Huffpost WorldPost
Eric Ehrmann Headshot

Brazil's Dilma in Crossfire of US-China Currency War

Posted: Updated:

With president-elect Dilma Rousseff announcing market-friendly budget cuts and the White House still searching for new economic leadership, Brazil has joined China, France and Germany in the call for a coordinated global effort to replace the foundering dollar as the major world reserve currency.

This new "Gang of Four" has more clout than the US and British economies combined. It emanated from the need to countervail US public diplomacy that caused Dilma to suggest Washington has been engaging in a "disguised devaluation" of the dollar following Fed Chairman Ben Bernanke's charge that Beijing is keeping its yuan to dollar exchange rate artificially low, which does help the earnings of American companies who manufacture in and buy goods from China.

But participating in the death panel for a sclerotic Bretton Woods system has sparked a wave of Brazil bashing by Anglo-American media and shadow government assets who place the need for greed above the stability of nations -- capitalist, socialist and hybrid- whose infrastructures and regulatory policies help them buffer the effects of the free market meltdown.

After their endorsement of Chilean-trained economist Jose Serra to be president of Brazil backfired, The Economist stepped up its attacks against Dilma, calling her "Lula In Lipstick," when the right call for the tough job she faces would have been Thatcher in tights. Serra was hooted down recently by members of the Mexican delegation at a European Community development conference in Biarritz after he trashed economic and training programs implemented by Lula and Dilma that are helping to feed and include young Brazilians in the nation's future.

And amping up the The Economist's charge that Brazil has "too much hubris" Peru's patrician ex-communist turned free market evangelist Mario Vargas Llosa recently tagged the land of the samba as a model of what's wrong with state capitalism. Nobel laureate Vargas Llosa failed to acknowledge that companies like Wal-Mart, Caterpillar and General Motors and start ups like Jet Blue appear to be doing quite well in Brazil's open market environment... and Fleet Street is agog now that Brazil purchased a $39 million dollar embassy in London's fashionable Trafalgar Square.

The Economist is co-owned by British educational services provider Pearson. The publication has offered some valid criticism of Brazil's bureaucratic public education system. But for a nation with the world's largest black population outside Nigeria these critiques merely play into the hands of white privatization preachers like Serra, whose advocacy for education solutions offered by companies like Pearson could help put some nice window dressing on any balance sheet.

In spite of all the yellow press Dilma has zoomed to #16 on the Forbes most powerful people list above The Economist's co-owner, Pearson boss Dame Marjorie Scardino. A Baylor University grad and ex-US citizen Scardino holds the 19 spot on Forbes' list of most powerful women and hasn't make the crossover to the big list. Her values have less to do with Dilma's notions of centralized economic planning than with mirroring and matching Baylor's president, Ken Starr, of Whitewater and Monica Lewinsky fame, who is committed to the goals of "excellence and humanity in christian higher education."

Having overcome the challenge posed by US-headquartered christian evangelical groups that prevented her first round victory, Dilma faces the tough job of forming her cabinet while dodging the crossfire from the currency war. China has overtaken the US as Brazil's top trade partner and the concept of a currency basket including dollars, reals, yuan and other major currencies makes sense in a world economy that needs stable new conventions for policy coordination. But the question of how much independence Dilma is willing to relinquish to her still undesignated central bank chief to tilt toward the dollar, the yuan or the basket has created some friction in the transition process that could create an opening for US-style neoconservative interests to shape central bank policy along globalist, not Brazilian lines.

Online media source Merco Press is reporting that University of Illinois-trained economist Alexandre Tombini, a career operative in the central bank bureaucracy with ties to Dilma's power base in Rio Grande do Sul state, is a likely candidate to head the entity.

Dilma's transition team has made clear that the Workers Party remains committed to domestic stimulus and development programs she helped create under Lula that promote social inclusion and the "one nation for everybody" concept that build a stronger society. But like the issue of politicizing or maintaining an independent central bank, elements on the losing side of the foreign policy establishment are scrambling to call in political debts in the hope of providing policy input from business-to-business elites nurtured by the World Economic Forum and US-based shadow government players. Tombini is well equipped to be a plain dealer in mediation should the debate heat up.

One such organization, the Washington-based Albright Stonebridge Group, maintains a stable of former senior Brazilian and US diplomats whose track records support policies that reduce income distribution and could further divide the nation along racial and cultural lines, creating a Brazilian version of economic apartheid.

Rupert Murdoch's FOX-TV has continued to characterize the Workers Party as heartbeat from old Soviet-style communism and hypes Dilma's early days as an urban guerrilla. Had Murdoch, who Fleet Street critics like to call "the dirty digger" dug a little bit deeper he would have found that Patty Hearst was much more of a high profile gun slinging urban guerrilla figure than Dilma, and that former Red Army terrorist helper German socialite Margaret Schiller snitched off a close family friend resulting in the murder of one of Germany's most prominent business leaders. Schiller's father Karl was finance minister in a previous Christian Democratic government and subsequently worked as a consultant for Saudi royals.

Murdoch's Red Square bash on the Workers Party is a red herring. Millions of Workers' Party members and other working Brazilians pulled together to pay off the nation's burdensome foreign debt, which was sold to them by overzealous US bankers during Washington-backed military regimes and involved lucrative commissions. Like the rest of Brazil, those who vote Workers' Party are part of a strong economic base that is willing to work hard and pay 44 percent annual credit card interest rates as the trade-off for keeping the economy from overheating. And the example they set by tolerating that 44 percent minimum rate is making that number a global benchmark for emerging nations who get on the consumer capitalism bandwagon. And Brazilians do all that on earnings that represent just one quarter of the CIA Factbook per capita income of a working American.

Political blogs like Estadao and president Lula's press team at the Planalto Palace acknowledge that media mogul Murdoch will appear in Brazil soon to meet leadership and discuss business issues. With Brazil in the crossfire of the currency war it's a great opportunity for the secretive Murdoch, who started his career as a socialist, to stop talking about economic reform and start talking about reforming economics.