Two things are happening over the weekend that is very disturbing ,,
Brazil ,,
On Friday ,, the central bank of Brazil tried to defend the currency by releasing 100 mill to buy up rials ,, in the late afternoon ,, market is testing the government's resolve,, rial dropped to low as 1.77 at one point ,, further .. almost 7 billion dollars more have fled the country in January alone ,, in some 21 days,,, considering with IMF package , when the whole country has only about 25 billion dollars,, this is a very large chunk ...
Bospa has fallen 4.6 % on Thursday and further 2% on Friday ,,and about 410 million dollars were pulled off the currency market on Friday alone ,, it is getting very illiquid there,,
Meanwhile Brazillian companies have about 700 milion in corporate bonds coming due this month .. bringing total overseas debt to 4.4 billion ,, including ,, 1.2 billion in interest alone by the private sector ,,.
Brazillian govt has to cut off some 23.5 bill from new govt budget in order to qualify for IMF loan of 41.5 billion ,, this will mean a radical change in the very social fiber of Brazillian ,, retirement ,, pension ,, almost guaranteed job for life if you work for the state ,, kind of thing , where govt workers moonlight in bright day light ,,, there was a famous film du noir , on the subject ,, I remember seeing a few years back ,, well that is something I doubt Brazillians will accept ,, nor will Mr. Carlos regime will survive ,, I hate to see more killings of lost children in Brazil ,, again ..
China ..
Another so called Regional Investment Trust (RIT).. has gone belly up ,, and Beijing stunned the foreign banks by saying ,, What guarantee ? We never guaranteed that we will bail out RIT !!!
This second one in less than 2 weeks from the first one to hit the out side world,, Guandong Province RIT , went under to the tune of 2.15 bill ,, caught were Japan ,,430 mill ,, Korea ,, 330 milll ,, Hong Kong , 190 mill ,, Germany 140 mill , Singapore 110 mill ,, China 60 mill ,, US 50 mill ,, France 48 mill Britain 40 mill Holland ,, 25 mill ..
They will basically lose all their money on this deal ,,
Rememebr the US savings and loan debacle ???
Well there are 240 such RITs in China !!! ,, from remote Fujian to you name it some dinky village RIT in outer Mogolia ,, where foreigners were eager to hop on the slow boat to China or Orient Express ..
People like Merril Lynch to Goldman to Deutche Bank ,, Sanwa Bank ,, to Seoul National ,, will lose their butts from Chinal this year ,, in effect govt of China is reducing the number of RIT from 240 to 40 ,, money well spent ? Yes these RITS spent the foreign money from hotels to silk fatories , to only golf course in China .. again excess that we have seen in Japan ,, and Korea,, is now hitting China,,
We are talking about ,, something that will out do the Long Term Capital fiasco and make it look like a petty burglary by two Bronx teen agers,,
Same scenario ,, as when I alerted you about Yeltsin ,, putting western banks on notice,, and putting moraritorium on withdrawls over the Thankgiving holiday of 1997 .. 4 mos before it hit the fan ,,
Like Russia and Korea ,, It is a good bet to short some Chinese ADRS ,, we can short these mothers with contempt, as I am sure Soros already have done so ,, at same time ,, expect ,, new Sino-rest of the world headache ,, how about starting with Merril Lynch ,, another round of Octoberfest ? One ,, two punch of Brazil and China might really do it this time ,,
It is time for us to be dead serious with our money again ,, this year we might have a very late ground hog day ,, |
