On Wednesday, Brazil’s Central Bank announced it is keeping the country’s basic interest rate (SELIC) at the usurious level of 10.5%, citing “excessive government expenditures” and market concerns over the federal budget deficit. President Lula da Silva struck back against this obvious act of economic warfare—directed by the City of London and Wall Street—by mobilizing Brazilians against the central bank’s policy of keeping speculators’ profits high, at the cost of the nation’s development. He even questioned the very idea of central bank “autonomy,” the holy grail of the City of London and Wall Street.
The President told Radio Verdinha yesterday that the high interests benefit the private banks, which “prefer, instead of issuing credit, to make money with the high interest rate of 10.5%.” Furthermore, he pointed out that while everyone talks about this or that which must be cut to avoid a budget deficit, under current rules, interest payments on government bonds and debt are defined as a sacrosanct category separate from the budget, and not to be cut. The government last year paid R$ 790 billion (some $145 billion) in interest alone, which is a notable part of the international carry trade.
“It’s Brazil that’s losing out, it’s the Brazilian people, because the more people pay in interest, the less money they have to invest here,” he said. Government spending on programs which raise the living standards, skills, and opportunities to advance for the Brazilian people should be viewed as “investments,” rather than “expenses…. I don’t hear the market talk about homeless people, about waste pickers, [people who survive by rummaging through garbage dumps for recyclables to sell-ed.], the unemployed, or the people who need the State. Who needs the State? It is the working people, the middle class who pay the taxes in this country,” not the rich.
