paulo represents 40% of entire Brazilian industry. Moreover, the federal government has a surplus of 4%. This can be much-needed funds for new investments.

Most importantly, the recently discovered oil reserves in Brazil may reach an output of 80 billion barrels. This can only attract investments that can be pegged at USD 600 billion over the next 10 years.

Platform for exploration of oil

The present global crisis is the result of the irresponsibility and incompetence of countries like the United States and United Kingdom which allowed international speculators, bankers and mortgage companies to earn indiscriminately and selfishly, at the expense of the greater good and sustainable growth.

Investments in infrastructure

The IMF also failed to caution, alert, and advise the United States to decrease its budget deficit? Why did the FED, which knew exactly what was happening since 2006, not taken any action? Frankly, who can better answer these questions than Paul Krugman.

In Brazil, the effect of this global crisis is the reverberation of it in terms of the retraction of credit. However, the largest local investment bank (which is state-owned) continues to provide business loans at low interest rates so that investments do not stop.

Investments in real estate

In addition, Brazil doesn’t have an economy as open as others, since only 14% of GDP comes from foreign trade. This means that there is an internal market consolidated within the country.

But an exciting possibility is looming now. When this crisis will be over, in maybe two years, new powers will emerge. New rules will be created for the new regional powers, so that they can be treated as they should have been treated a long time ago: appropriately and justly. The old and decadent powers will have to be content to share global influence with new and exciting players.

It pays to learn the lessons from the past.