Lost Samba – Chapter 23 – The Brazilian Hyperinflation begins
A bus to school, to my Dad’s office or to anywhere boring in the “real world”, would go from Ipanema towards Copacabana. After crossing my old neighbourhood it would leave the Zona Sul through the Túnel Novo. After this it would pass Botafogo’s training grounds before turning left towards the Botafogo beach and onwards into the city. On my first day as a university student, I was pleased to be catching the 511 bus, as it would not turn into Botafogo beach but instead would take a right into peaceful Urca where the Federal University – the UFRJ – was located. As the bus went along the good old Avenida Nossa Senhora Copacabana, I thought about the new cycle that was about to start, and realized that I didn’t know what to expect: was I going like the academic experience? What was the economics course actually about? What were my fellow students going to be like?
The campus was quiet, with well-kept trees bordering alleys that separated the well preserved nineteenth-century buildings. The one that housed the economics department originally served as a madhouse and although the asylum had long-since been transferred to a new building on the campus, we sometimes saw nurses chasing after runaway patients.
In the 1960s, the UFRJ had been at the epicentre of the students’ resistance to the military dictatorship. The National Union of Students (UNE – União Nacional dos Estudantes) had organized many crucial gatherings in its open-air amphitheatre that was just below our classrooms and most of the students who had opted for armed struggle reached that decision in the same places where I was now studying.
Even in 1981 there were rumours that some fellow-students were either undercover police agents or were members of underground organizations. I doubted this was the case, but there was no way of knowing. Anyhow, with the re-birth of open political debate, the students’ union was lively and there were active Trotskyists, Leninists, Maoists and anarchists, as well as people joining the new ideological groupings with more ecological and existential agendas.
These leftists fought amongst themselves. They bickered over almost everything; as, for example, which stance should the students union take over the Soviet invasion of Afghanistan, or which of the various communist parties was the true representative of the masses or which thinker best represented the people’s aspirations, Lenin, Trotsky, Mao, Bakunin or some other obscure Marxist. They also had serious fallouts over other theoretical and practical intricacies that made the experience of being involved with left wing politics seem more like belonging to a religion than anything else.
Now that the military regime was on its deathbed and the Soviet Union was beginning to show cracks, also having ceased long ago in investing in Latin American revolutions; the debate on choosing between either fighting or embracing the capitalist system had become obsolete. My generation was caught between this stagnant state of affairs and the pragmatism of the yuppie generation that would soon kick in. We recognized the importance of politics and welcomed the political springtime, but could not relate to the outdated dialogue.
Some teachers who had endured hardships during the military dictatorship saw us as a new breed of students; one of the first contingents to be free from the dictatorship’s constraints and, therefore, they expected a lot from us. Meanwhile, the militant Leftists saw us as alienated bourgeois kids while the nonpolitical students, already the majority, saw us as fake revolutionaries. Like our parents, they believed that politics was a waste of time, instead, they concentrated on forging their futures as stock market success stories.
The introductory courses that the university offered were vastly more interesting than the classes at the result-orientated factory schools that most of the students had come from. The programme concentrated on political economy and aimed at preparing students for future roles in government development agencies. We studied Marx – something extraordinary considering the government-funded university was still part of the apparatus of a pro-American dictatorship. Some of the professors had recently returned from exile and were excited to lecture freely in their own country. Everything was going well until an outbreak of hepatitis that I had contracted in Mauá forced me to spend over a month in bed.
That time off at home marked a subtle turning point both for me and for the country. Political freedom was already a given but an era of economic hell was about to break loose. Around the world, religious fundamentalism was taking root, HIV Aids was spreading, and Ronald Regan and Margaret Thatcher were consolidating the grip of conservative policies over the USA, the UK and the rest of the world.
In the minds of most Brazilian Leftists, the desperate middle and upper classes in the rich countries had voted in Regan and Thatcher to lead a crusade against the libertarian and egalitarian principles that had defined our intellectual upbringing. No matter how one saw this change of direction, it was undeniable that the duo had an anti-socialist agenda. For the new leaders of the two greatest western economies in the world needed to deal with a crisis caused by what they considered a warped way of thinking. While I was confined to my bed, and ate and drank from separate glasses and plates so that my infection wouldn’t spread to the rest of the family, foreign banks decided that their loans to friendly dictators – loans they’d been more than happy to make – were now a threat to world economic stability. They wanted their money back and if their debtors could not pay, they wanted to make money on those loans. Interest rates on international debts skyrocketed to levels that were unthinkable when the loans were taken out.
The international banks could not care less if their decisions suffocated the indebted countries and their citizens. Experiencing something like an ever worsening toothache ordinary Brazilians began feeling the consequences of the monetarist policies. When companies were forced to close down and inflation skyrocketed, people saw themselves jobless, with no social security to help them, while their money had less and less value. This came from the same creature that had sponsored the military coup back in 1964, now it was showing its true self again, but in a different angle.
Due to ineptness and to sheer lack of experience with such adverse economic conditions the policies that the government adopted were disastrous. With the Brazilian foreign debt rising to stratospheric levels, the authorities ignored the seriousness of the situation and resorted to printing more money in order to honour their internal obligations, a perfect recipe for disaster.
Over the following fifteen years, inflation in Brazil accumulated to 20,759,903,275,651 percent, an absolute world record. To give an idea as to how bad the situation became, had Dad not protected his money, for the same price that he had bought our comfortable apartment in Ipanema in the mid-1970s, he would only have been able to buy a cup of coffee a few years later.
At my university, faculty members and students saw this upheaval in a different light. It happened that our economics department was at the forefront of the opposition to the government’s policies long before the crisis began and many of the professors had issued warnings about the dangers ahead. Many Brazilians believed these academics could guide the country out of the mess, and they became public figures, appearing on television debates and contributing full-page articles in the main newspapers.
Meanwhile, in order to stimulate national industry, the government resorted to control imports, something that had a crippling effect on Dad’s business just as he entered his ninth decade. Now on top of a shrinking market, just getting a license to bring his goods in became difficult.
After I recovered from the hepatitis, the challenges my Old Man faced in his business meant that the pressure was, more than ever, on. The good times were clearly over and his only hope for me was that studying economics would save me from ruin. Still, I had fallen behind and the more I considered the situation, the more obvious it was that economics was not for me. I was doing badly while, to my naive surprise, my fellow students took their studies seriously and actually liked the course.
During this turning of the tide, Kristoff – my German-Chilean school friend – managed to get himself arrested on the same bus route we had made just the year before. The arrest took place in Uruguaiana, on the Brazilian border with Argentina and Uruguay, a cattle-country town that had become notorious as a hot spot for smuggling and money laundering. Although Kristoff was not smuggling drugs, he took the rash decision to light a joint in the street. Before he could inhale a single puff, out of nowhere agents of the federal police ambushed him, arrested him there and then, and later transferred him to a jail in Rio. As this was Kristoff’s first offense, he was bailed. A few weeks later, someone reported him on another charge. The police stormed into the classroom while he was attending a lecture at the university and hauled Kristoff back to jail – albeit a relatively luxurious one for foreigners and people with a university education. Kristoff’s father made a discrete appeal to the minister of justice and, to avoid a trial, the court agreed that he would be quietly deported to Chile.