The oligarchs and course coffee was a high profile example that this could be similar there are dozens and dozens and dozens and dozens of people its not just this guy was a politician so theyre cracking down on politicians and the politicians receiving the kickbacks from major multinationals and various powerful corporations that control various sectors of the economy here it is a 2 trillion dollar economy a car according to the world bank 2017 data that gives it a g. D. P. Per capita of 9800. 00 so its a pretty big economy and a huge economy with p. P. P. You know when they adjust for purchasing power its a really massive economy its got a lot of resources its got a lot of potential be a slick so much of south america the colonial past as has been created a lot of the legacy problems and also during the seventys and eightys a lot of the the the interference from abroad particularly from the u. S. Has caused a lot of problems. So this is the mountain that needs to be climbed yes our guests in the 2nd half Robert Wilson can go over some of the cone things because there is a specific structure formed in this economy because that dates back hundreds of years from the portuguese empire so it is unusual wiki pedia says that the economy of brazil is a developing free market economy it is the 9th largest in the world by a nominal g. D. P. And the 8th largest by purchasing power parity the country has an estimated 21. 00 trillion dollars worth of Natural Resources which include vast amounts of gold iron and timber of course timber well talk about in the next episode thats the amazon its a resource rich country and but they are saddled with a lot of debt and because they have to play ball with the debt sellers the bond sellers the the i. M. F. And these other multi global the global institutions that love to straddle people with debt and so this is going to be another impediment to get to a place of sustained growth more than debt their debt is quite manageable here certainly compared to argentina where we are but argentina has much better infrastructure than here brazil does not have much infrastructure Robert Wilson who we talked to in the 2nd half you know hes done a lot of research on this hes been a banker here for a year as in years and years and part of it is the government has an investment nor have private investors and thats because Interest Rates have generally been about 14 and a half percent over the past few decades so they make more Money Lending risk closely rather than resting in huge Infrastructure Projects but now Interest Rates are 4 and a half percent here. And inflation is 3 percent so you would expect a boom but that hasnt happened they did have a lot of a local Rio De Janeiro investment with the olympics so they extended for example that the metro system out to the beach much to the disdain of a lot of wealthy People Living in places like ive been ema and level on but heres a. Story from reuters about the ongoing Economic Situation here because theyve only been growing at one percent for the past few years this in a situation of the global g. D. P. Booming and markets booming and their only grown by one percent here brazil economic stars align turning 2020 into make or break year unprecedented monetary stimulus huge strides in the governments reform agenda to bring public finances under control and open up the economy and a record low Exchange Rate should help fuel the boom sustained growth is long overdue the economy has struggled to grow much above one percent a year in each of the 3 years since the 2152016. 00 crash making it the worst recovery from recession on record that the central bank just cut Interest Rates to 4 and a half percent which is very very low here so it has one of the most negative rates in the world essentially because of inflation running so low and yet Interest Rates as well so the right well capital flight is also a big problem so you have a lot of capital leaving the country because of the threat of taxation increased taxation on property and things like this certainly in argentina that was a huge case when you know since weve been here we saw argentina imposing huge amounts of a 30 percent tax on Foreign Exchange and things like that here we have a new free market. Has is cutting taxes hes removed the Public Sector from huge parts of the economy and his government has sat back expecting for Foreign Direct Investment expecting private investors to step in where the government has stepped out but not none of that has emerged according to this reuters article about here in brazil so theyre basically just stuck you know theyre stuck they cant define a spark what might the kind of thesis is it is amazing here right and the population is entrepreneurial you see it all over the streets you see it Walking Around but the headlines of all the danger the same thing happens with much the latin america and mexico you know weve been afraid in the past to go to mexico because. All these headlines about danger danger danger cartels are going to get killed here you have the same thing right with a resource or a country about resources autonomy a low margin business yes so for a high margin business Like Services entertainment Financial Products you need to have a story and appealing story you need to have dancing and singing and make it sound appealing right you cant be kind of like a truck driver in the back alley you know calling out somebody like dont dumpster dollar told you that right is like who i dont want to go there for vacation right youve got to have a. Go to liven it up a little bit he would think that would not be a problem in rio but now the reputation is at