The president of Brazil is already having the worst year ever
The Brazilian president, who barely defended her seat from opposition candidate Aecio Neves last fall, is dangerously close to losing it. The calls for her impeachment have gotten too loud to ignore. Eurasia Group researchers estimate that there's a 20% chance she'll be removed from office.
And as the situation gets worse, the odds of that happening increase.
Rousseff's latest missteps have to do with a singular problem - Petrobras. The state-own oil company that short seller Jim Chanos called "a scheme not a stock" has turned into $40 billion market-cap nightmare for the country. Laden with debt, inefficient and corrupt, it seems like new revelations about the dirty connection between the company and Rousseff's party come out every day. Brazilians are tired.
Over the past year the stock has fallen 46% and its bonds have lost 10% of their value since November.
To bring some order to this chaos, last week Rousseff appointed a new Petrobras CEO. Instead of choosing an executive with a background in energy, she chose a friend and banker named Aldemir Bendine. The market hated it.
"She could've made the right decision there," one Wall Street analyst told Business Insider. "If I put together a list of 10, he'd be about 10."
The investigation into graft at Petrobras - known as Operation Car Wash - has sunk Rousseff's popularity, especially since she was once an executive at the company. Dozens of higher-ups in the company have already been arrested. Her approval rating sits at a dismal 23% according to polls. Still beloved former president Luis Inacio Lula da Silva has stuck by her, and advised Rousseff to hire marketing consultants to improve her image - a cosmetic fix.
What Rousseff needs is a more like a cosmic fix. Petrobras workers are starting to take to the streets, and on Wednesday a rig explosion killed three and injured 10.
So what could happen?
In the worst-case scenario for Rousseff, it is found that some of the funds that members of her party and their allies took from Petrobras were used to fund her own political campaigns. In that case, she could be going down: It is an impeachable offense and Brazilians are in no mood to have an openly corrupt executive at the helm.
In that case, Lula's grace would be gone. Legally, he can run again in 2018, and he may want to distance himself from Rousseff's problems (if that's even possible, as he was president while she was at Petrobras).
Rousseff would stand alone.
In that event, politics in Brazil could completely rearrange if Rousseff's party - the ruling party for decades - doesn't watch its step.
When Rousseff won this past fall, Wall Street jeered. The market wanted opposition candidate Aecio Neves, who was seen as more of a reform candidate. The Brazil stock market selloff that followed was a sign that it believed bad things were to come.
What Rousseff faces now is probably worse than anyone imagined.
