Brazil much more serious for U.S. than Russia was
Reuters, Thursday, January 21, 1999 at 15:22
NEW YORK, Jan 21 (Reuters) - Federal Reserve Bank of St.
Louis President William Poole on Thursday described the
situation in Brazil as having far more serious implications for
the U.S. economy than the Russian crisis did last year.
"The Brazilian situation is potentially much more serious
for the United States than the Russian situation, but the
market has responded in a measured way to Brazil," Poole told
the St. Louis Society of Financial Analysts.
"I suspect that the differing responses reflect widespread
contingency thinking after Russia," Poole added in remarks also
available in New York.
"Competitive markets ought always to respond in the
well-informed way they have responded to Brazil," Poole said of
the limited U.S. market reaction since Brazil last week let its
currency, the real, float.
Poole pointed out this showed not only the different
economic fundamentals in Russia and Brazil but also U.S.
capital markets' recovery from the turmoil triggered by the
Russian default.
"Investors have taken the Brazil situation in stride. The
puzzle to me is not the market reaction to Brazil this month
but the reaction to Russia last August," the St. Louis Fed
president added.
Copyright 1999, Reuters News Service
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