Exactly, austerity was applied only on the demand side (social spending and infrastructure), but the problem was precisely the demand side. The private sector didn't need more loans or tax cuts, they needed customers and profits.
Most of the budget is fixed by law, so those were pretty much the only areas where costs could be cut. Social and infrastructure spending was actually record high before the crisis hit, so to say everything was caused by austerity is misleading.
Well, I didn't say everything was caused by austerity. I said austerity made it worse.
Social and infrastructure spending might have been high, but I think they were actually insufficient. Politics and economics are too skewed to the right in Brazil. Look at our budget surpluses for the last few decades:
It is a matter of personal opinion, after all. Anyway, I took the trouble to enumerate the ten largest parties in the brazilian congress and got their political position from Wikipedia (so as not to corrupt it with my own ideas):
PT - Centre-left;
PMDB - Centre;
PSDB - Centre (implemented neoliberal agenda in the 1990s);
PP - Centre-right/Right;
PSD - Centre-right;
PR - Centre;
PSB - Centre-left/Left;
PTB - Centre;
DEM - Centre-right (this I find hard to believe);
PRB - Centre-right.
