The Pandemic's Worst-Case Scenario

The pandemic’s worst-case scenario is unfolding in Brazil.

Hosts: Carol Massar and Jason Kelly. Producer: Doni Holloway.

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Episode Transcript

Speaker 1 (00:00):
High. I'm Carol Masser and I'm Jason Kelly in Bloomberg
Business Week. This week, the magazine continues to tackle the
global pandemic and Carol as Asia, Western Europe, and parts
of the US emerge from what will hopefully be the
worst of the pandemic. The virus in Brazil isn't slowing down.
You're so right, Jason, Brazil Maybe the Pandemics Perfect Storm.
Total fatalities now exceed fifty one thousand. That's the second

(00:23):
highest toll after the United States. It's second in overall
cases as well, with more than one million confirmed infections.
And to make matters worse, it's almost winter in the
Southern Hemisphere, potentially bringing even faster uptick in infections and
providing a glimpse of how the virus might fare later
in the year elsewhere in the world. And Jason, when
COVID nineteen finally receives While Brazil may very well have

(00:46):
been hit harder than any other country, worst case scenario,
cash strapped, dysfunctional, and led by a chloro queen obsessed
populist Brazil Maybe the Pandemics Perfect Storm? By Julia Lte,
Simone Iglesias, Martha Beck and Ethan Brauner. On a recent

(01:07):
afternoon in Sauluis, the capital of Marenno State in northeastern Brazil,
hosan Alima Castro sat on a flimsy plastic chair in
front of her house as stray dogs sniffed potholes in
the narrow street and a few neighborhood kids launched kites.
The bar across the way, where a few months ago
an acquaintance of Castro's had been shot, was closed because

(01:29):
of the pandemic. Her job at a convenience store had
disappeared too, so Castro, whose forty three and shares her
modest home with her father, two brothers, and two of
her kids, had nowhere else to be. Although the coronavirus
is widespread across Brazil's northeast, she wasn't wearing a mask,
nor was any one else in her crowded neighborhood, where

(01:50):
basic services have been so neglected that many residents have
no access to clean water. Castro's brother, Moises, a garbage collector,
was the first in her family to get Then her
other brother and Luciano did too, followed by their father, Francisco,
who has diabetes. He suffered badly struggling to breathe and
running a soaring fever. But no one in Castro's household

(02:12):
went to the hospital, a place that some in su
Luis believe makes patients sicker or worse. That would be
a death sentence, she said. As Asia, Western Europe, and
parts of the US emerged from what will hopefully be
the worst of the pandemic, the virus in Brazil isn't
slowing down. Between late May and mid June, the country

(02:33):
galloped past Spain, Italy and the UK in total fatalities,
which now exceed fifty one, the second highest toll after
that of the US. It's second in overall cases too,
with more than one million confirmed infections, with local officials
now lifting quarantines despite continued growth in cases, It's conceivable

(02:54):
that when COVID nineteen finally recedes, Brazil will have been
hit harder than any other tree. The reasons Brazil has
made such a perfect host for the coronavirus are diverse
and not yet fully understood. Like the US, it never
issued nationwide rules for social distancing, even if the government
had wanted to, the rules would have been impossible to

(03:16):
enforce in a country of two million where some states
are larger in land area than France. That left local
officials to do as they saw fit, issuing orders that
varied widely and sometimes contradicted one another. Poverty is certainly
also part of the picture, and the densely packed favelas
threaded through Brazilian cities. Social distancing isn't feasible, and not

(03:38):
working means not eating, especially with the cash strapped state
unable to provide enough support. So is the dysfunction of
the government. Overcrowding in public hospitals is a long standing problem,
as is graft among the people who are supposed to
build new ones. And then there's President Gayre Bosonaro, a
right wing populist who came to power with the teen

(04:00):
campaign that echoed Donald Trump's pledges to drain the swamp.
Since the coronavirus appeared in Brazil in late February, Bolsonaro
has frequently obstructed efforts to contain it, demanding local officials
abandoned severe tactics like shuttering businesses, firing a health minister
who pushed for a more aggressive response, and at one
point limiting the disclosure of epidemiological data, saying that without

(04:23):
the numbers there would no longer be a story on
the evening News. The Supreme Court ordered the government to
resume releasing the figures. While in the early weeks of
the outbreak, Bolsonaro's intransigence resembled what was happening in the
White House, even Trump grudgingly conceded the severity of the
situation once the body count started to soar. Bolsonaro, meanwhile,

(04:45):
has doubled down, insisting that the antimalarial drug chloroquine is
an effective treatment and claiming the number of cases is
being exaggerated. Bolsonaro's office did not respond to requests for
comment on this story. In a written risk bonds to questions,
Brazil's health ministry said it's acted aggressively to test patients
and add intensive care beds, protective gear, and ventilators across

