This could be about to change. The opposition Partido da Social Democracia Brasileira (PSDB, the party of Lula's predecessor), is trying to tar Lula. It jibes that Lula only travels, and does not have time to rule. The trip to Europe was the President's seventh foreign trip since he took office on 1 January. The PSDB calls Lula's first six months 'disappointing, incoherent, muddled and confused.' It argues that Lula has done little but talk a good game, and claims that the Zero Hunger programme, launched with much fanfare, has only reached 110,000 families and that 40% of the R$98m (US$34m) spent on the project has gone on publicity and other ancillary services.
The big problem for Lula and his government is the stuttering performance of the economy. In the first six months of the new government 550,000 people have lost their jobs. The main reason for this is the government's determination to allow the central bank to squeeze inflation out of the system. The central bank has kept interest rates high (they are still at 26%, when last month inflation was negative to the tune of 0.15%). The high interest rate policy has brought the domestic economy (apart from agriculture) to a juddering halt. The car industry is working at half capacity, yet inventories are already equivalent to two months of sales. Even used car sales are collapsing: they were down by 15% in the first half of the year.
The government argues that it had to establish its economic credentials by allowing the central bank to beat inflation. This policy has paid off: the international capital markets are now open to Brazil again -at a high cost: in São Paulo unemployment is 19.6% and, according to Fiesp, has worsened in the last month.
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