-Caveat Lector- >From SMH
Why the US can't afford a Brazilian meltdown By Edmund Andrews in Washington August 10 2002 To hear the Bush Administration tell the story, there is one main reason Brazil should be rescued with a $30 billion ($56 million) loan while Argentina should get nothing: Brazil has been good; Argentina has been bad. In explaining their abrupt reversal in deciding to support a huge bailout for Brazil, something that seemed odious to the White House a few weeks ago, United States officials said yesterday that Brazil had earned support because it had moved courageously to open its markets, fight inflation and put its financial house in order. Argentina, by contrast, reacted to its currency crisis by defaulting on most of its public debt, freezing bank accounts and refusing to enact much-needed reforms. Most international experts would agree with at least part of that analysis. But the motivations of the US are a good deal more tangled than that. For one thing, a Brazilian collapse would be much more frightening. Brazil's economy is several times as big as Argentina's. Its external debt of $US264 billion is more than double Argentina's, and US banks like Citigroup, FleetBoston and J.P. Morgan Chase have much greater exposure to Brazilian loans than to Argentine ones. Brazil has also been a big magnet for US industrial investment. General Motors and other car companies have sunk billions into factory expansions, and a Brazilian collapse would turn those into white elephants. It is unclear how much US banks and manufacturers lobbied for the Brazilian rescue plan, but they will certainly benefit from it. The Bush Administration also has political and diplomatic reasons to reverse its previous stance of "tough love" when it came to Brazil. President George Bush's hope to negotiate a giant free-trade agreement that covers all of South America, made possible when Congress gave him negotiation authority last week, would have been crippled if Brazil was forced to default on its debt. Supporters of a rescue package for Brazil said the Government of President Fernando Henrique Cardoso deserved credit for pursuing bold economic reforms. But it was only a few years ago that experts were showering similar praise on Argentina, which is now in disarray. Argentine leaders won praise for privatising state-owned industry, opening many of the country's markets and all but eliminating inflation by pegging the currency to the US dollar. Today critics complain that Argentina's spending is out of control because provincial governments run big budget deficits that have undermined the whole country. But Argentina's biggest handicap may have been its peg to the dollar, which appreciated by nearly one-third against other currencies in the second half of the 1990s. The high dollar crippled the country's exports because it made them more expensive. The New York Times This story was found at: http://www.smh.com.au/articles/2002/08/09/ 1028158017162.html ~~~~~~~~~~~~~~~ A<>E<>R + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + Forwarded as information only; no automatic endorsement + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + In accordance with Title 17 U.S.C. section 107, this material is distributed without charge or profit to those who have expressed a prior interest in receiving this type of information for non-profit research and educational purposes only. + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + "Always do sober what you said you'd do drunk. That will teach you to keep your mouth shut." --- Ernest Hemingway <A HREF="http://www.ctrl.org/";>www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance—not soap-boxing—please! These are sordid matters and 'conspiracy theory'—with its many half-truths, mis- directions and outright frauds—is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRLgives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credence to Holocaust denial and nazi's need not apply. Let us please be civil and as always, Caveat Lector. ======================================================================== Archives Available at: http://peach.ease.lsoft.com/archives/ctrl.html <A HREF="http://peach.ease.lsoft.com/archives/ctrl.html";>Archives of [EMAIL PROTECTED]</A> http:[EMAIL PROTECTED]/ <A HREF="http:[EMAIL PROTECTED]/";>ctrl</A> ======================================================================== To subscribe to Conspiracy Theory Research List[CTRL] send email: SUBSCRIBE CTRL [to:] [EMAIL PROTECTED] To UNsubscribe to Conspiracy Theory Research List[CTRL] send email: SIGNOFF CTRL [to:] [EMAIL PROTECTED] Om
