SAO PAULO, Brazil -- Perhaps the best sign that not all is well in Brazil is that everyone keeps talking about "the crisis," and whether it actually exists.

Newspapers, columnists and political analysts have all debated the question in recent days, highlighting the difficulties that Brazil's eight-month-old government is having getting its economic agenda through Congress and dealing with a militant agrarian reform movement.

It is still an open question whether Brazil has slid into a crisis. Even so, the debate itself shows how tense the mood has become, especially when compared with the boundless enthusiasm surrounding President Luiz Inacio Lula da Silva's government when it took office on New Year's Day.

"There was this sense that you would have a slew of market-friendly reforms which would be both effectively and quickly passed, and right now you really have neither," said Christian Stracke, head of emerging markets strategy at Wall Street research firm CreditSights.

Recently, Lula looked ready to score a much-needed victory in the lower house of Congress, with lawmakers expected to approve his proposal to overhaul the country's costly public pension system this week. If it is passed, the bill must face more votes before being sent to the Senate.

But approval will come at a high cost. Lula has faced strikes by civil servants who vehemently oppose the proposal, which will sharply curtail their pension benefits. Notably, it would end payment of full salaries to retirees.

The pension debate has also exposed differences between Lula and members of his left-wing Workers' Party, some of whom have been the most vocal opponents to the reform in Congress.

Lula's concessions to them and the country's judges -- who would also face reduced benefits under the proposal -- have made some investors worry that reform will end up too diluted to shore up government finances. ###### CRISIS, WHAT CRISIS? ######

At the same time, Lula has had to contend with increased pressure to loosen monetary policy to revive an economy sliding into recession.

And a group called the Landless Workers Movement, or MST, is stepping up pressure on the government to push for agrarian reform. Peasant activists have organized a fresh wave of farm occupations after halting the land grabs when Lula took office.

Concerns about the government came to a head on Monday, when the country's financial markets plunged as rumors swirled Lula's respected finance minister, Antonio Palocci, would step down over disagreements with the way the pension reform negotiations were going.

Although the rumor was quickly denied, the market's reaction underlined how cautious investors have become.

"What you saw yesterday was someone taking advantage of the volatility," said Nuno Camara, the senior Brazil economist at Dresdner Kleinwort Wasserstein in New York.

Certainly, the stars have not lined up in Lula's favor as he had to deal with the pension debate, the land grabs and negotiations over phone rate increases all at the same time.

Had his government faced these issues one at a time, the atmosphere might be less tense, said Christopher Garman, a political analyst at Tendencias, a top consulting firm.

"You have a feeling at the moment that everything is going down a hole," he said.

But Garman says the media is being too alarmist about the pace of reforms, and that Lula's tug of war with civil servants is a sign that the reform is tough enough to achieve its goals.

Although other analysts differ on how much of an impact the pension reform will end up having, most are still confident it will get passed by the end of the year.

Lula is still hugely popular with Brazilians, Garman said, so his real challenge is to ensure he can keep Brazil popular with investors.

Lula was prepared to use his political capital at the start of his administration to push through the reforms because he believes they will eventually attract investment and help revive the moribund economy, Garman said.

"There is a real mid-term risk, and that's what economic growth is going to be like next year," he said.

CAPTION Two children stand in front of their tent in the biggest roadside camp organized by Brazil's Landless Rural Workers Movement, or MST, in Presidente Epitacio, 600km west of Sao Paulo.