TheEconomist

Senator Renan Calheiros, president of Brazil´s Federal Senate and of the National Congress, will probably loose his mandate as senator by the State of Alagoas, under charges of corruption acts discovered after the accusation of pension payments to jornalist Monica Veloso, mother of Renan 4 year old daughter.

The senator is still married to Veronica Calheiros.

As a distinguished member of the strong PMDB (Party of the Brazilian Democratic Movement), who defeated the military rule in 1985 and now is allied to president Luis Inacio Lula da Silva´s Workers PArty (PT).

Lula tried to save his friend and may still have success in doing so tru the majority Government coalition has in Senate.

But the charges were so evident and the scandal lasted so long that Lula told people to let it go and try to solve the crisis as soon as possible because he - and the country - needs Senate being full opeational.

Senate has been paralized for the last quarter by Renan´s struggle to keep his job anyway.

It looks he won´t succeed and will have the same fate of former president Fernando Collor, also from Alagoas state, who resigned and lost his political rights for eight years under charges of corruption.

Last year Collor was elected senator after the 8-year period of punishment, but his role now is so ofuscated by his past that he decided to take a 4-months vacation, starting last week.

The main reason: not to be obliged to vote in Renan´s impeachment next week.

On the economic front, it´s expected for tonight the Central Bank announce about the basic interest rate, which the market wants to be cutted by 0,25 percent points.

Sao Paulo and Rio stock markets are on red now, following Dow Jones after bad news in US house financing market.

Dollar is woth R$ 1,94 which means everything is normal in Brazil at this moment.

Brazilian stock markets will open in one hour under strong pressure coming from Asia, where Nikkei index went down about 2% this morning.

Yesterday, as this economist forecasted last week, Brazilian Real was devaluated again - exchange rates went up to one dollar for 2,03 reals (it could reach up to 2,2 per dollar without serious troubles for local inflation now under control at 4% a year.

Yesterday night the 6.7 Richter escale earthquake in Peruvian ocean killed hundreds and Hawaii launched tsunami alerts valid for Chile and parts of South America west coast.

In Brazil President Lula asked Finance minister Guido Mantega some sort of B plan just in case domestic economy suffers too much inflation impact during this global crisis.

Let´s see what happens when São Paulo market opens at nine, Brasilia time - guess what?

If you´re doing business (or have any other link) with Brazil, watch at least two points when upgrading your information on this country:

# 1. Do not fly to or from Brazil: stay where you are, use phone lines and internet, instead of personal contact if you need to meet your business partners, staff, relatives and so on.

We´ll let you know when we ourselves start flying again inside our country, ok?

We´ve being using jeeps - because roads also are in very bad situation for the same reason jets falls over Amazonia and Sao Paulo: no investment in the last 2 decades and a ready-to-go US$ 1 trillion GNP emerging economy in a political wetern-type mass democracy for 22 years now.

# 2. Interest rates paid by  Brazilian federal bonds - one of the most really interesting investment options in the world - will probably stop its way down,  since there´s now an orange light on the world economic outlook after the overfinancing bubble disclosing in the US economy, reflecting on Asia and Europe markets this Friday, 27.

In case of US problems impact on Asia and emerging markets, Brazilian exports like raw materials for China, Korea and Japan will suffer from price lowering,  coming from lower imports from asian economies. 

In the political front, Lula´s government started to draw its future this week, following the national crisis over the TAM Air Bus exploding in Congonhas, Sao Paulo downtown airport: the new Defense minister is not jut a tall gaucho from the South pampas, but also a former head of the Supreme Court, Fernando Henrique Cardoso´s minister of Justice and now the manager in charge of solving Brazilian air crisis.

If minister Nelson Jobim succeeds, Lula, his party PT and allied PMDB will have got the ideal solution for a candidate to run for President in October 2010.

Lula is the only leader that could unite PT and PMDB but Constitution doesn´t accept third terms.

SP Stock Exchange opened in good shape reflecting the US GNP disclosure. Dollar is a little bit lower again - it´s about 1,85 reals for each US dollar (yesterday it was 1,92).

The problem is the country risk, which went up again: from 185 points last week to 220 points yesterday and 230 points  this Friday.