Heat a medium cast-iron and enamel casserole, or other heavy oven safe pan over medium high heat. Cook the bacon until crisp, then add the onion. Stir frequently for about 5 minutes, or until golden, taking care not to let it burn. With a slotted spoon, transfer the mixture to a bowl. Let the fat in the pan get very hot, and add the meat. Brown the meat, turning so that each piece is evenly golden.
Add the tomatoes and peppers and cook, stirring frequently, for 2 minutes more. Add the malagueta liquid, salt, black pepper, water, and bacon onion mixture, and stir to mix. Reduce the heat to low. Simmer for about 5 minutes, or until the sauce is thickened and the meat is done to your liking. Do not overcook or the meat will become tough. Spoon the stew into large, heated bowls and scatter green onions over the top.
Preserved malagueta peppers are one of the hallmarks of Brazilian cooking. Extremely hot peppers are pickled in a 2 to 1 oil to grain alcohol ratio and allowed to rest for 1 month before using. They are available in some Latin American markets.
c.1997, M.S. Milliken & S. Feniger, all rights reserved