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To: Little Joe who wrote (22314)	10/27/1998 11:31:00 AM
From: dwight vickers	Read Replies (2) \| Respond to of 116753

Inflation inevitable with liberals taking power? We built a welfare state in the 1930's with no inflation showing up for decades. My take is that the inflation to deflation cycle won't be changed by ideology. Only time...... Dwight

To: Little Joe who wrote (22314)	10/27/1998 8:48:00 PM
From: goldsnow	Read Replies (3) \| Respond to of 116753

"Even then, the best Brazil can hope for next year is a recession, most economists say. The worst-case scenario would be a sharp currency devaluation that could drag all of Latin America into recession and hurt the world economy. ' FOCUS - Cardoso prepares Brazil for austerity plan 07:48 p.m Oct 27, 1998 Eastern By Jeremy Smith RIO DE JANEIRO, Oct 27 (Reuters) - Brazilian President Fernando Henrique Cardoso pledged sweeping budget cuts and unspecified tax hikes on Tuesday in a long-awaited fiscal plan designed to save Latin America's biggest economy from crisis. Speaking on national television, Cardoso said he planned to yank an ''unprecedented'' 8.7 billion reais ($7.3 billion) from Brazil's 1999 budget to reduce a shortfall that amounts to some eight percent of gross domestic product (GDP). ''We are proposing to Congress a cut of 8.7 billion (reais) for 1999. To go beyond that would mean a paralysis of the state's essential activities,'' Cardoso said. ''At this time when Brazil is stoutly confronting a serious international financial crisis, we must be united and think of the country's highest interests.'' The three-year fiscal plan is widely viewed as crucial to restoring investor faith in Brazil's battered economy -- the world's eighth largest -- and paving the way for a $30 billion credit package led by the International Monetary Fund. Even then, the best Brazil can hope for next year is a recession, most economists say. The worst-case scenario would be a sharp currency devaluation that could drag all of Latin America into recession and hurt the world economy. But to qualify for the package, Brazil must first show it can slash its huge budget deficit. The 1999 budget cut is expected to be followed by even more savings in tax hikes to take the total 1999 savings package to some $20 billion. Firmer details of the proposed measures are only likely to emerge on Wednesday when Finance Minister Pedro Malan should hold a news conference, scheduled for 11 a.m. local (1300 GMT). Before this, Cardoso will discuss the measures in detail over a working breakfast with leaders of allied political parties, as their voting support will be crucial in Congress. Cardoso did not say how much the government expected to raise, or save, from the plan, which seeks to prevent Brazil from becoming the latest victim of global financial turmoil that has claimed Russia and much of Asia. Other measures included an unspecified increase in a tax on financial transactions and in civil servants' social security contributions. But no hikes were planned in personal income tax or social security contributions for private-sector workers. ''We will adopt balanced measures, a little in each area, and always with the concern to protest the poorest,'' Cardoso said, adding that many of the measures would be temporary. ''They will be suspended as soon as we manage to restore a greater balance in our accounts,'' he said. After the speech, Michel Temer, the leader of Cardoso's party alliance in Brazil's notoriously unpredictable Congress, said he would try to get lawmakers to adopt a measure to speed up the pace of voting on the plan. Opposition gains in Sunday's state gubernatorial elections have raised doubts about Cardoso's ability to push through the plan in Congress, where its success will be decided. Included among the proposals is a law to curb overspending at state and municipal level, which if approved is likely to irritate the new governors of key states where opposition candidates triumphed, such as Minas Gerais and Rio de Janeiro. Many of the new state governors, who have significant clout in Congress, have inherited bloated payrolls which the government will want to trim as part of its fiscal drive. However, some political analysts believe many proposals will be adopted despite the criticism from lawmakers, even if the government has to accept defeat on some items. Copyright 1998 Reuters Limited.