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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: James Strauss who wrote (8731)	10/1/1998 11:34:00 PM
From: Derrick P.	Read Replies (1) \| Respond to of 22640

Yes Brazil is important to the US. If Brazil follows the Asian lead, the fallout will greatly affect the US holders of Brazilian debt, namely many large US financial institutions. That Brazil's problems would lead to a reduction in US exports is also a concern. It used to be that the strength of a counties currency was determined by the strength of it's economy and of course sound fiscal policy. Now it seems to depend on the size of their reserves and amount of outside support (loans). Something is not right with this picture. Again the root problem seems to be overcapacity, over indebtedness, and competition. That the IMF is not addressing the root problem, but seems only concerned about making sure that the big financial institutions get paid back their loans is an ominous sign. That they intend to use taxpayers money to do it makes it even worse. I saw these problems coming when Asia started tanking, and got out of Latin America and emerging market debt over a year ago. We ought to be outraged that these are the kind of solutions that our enlightened leadership have been able to come up with a whole year later. It was good to hear Robert Rubin say that Brazil is very important to us... I think the U.S. will do whatever it has to to keep Brazil afloat... It appears that the US gov. will do whatever it can to keep the US financials 'afloat'. I am afraid that they will channel this money back to these institutions and then where will that leave Brazil and the other emerging markets? Hint....look at where the IMF has already been. Derrick