For the moment, the financial markets are making a bet, albeit a small one, that hope will triumph over experience. The spectre of Argentina’s economic collapse will have had another manifestation in a much larger and more important economy.We will see. The Sao Paulo region is one of the great engines of growth in the world, not just Latin America.Lose that confidence and Brazil is back into another miserable cycle of capital flight, falling inward investment, collapsing currency, rising inflation and ultimately deeper austerity. The more debt that can be rolled over rather than repaid and the stronger the real, the Brazilian currency, against the dollar, the smaller the burden on public finances in the future.Hold public confidence both at home and abroad and everything is manageable. Which way will he jump?Lula started off on an anti-capitalist ticket, a “fight them on the beaches” mode. For example in the early stages of the election campaign he said that he would “renegotiate” the debt But gradually this line softened.

Unemployment, at 8 per cent, is up from 6 per cent eight years ago, but it is not at the double-digit rates of most of South America.The rest of the score card is not too bad either. Health care has improved with infant mortality falling by a third; school and university enrolments have risen, though not by enough; and in infrastructure, the communications revolution has been kicked along by privatisation of the telecom industry. The weakness has been a build-up of public debt, which has doubled as a percent of GDP in the past four years.That debt is one of the first problems Lula has to tackle What he does will be of absolute seminal importance. Growth recently has been slow –1.5 per cent last year, only 0.5 per cent expected this – but at least Brazil has not yet gone into recession. Back in 1994 when Fernando Henrique Cardoso, the finance minister who subsequently became president, reformed the currency, inflation had reached 10,000 per cent a year Yup, 10,000 per cent That is like £100 being worth £1 next October True, Brazilians learnt to live with this.

Maybe it needs the left to consolidate the gains of the right.That Brazil’s economy has been turned round is not in question. For a Latin American country to make a hash of its economic policies is hardly news Sadly, the region has a track record of disappointment. The election of Luiz Inacio Lula da Silva as Brazil’s President not only means that the country will be led by a former Marxist firebrand instead of a conservative economist who tried to push through market reforms. It also shows the power of anti-globalisation, anti-international capital markets, anti-IMF rhetoric, for Lula’s campaign made much of the need to reject IMF-imposed austerity.This bigger element to the Brazil elections – whether the country will seek to reject the liberal consensus – brings a significance to the election that goes far beyond the region. But maybe that’s what the Tories are trying to avoid.simoncarr75 hotmail
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A shock rejection of the liberal market economy by the voters in Latin America’s most populous nation? Or the election of a leader who will be more trusted by the electorate and hence able to carry through the next stage of much-needed reforms?

A shock rejection of the liberal market economy by the voters in Latin America’s most populous nation? Or the election of a leader who will be more trusted by the electorate and hence able to carry through the next stage of much-needed reforms?
It might look a bit like the first but may well turn out to be the second. Had the debate started three hours earlier, we could have given it the full glare of publicity in living Sketcho-colour. Think of it not as a modernisation programme, he urged his opposite number, but as a reversion to tradition.Eric Forth made the point that no amount of changes to Parliament’s working methods would bring voters back to the voting booths. And he may have gone on to say something even more interesting when the Sketch’s deadline fell. It’s proposed they start at 11.30am and don’t carry on till dawn the next day. Duelling will probably be forbidden anywhere other than the committee corridor.