The end! How it happened and what will happen after impeachment in Brazil?

#Tchauquerida that was the tag used for those who wanted president Dilma Rousseff to be impeached, but why they wanted that to happen?

There is state that claims that "if economy is booming a president can do whatever (s)he wants that nothing and nobody will remove the presidency ". The  welfare state provides a "dope effect" to certain acts from the ones in power.

Brazil experienced that in 2005 after the Mensalão scandal that involved President Lula's Workers Party on a bribery scandal and the accusation of buying congress support. That scandal reached many important figures from the Party, sending some of then to jail but Lula was not impeached. Why? Economy was growing and the president was very popular, even President Obama called Lula "The Guy" in 2009.

Lula found himself so strong that he was able to elect Ms. Dilma Rousseff to replace him from 2011-2014.

Brazil economy started fading in 2012. Economy measures taken in order to recover from the 2008 Global Economy Crisis were no longer efective on sustaining growth. GDP number started to crumble and the president decided to push harder on government expenditures and credit expansion. That was the recipe that worked on the past but they used a higher dose. It worked 2013 but on 2014 the side effects of those actions started to show! GDP growth was 0,1%!

Add to that the beginning of the "Car Wash Operation" investigating the largest bribery scandal in the history of the country, hitting PETROBRAS, important political figures and the largest constructions companies CEOs sending then to jail. Dilma decided to add some "morphine" and raised social programs expenditures. She also used "creative accounting methods" to mask the real economy situation and show that the welfare state was sustainable. Dilma was re-elect to run the country from 2015 to 2018 on the closest rally ever for a presidential election.

After election, in October 2014 she was forced to unveil the reality! Brazil had a huge financial deficit! In 2015 Inflation exploded and unemployment numbers began to climb fast, social programs expenditure were reduced drastically, her popularity dropped to the lowest level reaching 9% and GDP was -3.8%. The vast majority of investments were put on-hold!

2014 Government Accounting Statement was rejected due to "creative accounting". Some presidential acts taken in 2015 were also considered against the law by TCU (Tribunal de Contas da União) Members. Those acts were the sparks that set fire on the impeachment process.

To conclude this picture I have to say: Dilma hates politics and politicians! She is not a leader! She is bossy! Her communications skills are terrible and former president Lula, her creator and "mentor", is now under pressure from "Car Wash Operation" and was not in conditions to support and sustain her.

Perfect condition for impeachment! Not even Frank Underwood was able to create those condition!

Mr. Michel Temer, the vice president, replaced her during the impeachment process and will be nominated president as stated under the Brazilian Constitution.

The vice president is already taking some action in order to regain international credibility and create condition so that economy reverts the drop. It is clear now that unemployment will grow, that government will have a huge financial debt and GDP will drop another -3.6% for 2016! Wow that is worse that 1929 crisis!

So far the market gave Vice President Temer the necessary time but as stated on a meeting I had the chance to participate with bankers, the markets is "cautiously optimistic" about him and his team. There will be no gamble!

Some real actions and measures must be taken to revert the situation, those will be hard. They will be presented after Mr. Temer is officially nominated president and the Brazilian Congress will be called to confirm those acts and measures. This may take some time and will test market's patience.

If and when that happen Mr. Temer will create the base to new investment and the economy recover. Projects will be taken out from drawers and the "golden rush" will start again!

If you and your company is willing to open a subsidiary or start business in Brazil get ready, start looking for people and partners because if you wait a lot it might be to late!