their. You know like a Teamster Convention its got to be more disney speak in disney of course they make their funds and much of america is iran today economy are on the global stage because not only do they have the u. S. Dollar but they have intellectual property so thinking of the fact that these huge amazon which is amazing resource totally unexplored still to this day so the fact that theyre willing to just chop it down and deforestation is rapidly increasing chop it down and sell it for timber and the fact is you know rain forest soil is very bad is like its not nutrient rich at all so once the rains come it just washes away and its hard to ever read grow the forest like we did in america like america chopped down their entire forest covering the country as well and then regrew it but you cant read grow the amazon so however with intellectual property there are so many plants and all sorts of wildlife that you could possibly package into pharmaceuticals for example the Indigenous People there use these ingredients for their own products in the u. S. Sort of and pharmaceutical giants and france and switzerland come here and they they look for these ingredients but you know why not thats a higher value revenue stream that you can as a country collect for generations yet much. Margins on ip intellectual property and the rain forest possesses to actually a lot of pharmaceutical breakthroughs that you can then sell as. Such and as intellectual property you can scale that into billions and billions of dollars where is what you chop down the rain forest is gone its like i come back and its a one time thing and so you know it doesnt make any sense selling off your gold supply is like Gordon Browns or no move as the equivalent of the dumb member gordon brown who is the chancellor of the exchequer the i cant im sold off half their goal that a global all time low for gold prices yet the same thing is like actually Commodity Prices there are all time lows as well so why sell off this Precious Resource of the amazon which youll never be able to get back again but it is a sort of resource that you could extract. Income for generations to come the current kind of mentality though of the ruling class seems not going down that they need i guess in the leadership circles here in brazil some body to come along and say hey you know you have a greater opportunity here in this rain forest and just chopping the trees down you can actually get involved at a much higher margin business and you can become a Global Leader and develop some Global Brands i mean theres not a lot of aside from the flip flops there are lots of put there and i have like 5 care now that im given the sale of brazilian brand im not ive got to be honest yes theres only a nuts but Ratings Agency s. And p. By the way did recently upgrade brazils sovereign credit to positive from neutral but the important thing to note here about this economy much like say france and Spain Unemployment remains high 11. 6 percent and is only likely to come down gradually more than 12000000 brazilians are out of work the number of underemployed is around double that and the number of private sector informal jobs is now at a record high of 11900000 so many of these new jobs are again just like in a. Eric i would say very low paid gig economy sort of work so thats a difficult even despite the low Interest Rates if essential a negative real rates people arent spending because they have horrible jobs right i mean thats not china had all that cheap labor and they were their workshop of the world and they went up the value chain to great brands brazil as the commodities they need to go up value chain so brands like everything a break want to come back much more i mean. So what weve got to do is identify the threats that we have its crazy. Let it be an arms race. And spearing Dramatic Development only. Exists i dont see how that strategy will be successful very critical. To sit down and. What holds and. To. Put themselves on the line to get accepted or rejected. So when youre the president and she. Wanted. To do it. But she wasnt. In the morn. 10 people. Interested always in the waters of my house. Question. I am not one who will ever argue that there are worthy and unworthy victims its also important to also distinguish the fact that whenever we have a crime the norm of the army in genocide and other cases of genocide thats that were talking about the issues of confronting it can all the doing it and injustice and reparations for it are important it is important to confront the crimes wherever they happen but it shouldnt be means to dilute you know the experience of. Wealth in this particular case of the r. V. Thats. Larger serial i believe in the room light of. The room. My name is drawn more than i was for it is to die in prison by the expiration of my life. Case to grab some Media Attention i mean its a shooting in a 16 year olds 16 Birthday Party found something the police tell a lot of pressure channel close to kids. 40 and i mean just. Its like i couldnt believe it was. Me out so far they are all more than the sure dont want peace be with us thats all it was she knew because i was standing right next to. Me for is because you got to keep in mind one thing doing this 1617 zone so. This could lead one to lose their lives is plunder his fear of a train. Pull food relief. Former those close to. Govern the flow know the truth. Welcome back to the kaiser report imax guys are time now to turn to robert well said hes a former banker turned private Equity Investor who has lived in Rio De Janeiro for 20 years robert welcome thank you really great to meet you where are you we want to dig