• Categories
  • Archives

US Fed Offers Brazil US$ 30 Billion to Shake Up Market

Fed headquarters in Washington, DC The United States Federal Reserve agreed to provide US$ 30 billion each to the central banks of Brazil, Mexico, South Korea and Singapore, expanding its effort to unfreeze money markets to emerging nations for the first time.

The Fed set up "liquidity swap facilities with the central banks of these four large systemically important economies" effective until April 30, the central bank said in a statement. The arrangements aim "to mitigate the spread of difficulties in obtaining US dollar funding."

The Fed announcement coincided with a decision by the International Monetary Fund to almost double borrowing limits for emerging market countries while waiving demands for economic austerity measures.

The Fed and IMF actions "show international resolve to support strong performing emerging-market economies adversely impacted by the current financial market turbulence," U.S. Treasury Secretary Henry Paulson said in a statement.

"The Fed is there to support large emerging markets that have done their homework over the past several years like South Korea, Brazil, Singapore and Mexico," said Alonso Cervera, a Latin America economist with Credit Suisse Group in New York. "These are large, relevant emerging countries that have followed responsible fiscal and monetary policies for the past several years and now are going through tough times."

The Fed also created this week a 15 billion US dollars swap line with its New Zealand counterpart and removed limits this month on four existing swap lines, including one with the European Central Bank. The Fed set up a 10 billion arrangement with Australia's central bank last month and then tripled it to $30 billion.

The official Fed release said that "the Federal Reserve, the Banco Central do Brasil, the Banco de Mexico, the Bank of Korea, and the Monetary Authority of Singapore are announcing the establishment of temporary reciprocal currency arrangements (swap lines). These facilities, like those already established with other central banks, are designed to help improve liquidity conditions in global financial markets and to mitigate the spread of difficulties in obtaining U.S. dollar funding in fundamentally sound and well managed economies."

"In response to the heightened stress associated with the global financial turmoil, which has broadened to emerging market economies, the Federal Reserve has authorized the establishment of temporary liquidity swap facilities with the central banks of these four large and systemically important economies. These new facilities will support the provision of U.S. dollar liquidity in amounts of up to $30 billion each by the Banco Central do Brasil, the Banco de Mexico, the Bank of Korea, and the Monetary Authority of Singapore. These reciprocal currency arrangements have been authorized through April 30, 2009."

The FOMC previously authorized temporary reciprocal currency arrangements with ten other central banks: the Reserve Bank of Australia, the Bank of Canada, Denmark's Nationalbank, the Bank of England, the European Central Bank, the Bank of Japan, the Reserve Bank of New Zealand, the Norges Bank, the Sveriges Riksbank, and the Swiss National Bank.

Mercopress

Tags:

  • Show Comments (22)

  • dnbaiacu

    Hopefully this is true…
    [quote]) iF AND WHEN YOU WILL UNDERSTAND THIS, YOU WILL SEE FINALLY REALIZE WHY THIS IS BULLISH FOR THE US$ MEDIUM TERM (NEXT 2 TO 4 YEARS)
    [/quote]

    I just may be able to get out of here in time! πŸ˜€ πŸ˜€ πŸ˜€

    I think it all depends on the fear factor though. And terrorism is still an issue. Anything can happen. Just “printing up money “can only go so far πŸ˜₯ It defies logic (as it should) .
    Then there is the China factor.. There IS a curve in here that remains to be seen just as Ch.c implies from his “economic” perspective.
    China will be “provoked” by “terrorism” to exert their influence in a BIG way. One that will cause the U.S to say,, “if we can’t beat them,, join them”.
    Hello U.N!
    How this all plays out will be interesting.
    Thanks for the insight Ch.c

  • dnbaiacu

    Thanks for the break down Joao!
    I am looking forward to hearing Ch.c also πŸ˜‰

    I think everyone is holding their breath πŸ˜€ πŸ˜€
    And on the edge of their seat πŸ˜‰ πŸ˜‰

  • dnbaiacu

    They Really Threw A Curve
    Never thought they’d go this far. But this is REALLY getting interesting.
    I only wonder if Lula himself knows what the heck is going on? πŸ™‚
    This is so entertaining. πŸ˜€ πŸ˜‰ πŸ˜€ Like virtual Monopoly or something. Connect the dots.
    Amazing thing about it is MOST people have NO CLUE what is going on.
    Believers have half an idea because it isn’t so necessary to know all the gory details.
    But if you don’t “believe” and aren’t a self -educator.. YOUR CLUELESS .. πŸ˜‰ πŸ˜‰ πŸ˜‰ πŸ˜‰ πŸ˜₯

