Brazil is currently a sitting duck for capital flight and other forms of financial warfare over the next six weeks, which is being orchestrated by Wall Street and the City of London, with Trump administration help, to prevent the reelection of President Luiz Inácio Lula da Silva on Oct. 4. “Foreigners own more than 60 per cent of Brazilian equities [the stock market—ed.], the highest share in emerging markets. This leaves the market exposed to bad news,” the Financial Times reported with a chuckle on July 21, 2026. Furthermore, foreign-controlled Brazilian commercial banks, local pension funds, and domestic investment funds own over 76% of the country’s public debt, and serve as consensual conduits for the international carry trade. That’s the scam whereby major international financial speculators borrow cheap money in Japan and elsewhere, and use Brazilian banks and other financial intermediaries to place the funds in high interest bearing Brazilian government debt—which today carries a staggering 14.25% interest rate (the benchmark Selic rate).
With such spreads, Brazilian banks have no incentive to lend to domestic industry or consumers, and every reason to use Brazil’s lack of exchange controls and free convertibility between the real and the dollar to make a speculative killing—at the expense of Brazil’s physical economy. An estimated 25% of the government’s yearly budget is spent on interest payments alone on its $2.1 trillion debt, according to World Bank data.
The top private banks in Brazil include Itaú Unibanco, Banco Bradesco, Banco Santander, BTG Pactual, Banco XP, Banco Safra, and Sicredi.
There are a number of indications that the financial warfare to prevent Lula’s reelection is already well underway and can be expected to sharply escalate between now and the Oct. 4 election. Since April, the Brazilian stock market has lost $6.1 billion, or 16% of its value, and the real has fallen by about 4.2% in relation to the dollar.
“The fast-approaching election period has heightened caution toward Brazilian markets among foreign investors, who have been making sizable withdrawals from the country,” Valor reported.