(05:08):
the country, spending more than eleven billion rays or two
point one billion dollars so far. Most local and state
leaders have ignored Bolsonnaro's push to end lockdowns. Brazil has
a federal system and governors have wide powers over public health,
but his continued dismissal of the pandemic seriousness has undermined

(05:28):
distancing measures, while mismanagement and corruption at all levels of
government have prevented help from getting to where it's needed.
The consequences are severe. In Parah, a vast and underdeveloped
state that neighbors Marino, COVID nineteen has been killing about
fifty out of every one hundred thousand citizens, more than
double the national average. I saw people getting to the

(05:51):
hospital with family members already dead in the passenger seat.
People given CPR on the sidewalks because the hospitals are full,
says Alberto Beltrame, the state health secretary. One day in April,
he visited the morgue in the capital. There were twenty
bodies scattered everywhere. It's something you'd see in a war.

(06:12):
As the virus continues to spread, Brazil may be turning
into the true worst case scenario, a laboratory for what
happens when a deadly and little understood pathogen spreads without
much restriction. Unlike past plagues, the coronavirus has spread in
substantial part from the rich to the poor, with prosperous

(06:34):
and well connected global cities Milan, London, New York among
the earliest hotspots outside China. The story in Brazil was similar.
The first clusters emerged in Salt Paulo, Brazil's financial capital,
in early March, as wealthy residents returned from overseas trips.
One of the first so called super spreader events was

(06:55):
the wedding of a social media star, held at a
beach side resort in Bahia State in March seven. Twenty
seven year old sal Polo lawyer named Pedro Pacifico, an
Instagram personality himself with hundreds of thousands of followers for
a feed devoted mainly to literary recommendations, was one of
the guests. He felt lousy when he got home, but

(07:16):
figured he had an exceptionally bad hangover. When he found
out that another guest had been diagnosed with COVID nineteen,
Pacifico went for a test. He had it too, as
he gradually learned, did about fifteen of his friends. But
at that point, Pacifico says over a video call, the
disease seemed more like a nuisance than a threat. He

(07:37):
isolated at home, suggesting quarantine, reading to his followers, and
trading virus stories with other well off Palistano's It was
the novelty of it, Pacifico says. No one saw it
coming or thought it would be so bad. On the
weekend of the Bahia wedding, Bolsonaro was in Florida visiting
Trump at Mara Lago in Palm Beach. The two leaders

(07:58):
entourages took no real precautions, shaking hands and hugging as usual.
The first person to test positive after returning home was
Fabio wine Garden, Bilsonnaro's communications chief. As everyone who deals
with him knows, Winegarden is what Jerry Seinfeld would call
a close talker with a habit of leaning in when
he speaks. Five of the eight people who sat at

(08:21):
his table at amar A Lago dinner tested positive. In all,
thirty people on the trip got sick. One was Alexander Fernandez,
an athletic forty four year old who's developing a grain
export terminal in southern Brazil. After four days isolating in
his apartment, Fernandez was so weak he couldn't walk to
the bathroom. He went to the hospital, where he was

(08:41):
placed in intensive care. I couldn't pull the covers up
in bed, he says. At one point doctors thought he
wouldn't make it. The nurse had to help me hold
the phone so I could face time with my daughters
to say goodbye. Even as the virus spread through his
inner circle, the president was sending contradictory signals. On March twelfth,
he asked supporters to call off planned rallies to support

(09:04):
his government, but then turned up at one in Brasilia anyway,
unmasked and fist bumping with attendees. Later that month, he
urged state governors to curb their quarantines and claimed that
even though he sixty five, as a former athlete, he
had nothing to fear from COVID nineteen. The virus is here,
he said, after walking around visiting shops one Sunday. We're

(09:25):
going to have to face it, but face it like
a fucking man. Still, in those early weeks, Brazilians took
heart in the actions of the Health Minister, a fifty
five year old doctor named Louise Henrique Mendetta. He spoke
calmly to the press almost daily, presenting the latest data
and pushing lawmakers to buy ventilators and face masks. Mandetta

(09:46):
acknowledged that the virus was a severe threat that could
be contained only through distancing measures and intensive preparation. He
also said that counting on unproven treatments such as chloroquine
being heavily promoted at the time by bolson Arrow and
his supporters, mimicking a similar campaign by Trump was counterproductive
or even dangerous. During a visit to the side of

