The fraudulent house of cards is being shaken with scandal after scandal.

While Luíz Inácio ‘Lula’ da Silva stealthly rents out private jets to travel to Italy, his co-horts are captured and imprisoned for money laundering, bribery and other forms of corruption.

Last week we reported how the Brazilian Federal Police had arrested former minister José Dirceu. He was one of the most influential men in the government of former President Luíz Inácio ‘Lula’ da Silva.

Previous to that report, we wrote about former president and current senator Fernando Collor de Mello, being investigated by the Federal Police in relation to Operation ‘Lava Jato’, which investigated corruption activities at Brazilian oil giant Petrobras.

In other reports, we have informed about how ‘Lula’ himself is on the eye of the beholder for possible involvement in similar activities.

Since the current investigations began, there is a popular belief that August is going to be a month of bad omen, and the fact is that it is not likely to be the best for President Dilma Rousseff: a rebellion in Congress, new protests planned for the 16th and difficulties with the economy, which is at its worst result in 25 years, threaten to turn this month into a nightmare for the political class.

At the local level, many cities are seeing public servants go on strike because government has not paid their salaries, or has offered to pay them in installments. Even police went on strike, leaving Brazilians at the mercy of numerous criminal gangs that have taken advantage of the lack of policing to rob train passengers, break into homes, and sell drugs even more freely than before.

This week’s scenario was aggravated by the reaction that came from the arrest of José Dirceu, the former minister of and one of the founders of the Worker’s Party (PT). Dirceu was accused of being one of the leaders of the plot of corruption in Petrobras.

Despite there being no direct link with Rousseff, the arrest of Dirceu has only thrown more fuel to the desire of the opposition to impeach the president, which was reflected in the markets.

On Tuesday, for the fourth consecutive day, the real fell against the dollar, reaching the lowest level in recent times. Right now, one real is worth 0.29 cents of a dollar and 0326 cents of a euro.

Rousseff reacted trying to disassociate her government from the arrest and sent out a message to try to shield the economy from the political turmoil.

Her ministers took turns in issuing statements to the press to minimize the effect of having the iconic former president of PT behind bars again.

Three years ago, Dirceu was convicted in the Mensalão case, a corrupt plot to transfer money to parliamentarians that stained the history of the PT.

Now, those responsible for the mega investigation at Petrobras, accuse Dirceu of maintaining and expanding the same strategy that was used in the Mensalão to launder money in the Petrobras scandal.

“We need to maintain two parallel channels. The first is the investigation, which will continue. The other is to try to improve the climate for investors and stimulate the economy itself so it grows,” said on Monday Jacques Wagner, one of the chief ministers of the PT, currently responsible for the Defense Department.

The message of the minister is not trivial. The Government is concerned about the economic impact of the investigation.

A week ago, the Executive estimated that the mega scandal, involving major construction companies in Brazil and Latin America, has already caused a negative impact of 1% of GDP this year.

In addition, the president, has an all time low approval of 10% while facing a tide of bad news, with runaway inflation and low consumer confidence.

On the political front, the main battle is played in Congress. The president of the Chamber of Deputies, Eduardo Cunha, also investigated in the operation, had already announced his break up with the government, despite being part of the Brazilian Democratic Movement Party (PMDB), the main ally of the PT.

Cunha warned that he would make life difficult for Rousseff in the second half of the year, a time when the House may be decisive for the current movement to impeach Dilma.

“The arrest of Dirceu was the spark. What is really the goal right now? To Cunha and Aécio Neves, leader of the PSDB, the goal is to get to Rousseff.

For most of the opposition, the goal is Lula, who has said he might be interested in running for the presidency in 2018.

The development of this crisis and the chances that Rousseff remains in power depend on the current investigation.

In Brasilia people expect that Cunha will be formally accused for alleged links to the Perobras scandal. If this happens, it will be a new twist in the plot, this time to the relief of the president.

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