Brazil

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Anyone reading the newspapers in Brazil on Monday could have been forgiven for experiencing a sense of déjà vu.

The government has again extended its dreaded “IOF”, a tax on foreign exchange transactions, this time to overseas borrowings by Brazilian companies maturing in up to five years.

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The IOF and the government’s other measures to prevent the real, Brazil’s currency, from appreciating against the dollar, are highly complex. But the intention is simple: to protect Brazilian industry as the strong exchange rate encourages a flood of imports into the country.

Or, in President Dilma Rousseff’s words, loose monetary policy in the US and Europe has created a “tsunami” of cheap money whose main victim is Brazilian enterprise. It is a threat so grave, in the government’s eyes, that Brazil is at risk of being cast back into the dark ages before its post-second world war industrialisation, when its economy was little more than a giant mine and a farm.

Certainly Brazil is suffering what is becoming a prolonged slump that has hit the heart of heavy industry....