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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Skywatcher who wrote (303014)	10/1/2002 3:01:34 PM
From: Baldur Fjvlnisson	Read Replies (1) \| Respond to of 769670

Crisis In Brazil Comstockfunds.com With all its other problems the last thing the stock market needs is an international financial crisis, but it seems to have one in Brazil. Concern about Brazil’s ability to pay its debts arose a few months ago and the IMF eventually stepped in with a record $30 billion bailout, effective August 7. However, the international markets have become less certain about the outcome as left-wing presidential candidate, Luiz Inacio Lula da Silva moved decisively ahead in the polls for the election due October 6. The Brazilian real is down about 28% since the IMF initiative. Lula has in the past spoken about renegotiating part of the nation’s debt and the fear is that he would consider defaulting, although he denies that he would do so. Brazil has $330 billion of debts outstanding compared to the $130 billion Argentina had in 2001. In addition Brazil’s debt amounted to 62% of GDP compared to 54% for Argentina. About 45% of Brazil’s total debt is tied to the dollar, so the debt increases as the Brazilian real falls. A Brazilian default would have dire consequences for the global economy, the banking system and scores of leading companies. It would also erode confidence in emerging country loans everywhere as the Asian crisis did in 1998. The big difference is that the U.S. economy was strong enough in 1998 to bail out the world economy, but does not seem capable of doing so in the current environment. International banks have $66 billion in outstanding loans to Brazil including $15 billion for U.S. banks. The consequences of default are grave enough that Treasury Secretary O’Neill, originally against any bailouts, did an about-face and strongly supported the IMF loan, which now doesn’t seem to be inspiring much confidence. With the U.S. and other stock markets already sagging under the weight of the weak global economy, disappointing earnings, terrorism and possible war, the Brazilian crisis is another major problem adding to the overall tension.