Dilma's Dilemma
Mutiny Spells Trouble for Rousseff

Just when it looked like Brazil’s economic woes couldn’t get any worse, the country’s unpopular president Dilma Rousseff now faces a mutinous Congress. Bloomberg reports that the lower house is pushing spending increases even as Rousseff’s government is trying to stave off economic crisis by keeping spending down:

The lower house approved in a first round vote a constitutional amendment by 445 against 16 votes granting salary increases to police chiefs, prosecutors and government attorneys. The bill still needs to pass a second round vote before going to the Senate.

Earlier, leaders of the Brazilian Labor Party and the Democratic Labor Party, or PTB and PDT, said they would act independently and no longer participate in meetings of the ruling coalition. The parties together have 44 out of 513 seats in the Chamber.

This Thursday a Datafolha poll showed Rousseff’s popularity fell to the lowest on record for a Brazilian president. Support for the start of impeachment proceedings increased, the poll published by Folha de S. Paulo shows.

The initiative comes as the real drops to a 12-year and local bond yields soar, and that economic context us what makes the political fragmentation, exacerbated by the vote, so dangerous. The Brazilian political establishment is enraged by the spreading corruption investigation linked to the Petrobras debacle, and, out of a mix of fury and fear, leading politicians are now blocking efforts to stop their country’s economic nosedive. At a time when the ship is heading for the rocks, a riot has broken out on the poop deck. This does not bode well for Brazil.

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