into some of these issues you lived in rio for on 2 separate occasions over the past 2030 or 40 years the last time now here for 23 years describe the evolution youve seen in the city since you 1st came here during the military dictatorship. A huge evolution. When i 1st got here in the late seventys just to give you an idea there are as you probably noticed on most of the buildings there are guardrails and barriers to entry to the buildings didnt exist in the during the military dictatorship so rio is going through a massive change in the past 40 years i mean obviously the lead up to the end of the dictatorship in 8485 was kind of a precursor to the changes that we all experienced but part of those changes were i guess youd have to put part of it on brazil as doorstep was a former governor but the drug trade and a bunch of other things transformed the city dramatically the Financial Sector which was largely focused here and until the 1980 s. Moved migrated to some pollo pretty much on mass real still has a good presence in private equity Asset Management looking at the economy you know 30000 feet down whats working well for brazil and where is it not working well the sector thats working i would say the best is agriculture thats the sector that you could say is a home grown 1st world sector. At least in terms of the technology and production in terms of infrastructure in terms of getting product to market its not what youd call the best logistically brazils tools still has about i guess well over 80 or 85 percent of its transport of goods by road not by rail not by air not by water so the infrastructure is a bottleneck in brazil but the acceptor is a serious sector. And i think that you know obviously automobiles d is a major sector because its technologically advanced. The aviation said a lot of Car Companies may actually airbus out absolute there is no brazilian brand car there is no brazilian very good they have a brazilian brand of car i dont think that would make sense you know. The competitively just let me get a sense of the technology that the with the factories here have is actually state of the art so for brazil to carry over and try to transport that into any you know a brazilian automotive sector thats a tourist industry its underdeveloped correct dramatically undeveloped because everyone knows Rio De Janeiro they know brazil but a same time it would be attracting more tourists its not tracking more tourists i think of the reason i mentioned like a person car company it seems like theres a lack of fabulousness. If you well thats a great way to put it yeah you know theres a lack of sizzle internet a brand i mean you have a car a dollar a year ok thats thats been around for a while but is there a hipster scene there is a hipster scene. Lamentably to his book hipster scene here which is obviously culturally driven you know the arts cinema. Thats considered today left wing. And frowned upon so you know that it cuts in a lot of Different Directions i mean theres no question tourism could be huge in brazil it sure is not here is a global leftwing resurgence they may politically maybe not getting great traction but these millennialism jhansi are definitely identify more with a left side of the spectrum and theyve got a lot of discretionary dollars theyre having to write i think youre right about that and if brazil put its mind you know to really opening up the country to tourism and creating the infrastructure for tourism and infrastructure is really the bottleneck for everything but if they get if they could do that this country would be absolutely fabulous for infrastructure and its a cultural legacy kind of overhanging the ability to break out of a legacy mentality if you will is there a legacy a mentality that stops some dynamic rother dynamism i think there is i think that the colonial history of the country is more a mindset. That manifests itself in the lack of things in the country i mean theres a you know the tendency here is to always think about the idea of doing this but the practical measures to make it happen are you know lost in the bureaucracy lets talk about some nuts and bolts of the economy here so Interest Rates are brazil been cut down to 4 happier sat down from an average of over 14 percent over the past few decades inflation is just 3 percent wheres the investment boom well thats a great question because everybody is expecting the investment boom to happen i think that the Current Administration under bill some that is expecting to have enough reforms in the current in the course of pension reform tax reform privatizations theyre hoping that those tools will open the country for private Sector Investment that hasnt happened yet. The last time that we had a Major Service was actually what brought me to brazil which is the 1990 s. When brazil was able to marshal a Stabilization Program with the new up with with with the new currency the real. Well and that actually set the stage for the private act we enter instance of the country its a bit ironic because private equity here actually served as an outgrowth of basic m. And a mathematics and and the other key factor was Interest Rates i mean the Interest Rates just mentioned were incredibly high until recently and those Interest Rates created a situation where the fed funds rate for brazils called the said week that Interest Rate was in the high teens for years for decades the Banking Sector made a fortune but it also laid the groundwork for private equity because companies couldnt borrow for working capital and so you had huge sectors of the economy that needed capital for growth and private equity basically fill the gap the Ban