One reason is that the scandals have provided an opportunity for investors to see Brazilian freedom of speech and democracy in action. Newspapers and television commentators have been relentless in reporting the scandals, helping to prove to Brazilians and foreign investors alike that the political system is sufficiently stable to withstand open criticism.
Lula remains popular with Brazilians because his populist rhetoric shows real sympathy with the less affluent, and with foreign investors because he has always tempered his radicalism to accommodate economic reality.
He recently criticized Bolivian President Evo Morales' threats to seize foreign assets for his failure in this regard.
"Radicalism is incompatible with the common sense needed from someone who governs," Lulu said.
That combination of philosophical radicalism and economic pragmatism has proven to be a perfect formula for Brazil's progress.
Granted, the future is unknown; we have no crystal ball to predict the Bovespa's likely path. But, for me, the story is far more convincing than the one told during the 1990s stock-market boom.
Robert Shiller is professor of economics at Yale University.
Copyright: Project Syndicate
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