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To: 10K a day who wrote (189387)	8/25/2002 11:40:26 PM
From: Les H	Read Replies (1) \| Respond to of 436258

If we do double-dip, the ultimate recourse will be for the Treasury to spend a great deal of money spraying greenbacks all across this parched nation. If the markets get the idea that the only way out of this predicament is monetary "reflation," we'll see upward tilting interest-rate volatility we haven't seen since the 70s. planetloan.com The $30 Billion IMF Bailout of Brazil. Just who is getting bailed out here? August 8, 2002. As Brazil becomes the recipient of an IMF bailout, the size of which has not been seen since the bailouts of the Asian Financial Crisis, the mainstream press seems to be overlooking the game of "SNAP" being played in the House of Cards. "SNAP"? ... Because the $30 billion looks like a good match for the $27 billion in USD owed to US banks by Brazil, primarily Citigroup, and the increasingly troubled FleetBoston and JP Morgan Chase. It's doubtful that the US financial sector, the big banks in particular, could have weathered the storm of a Brazilian Default amid the grave concerns over their exposures to the Telecos and Energy sector, other Latin American countries, their consumer credit exposures, the recent congressional inquiries into the Enron deals and the rumors flying around the whopping derivatives books at these banks. There are two important things to watch for on the financial side: Are these banks in the process of pulling out and/or significantly reducing their exposure to Brazil, especially given that capital continues to flow out? If so the bailout looks suspiciously like it was done primarily for the benefit of the western financial institutions. Is the "Interest Arbitrage Game" now draining Brazil's foreign currency reserves, so that financial speculators and hedge funds become the other main beneficiaries of the bailout? In this arbitrage game, speculators would borrow US dollars at today's very low rates and switch the funds into the Brazilian Real earning 20+%, knowing that the Central Bank of Brazil is using the IMF loan and new IMF conditions to prop up the real and keep its value from falling. After a little while, speculators could swap back into USD and pay off the low interest USD loan, reaping a sizable profit. wizardsofmoney.org