Arminio Fraga warns: Brazil repeats fiscal mistakes and heads toward a new crisis

Crossing this diagnosis with the portal's recent editorial archive panorama, a clear repetition of systemic pressures is noted, marking the fifth negative-toned news of the week, intensifying concerns already manifested in external shocks, such as tension in the Strait of Hormuz raising energy costs, and in domestic structural debates like the 6x1 Work Scale Constitutional Amendment (PEC). From the perspective of the value tradition and margin of safety inspired by the Graham and Buffett school, the prudent investor should see in this macroeconomic disarray a clear warning against the blind pursuit of immediate returns. The price paid for assets without adequate protection in moments of fiscal transition usually results in permanent capital loss, demanding extreme patience and rejection of false promises of easy gains in overheated markets.

Deepening the analysis on the anatomy of this vulnerability, the historical growth of government expenses—which jumped from about a quarter of the Gross Domestic Product to approximately one-third over recent decades—proves that fiscal austerity discourse never translated into effective administrative practice. Superficial short-term indicators, such as the unemployment rate reduced to 5.4% in the quarter ending in June, end up masking the underlying deterioration of the productive fabric and the fragility of household indebtedness. As pointed out by sector experts, waves of corporate default and personal credit show that retail and traditional borrowers operate at the limit, crushed by narrow margins and carried inventories that make the system highly vulnerable to any jolt in interest rates or inflation.

Facing this 30-, 90-, and 180-day horizon, economic scenarios point to heightened volatility in the markets.