Posted on 08/02/2002 12:31:31 AM PDT by sarcasm
RIO DE JANEIRO, Brazil — A reluctant United States is being forced to support a bailout of Latin America's sputtering economies to prevent the continent's spreading financial crisis from becoming a repeat of the Latin debt crisis of the 1980s or the Asian financial crisis five years ago.
Treasury Secretary Paul O'Neill said yesterday that the Bush administration favors more loans for Brazil and Uruguay.
"I continue to favor support for Brazil and other nations that take appropriate policy steps to build sound, sustainable and growing economies," said O'Neill, who leaves Washington Sunday for a fact-finding mission to the region.
But O'Neill indicated that he isn't satisfied with economic reforms taken so far by Argentina, the nation with the worst crisis.
President Bush took office vowing not to rescue ailing economies. But circumstances in Latin America are forcing his administration to adjust its free-market policies to assist troubled nations such as Brazil, where U.S. mutual funds have invested Americans' savings.
If Brazil defaults on its foreign debts because it can't get billions of dollars in new loans from the U.S.-dominated International Monetary Fund, the financial shock would reverberate around the globe. Credit could instantly dry up in emerging markets as varied as Mexico, Turkey, India, Poland and South Korea.
The economic consequences "would be transmitted to the U.S. economy in many ways," said Salomao Quadros, an economist with the Getulio Vargas Foundation, a business- and economic-policy research organization in Rio de Janeiro.
From 1997 to 2000, the U.S. exported $156 billion to South America, and if the crisis deepens cities such as Miami, New Orleans and Houston would see exports nosedive as their Latin customers evaporate. Detroit's auto industry would see exports fall, and would be forced to idle plants abroad.
The crisis began in January when Argentina defaulted on $141 billion in government debt, and since then most of South America has slid deep into crisis while America's attention has been focused on Afghanistan and the Middle East.
Argentina has frozen citizens' bank deposits to prevent the banking system from collapsing. Three-quarters of Uruguay's foreign currency reserves vaporized this year, and on Tuesday the country ordered its banks to close for the week to avoid collapse. In Brazil, South America's bellwether economy, the value of the real, the national currency, has fallen 25 percent against the dollar, sparking fears that the country will stop payment on its debts.
Supermarkets looted
Sixteen supermarkets were looted yesterday in the worst violence in a decade in Uruguay in what the government called a coordinated series of attacks around the capital as thousands of other people staged a peaceful general strike amid a spiraling financial crisis.
Twenty people were arrested and 14 attempts to loot shops were repelled by riot police who were pelted with stones in several poor districts around the capital, with at least one policeman being struck in the face, police said.
In the Andean region, protests halted Peru's sale of state monopolies and unrest is growing even faster than employment. In Bolivia, South America's poorest country, a Marxist opponent of free-market reforms will control about a third of the new congress when it is sworn in this month. Political woes in Colombia and Venezuela have soured the economies there.
Even Chile, which has the region's only healthy economy, has seen the IMF's estimates of annual growth in its gross domestic product, the total value of the goods and services Chile produces, fall to 2.6 percent from 3 percent this year and to 4.8 percent from 6 percent next year.
"Unless something changes fairly soon, we are probably heading to a meltdown," said John Williamson, a senior associate at the Institute for International Economics in Washington, D.C. "It's difficult to see how it's going to be resolved."
Fresh talks between Brazil and the U.S.-led IMF, the multilateral institution that lends to developing nations, offer the most immediate and perhaps the only hope of averting disaster. Brazil is seeking $10 billion to $20 billion in new loans that would be used to bolster the value of its currency and to calm panicky investors.
But experts worry that Brazil still may not be able to meet its obligations to repay more than $300 billion of internal debt and more than $200 billion to foreign lenders. The real's fall means that companies and the government must earn more local currency to pay off their debts in dollars.
Investor fears in Brazil are tied to October elections and economic policies that could result. The problems began to mount after polls last month showed that President Fernando Henrique Cardoso's hand-picked successor, former Health Minister Jose Serra, had fallen to third place in opinion polls. Topping the polls now are Luiz Inacio Lula da Silva, a left-wing candidate, and a center-leftist, Ciro Gomes.
I was reading a thread the other day that mentioned the fact that when our plane was crashed into and ended up on that Chinese island, a few months into #43's Presidency, that Jiang Zemin was on a whirlwind 12 day tour throughout South America.Isn't that an odd coincidence?What did he expect to gain (or Give)from all those visits to countries on the decline,hmmm?It makes me wonder,and I can't find that article either.
Movie version "Saving Banker's Privates".
I thought that cleaned up Volcker's mess, rather than a fault in the Reagan economy.
Using the Visa to pay on the Mastercard.
That's OK. Stupid America always comes through with hundreds of billions of dollars to prop up corrupt, socialist, welfare/statist economies. Then, once they're solvent again the rip-off game starts anew. Remember, it's a (everbody shout at once) Inter-dependent Global Economy! What this really means is that America pays everyones bills no matter what stupid economic/spending policies brought on the bankruptcy.
Sardinha was hospitalized overnight at Kino Community Hospital and will remain in Tucson until space becomes available in a Florence detention center. It will probably take a month or two before Sardinha sees an immigration judge, Scudder said.
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