If the two sides of Brazil have not managed, thus far, to co- exist, then at least they have managed to avoid coming into direct and open conflict. Only a few poor people beg for money or sleep with their belongings on the white beaches of Rio. The rule of law does not extend to Rosinha, where drug warlords, many of whom are better armed than the federal police, maintain order. And in places like Rosinha, there is no labor law protection, sewage system, medical care or hope. During the regime of President Jose Sarney, which is not yet 3 years old, three finance ministers and four presidents of the Central Bank have failed to devise any comprehensive solution to the debt problem.
Brazil needs rapid and sustained economic expansion for political and economic reasons.
Because of Brazil's rapidly growing population, its economy must create 1.6 million jobs every year just to absorb the new entrants into the labor force. As a result, the economy must grow at an annual rate of 7-8 percent just to keep per capita income levels from shrinking. To help these people, the economy should create an additional 200,000-300,000 jobs to help bring them into the mainstream workforce. For the past nine months, Brazil has not paid interest to the banks. Paolo Lyra, the former head of Brazil's central bank, is guardedly optimistic that the country will find a way out of its current difficulties.