In the film “Blame it on Rio”, Michael Caine plays a middle-aged man with marital problems who falls for his best friend’s daughter during a holiday in Rio de Janeiro. The heady atmosphere of one of the world’s most alluring cities is apparently the cause of this lapse in judgement. If only it were just a movie.
The list of Rio casualties is growing longer with recent additions including Mick Jagger, whose dalliance with local girl Luciana Gimenez sent wife Jerry Hall calling for her lawyers, and former UK trade minister Peter Mandelson, who had to vigorously deny local reports that he went on a tour of gay nightspots during a two-day visit to the city last July.
While politicians and pop stars are noted for slapstick at any latitude, one might expect that the serious-minded practitioners of the dismal science be immune from Copacabana’s curse. Unfortunately not. In the age of the internet, US economist Paul Krugman, who is noted for ripping into policy makers of every stripe and colour, proved that it is not necessary to visit Brazil to be undone by it. Cringing with embarrassment Krugman was forced into making a five point apology to George Soros over an article appearing in the on-line magazine Slate. In the piece Krugman accused Soros, falsely he now admits, of insider trading in the days preceding the appointment of Armínio Fraga Neto, a former Soros fund manager, as the president of the Brazilian central bank.
“Clearly I wish I hadn’t done it,” Krugman said. “I didn’t think I was breaking a story. It’s been an object lesson in something or other.” In his on-line apology Krugman admitted carelessness and said he had no ill intent. But was he also distracted in his writing by those compelling mental images of life down on Rio’s beaches, where there seems to be a municipal by-law banning ugly or unshapely women from appearing in public?
Surely this could not be the reason for Krugman’s error. An economist left out for the day on Ipanema would probably find something productive to do like solving the utility/exchange value conundrum of Brazilian-style bikinis that cover little – the style is so minimalist that they are known locally as “dental floss” – and cost a lot. An economist would never allow his mind to be polluted by wanton thoughts would he? Krugman must just have had a bad day. Rest easy, Paul, it’s not only charlatans who succumb to the cidade maravilhosa (marvellous city), the intelligentsia are also at risk.
The pity is that Krugman has some serious points to make about Brazil, about the economic situation that is, and the collapse of the real which, tragic as it is, did nothing to dampen spirits at last month’s carnival. Krugman’s argument, which got somewhat lost in the furore over his Soros remarks, is that the IMF is once again getting it wrong by pushing for high interest rates in the aftermath of a currency collapse.
“One thing seems certain: the high interest rate cure is utterly wrong in this case [Brazil’s],” writes Krugman in a piece entitled “Alas, Brazil” but which might be better headed “Alas, Krugman”. “The IMF now likes to claim that the stabilization of Asia, and the beginnings of some recovery in Korea, prove that this approach works: this is like the highway safety department claiming success because most accident victims survive, and some eventually learn to walk again. Whatever Brazil does next, please let it not include yet another increase in interest rates.”
Krugman should be thankful for one thing: the Soros debacle occurred during rather than before carnival. By that time it was too late for float designers and samba lyric writers to include him in their fare. Not so lucky were the IMF and Mick Jagger who found themselves in the direct firing line of the revellers.
Some carnival-goers wore costumes fiendishly depicting IMF negotiators while singing: “Hey there IMF, give us some money, won’t you.” But Michel Camdessus and his colleagues got off rather more lightly than the old man of rock and roll. There for all the world to see was a heavily pregnant Luciana Gimenez, wearing a scanty wedding dress and dancing on a float decorated like a church while a man dressed as a priest gave her a blessing. Jagger must rue the day he opened his hotel window in Rio and let in more than a sea breeze.
Maybe the Europeans and North Americans visiting Rio don’t give themselves time to acclimatize. As soon as their plane lands they are out on the town knocking back caipirinhas (a highly intoxicating drink made from white rum) and taking samba lessons. More companies need to give their staff training in safe Rio. Better still, follow the World Bank’s example in shifting part of its operations south – to Mexico City in the bank’s case – and open a Brazil office. Six-month secondments to offices in the Avenida Rio Branco would help a lot in building up immunity.
But it’s not a perfect solution, as Brazilians also come unstuck – particularly at carnival time. Take Itamar Franco, a former president and current governor of the state of Minas Gerais, whose arguments with the government over the repayment of state debt helped bring the real crashing down. It was Franco who experienced his own carnival lapse when he invited a knickerless pageant girl to join him in the mafia’s parade box some years back.
Still there is an answer for Franco which the Brazilian government may now be considering. As part of its latest deal with the Inter-American Development Bank, the Brazilians have to find an eminent person to fill a newly created vice-president’s post. What better candidate than Franco, who is still refusing to talk turkey with president Cardoso, not caring how much damage he does to Brazil in the process.
The Brasília civil servant who writes the invitation should take care with the address. It’s easy to imagine a scene worthy of Evelyn Waugh’s Scoop with the letter going to the wrong Franco. Former central bank governor Gustavo Franco, whose plans are to return to academia at Rio de Janeiro’s prestigious Catholic University, looks a good choice for the job. But top jobs at multilaterals don’t always go to the most talented. Sometimes the opportunity to get rid of an awkward customer takes precedence. Which in this case would provide an opportunity to conduct a scientific experiment. If Itamar Franco goes to Washington and slips on a banana skin, it shows that not all wayward behaviour can be blamed on breathing the Rio air. Only some of it.
