<<what the money is to be spent on...>>
I think you missed the mark. The dough was ALREADY spent. That's the beauty of the excessive borrowing. The Govt borrowed heavily form the public and debt market to spend and spend. Now, things are at a stage where the debt burden is weighing on the currency and Govt ability to a) defend the currency, b) service debt, and c) maintain growth. Brazil wants all these things done at the same time. So does Wall Street and Greenspan and Slick. Why? If Brazil goes, US goes. Let us say they can't pay interest on sovereign debt, a la Russia, it amounts to a "default." If you are a debtor, it is in your interest to loan them more money so that you can get the interest payment from them. Otherwise you have to mark that debt as "bad loan." Since it is no chump change, CitiGroups and Chase's of the world put enormous pressure on Washington to do something about it.
The administration asks the Congress to give more money for this "bail out" because it is in OUR financial interest. Congress gives the money to the IMF. Since it is difficult to achieve all the goals (a, b, and c) at the same time, IMF, at the behest of Uncle Sam and other generous donors to the bailout fund, imposes conditions of the bailout in the best interest of the LENDER. So, items (a) and (c) have to be sacrificed for (b). That's OK, I guess. It worked for SEA countries. No reason why it shouldn't work for Brazil -vbg- |