(10:08):
a temporary hospital near Brazilia in mid April, Mandetta stood
to one side as the president walked into a dense
crowd of fans, some of them climbing over each other
to get a better look. One woman asked him to
autograph her soccer jersey. After Bolsonaro obliged, she leaned in
and kissed his hand. In a TV interview the next day,
Mandetta said it was clearly a mistake that people were

(10:31):
going into bakeries and markets and putting themselves in crowded situations.
He didn't name Bolsonaro, but he didn't have to. A
few days later, he was fired. Mandetta's replacement, an oncologist
named Nelson Tyke, quit after less than a month. He
was replaced by a general. Bolsonaro is a former army
officer and has named soldiers to several top posts with

(10:54):
no medical experience. With the national caseload nearing three hundred thousand,
the industry issued guidelines allowing doctors in the public Health
system to prescribe chloroquine and its sister drug, hydroxy chloroquine
for even mild COVID nineteen cases. In its written response,
the ministry said that it's following bioethical principles by making

(11:15):
them available and that Brazilians treated with the drugs have
had good results. Towards the end of May, Bolsonaro shared
some good news the US would be sending two million doses.
The eve of Brazil's Valentine's Day in mid June is
one of the busier nights of the year. At the
Villa Roma pizzeria and Salt Bolo's upscale Jardine's district. In

(11:38):
twenty nineteen, tables were booked solid a month in advance,
but this year, owner Gabriel Pinero was standing alone, wearing
a black face mask behind the wooden bar, greeting deliverymen
who came in one at a time and ventured no
more than ten steps into the restaurant. He'd put out
a bottle of sanitizer next to a little sign instructing
them to clean their bags before putting orders in side.

(12:01):
The two story window at the back, normally lit to
reveal the lush plant life beyond was dark, while the
second floor was filled with stacks of pizza boxes and
new simplified menus that are easier to clean than the
thick booklets they replaced. Running a restaurant at this time
of year is usually such a good feeling, Pinero said,
Now it's depressing. Villa Roma has been closed to dine

(12:24):
in customers since mid March, when Salpolo Governor Joao Doria
defied Bolsonnaro to impose what became a more than two
month lockdown. Though it was only loosely enforced. Delivery business
announced by computer beaps that prompted Pinero and his manager
Carolina to shout orders into the kitchen, has helped the
restaurants stay afloat, if barely. Sales have plunged to about

(12:47):
twenty at the pre shutdown level, and of thirty employees,
only ten are still at work. Desperate to cut costs,
Piniero renegotiated his rent, asked suppliers for more time to
settle bills, and took on tasks like buying goods and
handling payroll himself. We're about breaking even, but it's very tough,
he said. More and more restaurants are closing and the

(13:09):
state is not doing anything. Pinero is relatively lucky. Nationally,
restaurants and bars had fired more than one point two
million workers by early June, according to Industry Association A Brazil.
The organization's president in San Paulo, Percival Maracato, says that
while about eighty percent of owners tried to get financing

(13:30):
to tie them over, the vast majority were unsuccessful. Banks
are supposed to be providing plenty of cash. Vulsonaro's government
recently slashed reserve requirements to give them more room to lend,
but bureaucracy, demands for collateral and high rates have prevented
companies from getting it. Many restaurateurs have simply run out
of money. Unlike in the US and Europe, the Brazilian

(13:54):
government hasn't been able to provide much direct help to
companies or individuals. Public finances were in severe trouble even
before the pandemic, the result of decades of overspending by
politicians of all ideological stripes and the lingering effects of
a severe recession in twenty The number of public employees
has more than doubled in the past three decades. Summer

(14:17):
paid almost twice as much as equivalent staff in the
private sector and receive outsize retirement packages. Though Bolsonaro succeeded
in passing a controversial pension reform last year, that kind
of spending doesn't leave much for essential needs, such as healthcare.
The centerpiece of Bolsonaro's economic response is a six hundred
real monthly stipend for Brazil's huge number of informal workers,

(14:41):
accounting for the bulk of the roughly four hundred billion
really spent on emergency support so far. The government has
also used an insurance fund to pay furload employees and
provided emergency loans to states. The stipend, recently extended to
run for five months, drew praise, but at a little
more than half the minimum way age, it's not enough
for many citizens to get by on, especially in big cities.

(15:05):
Disbursements have also been delayed by problems including crashing computer
systems and a shortage of bills for cash payouts. Bulsonaro
has argued in speeches and on social media that with
millions of Brazilians living hand to mouth, a prolonged recession
will be deadlier than the virus, and the only solution
is to swiftly restart the economy. That's not really in

(15:26):
his power, but his pronouncements still have a significant effect
on people's willingness to endure and comply with ongoing restrictions.
You have about thirty percent of the people who still
support him and are influenced by his decisions, says Doria,
The Salpollo governor, once allies, he and Bulsonaro are now
at odds, in part because of the president's criticism of

(15:47):
his decision to lock down the state, which has more
than forty five million people. If he doesn't wear a mask,
why should they, Doria asks. His insistence on opening the
economy is another layer of pressure. How Paulo began lifting
its restrictions on June one, gradually allowing retailers and other
businesses to reopen, though restaurants and parks are still off limits.

