It's kick-off time in Brazil

When protesters seize a transport hub in a protest against fare increases, allowing passengers to travel free for a short time, you can understand why Brazil’s authorities are preparing to establish an armed camp for this year’s World Cup.

Brazil is a social tinder pot, a county where endemic corruption and decaying public services constantly drive people on to the streets. Spending billions on a football tournament has proved the last straw for many.

As the comparative stately 48-hour Tube strike drew to a close in London, a march in Rio was heading for the city’s Central Station in protest against fare rises of nearly 10%."We want Fifa-standard hospitals too," marchers shouted, making reference to the high standards demanded by the World Cup organisers for the event's venues.

As they reached their destination, some activists leaped over the barriers and before long a crowd had taken control of the station. The riot police showed up and in the clashes that followed, many were injured. They included a cameraman who was apparently the victim of a police tear gas grenade. He suffered terrible head injuries.

Last year, similar protests that began in Sao Paulo grew into a nationwide movement against corruption and excessive spending ahead of the tournament, which begins in June. Local authorities were forced to withdraw fare rises. Since then, the state has created a mass surveillance programme, no doubt with a little help from the United States.

According to a Reuters news agency report, the security forces are using undercover agents, intercepting e-mails, and monitoring social media to try and keep one step ahead of the protests. President Dilma Rousseff's government is terrified that actions could severely disrupt the tournament. Protests are being planned in all 12 cities that will host matches.

The state is ostensibly targeting the anarchist-inspired Black Bloc members, but the surveillance is taking in all anti-government protesters. Agents are said to have infiltrated the movement and are no doubt acting as provocateurs with the intention of getting activists arrested before the World Cup kicks off.

Ironically, Rousseff herself was the target of the military government that ruled Brazil from 1964-85. A genuine case of poacher turned gamekeeper. She is also mobilising at least 100,000 security personnel across Brazil for the World Cup itself. That’s twice as many as were deployed for the 2013 Confederations Cup which drew mass protests. As well as police and military, members of the elite National Force unit will be “ready to intervene where necessary”, according to Andrei Rodrigues, special secretary for security and safety at major events.

  

Rafael Alcadipani, a professor at the Getulio Vargas Foundation business school who has researched the group and interviewed its members, says the Black Blocs "believe that the Brazilian political system is broken and that it doesn't represent them".  said. "As long as the government doesn't address the main issues, people are going to keep protesting," said Alcadipani. "Nothing has changed since last June."

Actually what has changed is the Brazilian economy. A slowing growth rate – the economy shrank in the third quarter of last year for the first time since 2009 - has prompted global investors to pull out their cash, causing the real to depreciate by nearly 20% against the dollar in the last year. That makes imports much dearer for ordinary Brazilians. Abnormally dry weather could threaten agricultural produce and exports, deepening the crisis.

Brazil may be one of the favourites for the tournament but, to coin a phrase, it’s kicking off all over the country and football is likely to take second place to a continuing social upheaval in the world’s fifth largest country. The system is not only broken – it can’t be fixed.

Paul Feldman

Communications editor

The rise and fall of Brazil's No.1 tycoon tells you a lot about the global economy

Rio’s Maracana stadium was the centre of attention on Sunday, as protestors clashed with police outside over the billions spent on preparations for the World Cup and the Olympics. Behind the very public scenes another drama is playing out.

It’s one that brings together many of the threads of the crisis racking the global economy. Corruption ranks high amongst the issues enraging the protestors who took to the streets more than three weeks ago. And multi-billionaire Eike Batista, owner of the EBX group of companies, is at the centre of it all.

Batista’s property arm IMX has a small stake in the consortium that is leasing the newly-renovated stadium from the state government. IMX pitched the idea for the deal, carried out the financial viability analysis, and then, to nobody’s surprise, since Batista is a friend of Rio’s governor Sergio Cabral, won.

But there’s much more to this than a seedy scandal.

As well as property, Batista has interdependent interests in oil, mining, ports and railways, technology, as well as sports, entertainment and catering. You name it, he’s into it. At the start of 2012 he’d become the seventh richest man in the world. His personal wealth was estimated at $30 billion. He’d set his sights on becoming top of the world’s rich list. King of the 1%.

A year later and the horrible truth is out. None of his companies is making a profit.

On Monday, the oil company OGX called it a day, more or less, telling the world that output from its only producing wells was coming to an end, and would probably close next year, leaving it with one unproved field still under development. 

From 2009, the value of the EBX group soared on the commodity price boom that resulted from global attempts to engineer a credit-fuelled recovery from the 2007-8 financial and economic crash. 

The optimism around Batista reflected a desperate belief – more a baseless fantasy – that Brazil, Russia, India and China (the BRICs countries) would drag the battered capitalist world economy back from recession, depression, stagnation – all of those and more.

But it hasn’t turned out like that. China’s manufacturing is shrinking, and its government, risking a credit crunch as it attempts to forestall a renewed credit crash, has now joined others around the world in stemming its supply of the stuff.

Just the suggestion that the US Federal Reserve might soon start reducing its programme of credit expansion sent markets around the world spinning. Now speculators on the commodity and emerging markets are betting that China’s demand for Brazilian or any other country’s commodities will fall.

So the EBX group’s value has dropped by more than 90% compared with its 2011 peak.

On the way down as well as on its way up, Batista’s group of companies sucked in credit, mostly from Brazilian banks. These include state development lender BNDES and Caixa, the nation's largest mortgage lender, as well as private-sector lenders Banco Bradesco SA, and Itaú Unibanco Holding SA.

And, borrowing more to service his debts, Batista tapped into $1 billion in capital from Malaysian oil company Petronas in May, and in March from German utility E.ON SE and fellow Brazilian billionaire Andre Esteves' investment bank, BTG Pactual.

Now with debts far exceeding its value, the group faces restructuring, bankruptcy or both.

Like giant corporations everywhere Batista’s companies are closely enmeshed in the state. As OGX crashed, three of its board members rushed for the exit. The high-profile trio are: Pedro Malan, a former long-serving Brazilian finance minister; Rodolfo Tourinho, a former energy minister; and Ellen Gracie, a former chief justice of Brazil's Supreme Court.

Batista’s rise and fall is a microcosm of a global economy still heavily dependent on and weighed down by debt . Today's early sell-off of shares in London in response to China's slowdown and the political crisis in Egypt are more than straws in the wind.

Gerry Gold

Economics editor