Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: Chip McVickar who wrote (1138)	1/8/1999 1:37:00 PM
From: Lee	Read Replies (2) \| Respond to of 3536

Thread, Hope this finds all well. Thanks for the heads up on China and Brazil. Mr. Makin keeps hammering... aei.org The Deflationary Fear of Inflation By John H. Makin . . . (Conclusion) "But U.S. tax cuts, even if possible, are passive measures that will not be decided until next fall. For now, active monetary easing is needed. The Bank of Japan must ease aggressively enough to stop the dangerous accelerating deflation appearing in Japan and Asia. The amount of work left for European and American central banks depends on whether the Bank of Japan can abandon its fear of inflation and expedite reflationary measures. If it fails to do so while Europe remains passive, the Federal Reserve must choose between supporting the U.S. stock market and allowing global deflation to accelerate." Happy 1999! Cheers, Lee

To: Chip McVickar who wrote (1138)	1/12/1999 11:34:00 AM
From: N	Read Replies (1) \| Respond to of 3536

Chip, Bye, bye Bresil... Brazil blocks $9.7m debt transfer By Geoff Dyer in São Paulo The Brazilian government raised the stakes yesterday in its dispute with Minas Gerais state, which last week announced a moratorium on debt payments, by blocking the transfer of R$11.7m ($9.7m) to the state government. The move was the federal government's first direct response to the decision by Minas Gerais, the country's third wealthiest state, to suspend interest payments on R$18.5bn of debt to Brasília. The news that the federal government was keeping its promise to take a hard line with Minas did not immediately ease investor concerns about the impact of the moratorium on Brazil's fiscal austerity plan. By early yesterday afternoon, shares on the São Paulo stock exchange had fallen 7.24 per cent, although the volume was extremely thin. Spreads of Brazilian international bond issues also continued to widen and economists said that the Minas situation would make it harder for Brazilian borrowers to return to capital markets. Minas signed a refinancing agreement with the federal government last year, which allows it to repay the R$18.5bn debt over 30 years at an interest rate of around 7 per cent. Eduardo Guimarães, secretary of the National Treasury, said the transfer of funds had been blocked by "an automatic trigger mechanism" because of non-payment of interest. He said this had happened before with other states, but had never been made public. A further R$55m due to be passed to Minas on January 20 would be blocked if the state did not pay its monthly interest bill of R$77.5m. The moratorium by Minas, which claims it does not have the money to pay the interest, is the first direct political challenge to the government's austerity strategy of high interest rates and steep budget cuts, designed to win back credibility since the Russian default. The government has come under strong international pressure not to award any fresh concessions to the states. Standard & Poor's, the ratings agency, warned last week: "Given its own precarious financial condition, the federal government can ill afford to increase its subsidy to the states." However, if the government takes too tough a line with Minas, it could lose support for the emergency budget cuts it is trying to push through Congress, particularly from the Brazilian Democratic Movement (PMDB), the party of Itamar Franco, centre-left governor of Minas. State governors allied to the federal government will meet in Maranhão today, when they are likely to attack Mr Franco's decision. The six opposition governors are due to meet on January 18. However, no other states have said they will follow Minas, and Anthony Garotinho, opposition governor of Rio de Janeiro, the second wealthiest state, has begun to tone down his criticism of the federal government. In an interview at the weekend, Mr Franco said that Minas would only repay a $100m eurobond which matures next month if he was able to meet other spending needs first. Nancy