(16:09):
Health experts are concerned that even in the first place
in Brazil to experience a COVID nineteen outbreak, it's too soon.
The number of people in intensive care has declined, but
cases and deaths keep growing, particularly in rural areas that
were spared early on. Reopening now is a gross mistake,
says Pedro Halal the dean of the Federal University of Pelotas,

(16:31):
who coordinated a large scale study of how many Brazilians
have been exposed to the virus. It estimated that half
a million people in Rio de Janeiro have antibodies, ten
times the number of official cases, and that rates in
some northeastern cities are much higher. It's like we're saying,
let's go out and see just how bad the virus
can get. In the working class district of Nova u

(16:56):
s who forty minutes by car from Rio's glittering beaches,
there is a construction site just down the road from
an evangelical church, between a soccer academy and an aviation school.
The building was supposed to be a temporary hospital for
COVID nineteen patients, and the state government had announced its
opening in May, but a reporter for Bloomberg Business Week

(17:16):
who visited in June found it far from finished, with
no obvious signs of ongoing construction, let alone patients. That
hadn't stopped someone from papering a concrete wall at the
edge of the site with posters touting the government's pandemic
response efforts. It wasn't ready when we needed it most,
said Aria Almeida, a middle aged woman who was standing

(17:36):
in the shade nearby. The facilities seemed to have made
little impression on the locals. A teenage boy who was
selling oranges on a street corner had never heard of it.
Waiting in line at an auto parts store, a man
named Fabio Corvalio took it as a given that funds
for the hospital had been misappropriated. The money has gone
all over the place, he said. The story in Novaya

(17:58):
Su has played out in cities across the country, with
promised temporary hospitals sitting unfinished or unequipped months into the pandemic.
The challenges and getting them up and running are a
reminder that of all Brazil's handicaps and fighting COVID nineteen,
corruption and the state's related failures in delivering essential projects
might be the most disheartening. Brazil has a rich history

(18:21):
of graft, ranging from palm greasing to outright theft. Luis
Nacio Lula da Silva, who served as president from two
thousand three to was jailed on charges stemming from Operation
car Wash, a sprawling investigation into bribery involving the state
oil company Petrobras Bolsonnaro, who pledged to clean up scandals

(18:41):
associated with Lula and his successor, Dilmarussef, has been embroiled
in allegations that he tried to prevent federal police from
investigating his family. Both the current and former president deny wrongdoing.
Not surprisingly, Brazil's sudden need for more masks, gowns, ventilators,
and hospitals, already complicated by global rush for the same equipment,

(19:04):
wasn't wasted by bureaucrats and politicians looking to make some
extra cash. Police in several states are investigating the suspected
misuse of funds, over payments for supplies that never arrived,
and contract padding for politically connected business people. Health officials
in the states of Para and Rio de Janeiro have
been fired, while lawmakers in the Ladder are trying to

(19:26):
oust Governor Wilson Whitzell over suspicions he used hospital contracts
to line his pockets. Witzel says the allegations are politically
motivated and he did nothing wrong. Brazil has nowhere near
the medical resources to handle a second wave of cases,
let alone the first, which is still expanding, spreading along
bus routes and waterways deep into the interior. To make

(19:48):
matters worse, July, August, and September are winter months in
the southern Hemisphere, potentially bringing an even faster uptick in infections.
Researchers at the Pontifical Catholic University Rio de Janeiro estimate
cases could reach one point four million before the end
of June, bringing the death toll to almost sixty by
mid July, says the University of Washington's Institute for Health

(20:11):
Metrics and Evaluation. Brazil will overtake the US in per
capita fatalities. We have many months still to go, says
Julio Croda, an epidemiologist who previously worked in infectious disease
surveillance at the Brazilian Health Ministry. What's sad to see
is that the curve is still steepening. With Peter Millard

(20:35):
and that's the story of how the pandemics worst case
scenario is unfolding in Brazil, and check out that story
and so much more in this week's magazine. It's on newsstands,
it's online, and of course on the Bloomberg Terminal, including
my partner's cover story on Lebron James Business off the Court.
I'm Carol Masser and I'm Jason Kelly. Joined us every
day on the radio two pm to six pm Wall

(20:55):
Street Time. Also check out our podcast for any of
the interviews you missed. This is Bloomberg.