Brazil’s two-one win failed to prevent the Real falling to a historic low against the US dollar. One analyst commented that "the level of concern over debt and politics is outweighing football".
The Real has lost nearly 20% of its value against the dollar this year and has been downgraded to the second riskiest investment in the world, after Argentina.
Wall Street’s woes though stem not from the plight facing the masses in Brazil, but from concerns about the exposure to Brazil by US banks of $17.9 billion of debt, 32% of all exposures in Latin America and the Caribbean.
Public sector debt in Brazil has risen to a record high. Private sector debt is now more than 310% of the value of exports of goods and services, amid fears that Brazil will follow Argentina into financial chaos.
Last week’s financial turmoil reflects an economy in decline. Growth has fallen from 4.4% in 2000 to 1.5% in 2001, and just 0.5% in the 12 months to the end of March. Ruling class demands for an increase in the budget surplus to pay off the debt means cuts in public spending and possible tax rises.
Big business is also panicking at opinion polls showing Luiz In?cio Lula da Silva, PT (Workers Party) candidate, ahead in the race for president.
Notwithstanding Lula’s commitment to capitalism, the bosses are worried at PT members’ radical anti-capitalism.
Financial crisis is spreading across the continent and in its wake opposition is growing to privatisation and other pro-capitalist measures.
When the football celebrations end the Brazilian masses will be confronted with the vital task of building a socialist alternative to the horrors of capitalism.