  • dnbaiacu

    The Truth
    [quote]It is an attempt to ensure primacy of a fiat currency and dominance of a corrupt US Federal Reserve. [/quote]

    If we could only get more to understand this. And then start having discussions accordiingly πŸ˜₯ πŸ˜‰

    [quote]I don’t know how the US can afford this. Their US$700 billion bailout already provided tax breaks to other nations. They are over 10 trillion in debt and it only keeps climbing. [/quote]

    Falupa,, do your research on the Federal Reserve Bank and EVERYTHING will get clear.
    Don’t be afraid of the word CONSPIRACY. It is a fact of human life right now.
    Truth is usually made to appear ugly. And lies to appear beautiful.

    [quote]I will be interested to see what the new president will do in order to correct the problem. It will be interesting to see how these markets will react to the influx of money.
    [/quote]
    Presidents are just spokeman.. A la Bush and next Obama.. They can’t DO anything .And only DO as ADVISED. This is how a black man can be president in a still racist country. THEY, “the powers that be”, WANT him there. πŸ˜‰ Pure distraction at its very basic level.

    Your only defense are the metaphysic principles that can easily be referrence in the Bible. Matthew 5-7 Although you can start at the”self-help” section in your local bookstore and get “watered down , interpreted ,excerpts of the same exact thing. πŸ˜‰

  • Falupa

    How do they afford it
    I don’t know how the US can afford this. Their US$700 billion bailout already provided tax breaks to other nations. They are over 10 trillion in debt and it only keeps climbing.

    I will be interested to see what the new president will do in order to correct the problem. It will be interesting to see how these markets will react to the influx of money.

  • João da Silva

    VinnyCarioca
    [quote]Now, now my good fellow. Don’t you recognize pure altruism when you see it?[/quote]

    Vinny, my dear fellow, thank you for opening my eyes. Now I am ready to grab the $30 B. πŸ˜€

  • VinnyCarioca

    Joao
    [quote]It appears that U.S.Fed/IMF are trying to trick us again into borrowing this paltry sum of $30 B and enslave us again.[/quote]

    Now, now my good fellow. Don’t you recognize pure altruism when you see it? πŸ˜‰ πŸ˜€

  • VinnyCarioca

    ch.c
    [quote]NOTHING NEW. HISTORY REPEATS ITSELF FAR MORE THAN YOU THINK ![/quote]
    Outstanding analysis. You have brought up points I have not considered in the past (re: IPOs) and, if you don’t mind, I would like your opinion on the current valuation of the DJIA. Even after the incredibly sharp recent decline, the dividend yield on the Dow seems pretty low compared to historical yields that portended something close to a bottom. Any thoughts on that?

  • João da Silva

    For anyone who is interested, posting the following link:

    [url]http://www.estadao.com.br/estadaodehoje/20081101/not_imp270460,0.php[/url]

    It appears that some “direct” and “indirect” jobs are going to be in doldrums. πŸ˜€

  • ch.c.

    continued
    Today, even the ones who sold the BOVESPA at 60’000 before it peaked at 73’300 are finally VERY CLEVER !
    Same for those who sold the biggest BUBBLE too early : CHINA when the Index was at 5000 ! It topped at 6000 and now is at 1700…. in 11 months !!!!!!!

    Just a word about Soros that few people know. He is known for having made US$ 1 B. against the U.K. Central Bank. Right ?
    a) it was not HIS analysis. But the one from his then lieutenant DRUCKENMILLER WHO GOT A US$ 240 MILLIONS….BONUS !
    b) less known is that within the next 18 months, he lost TWICE US$ 500 millions against the Japanese Yen !
    c) on his smart investments in farm lands : in 1997 he bought HUGE HUGE HUGE tracks of land in Argentina, to grow cattles !
    Was is that smart..even ten years later ?????? smiles
    It would have been smart after the country default !
    Where HE makes money is where HE DOESNT TALK : through his army of analysts, investments managers always working…LOW KEY !!!!!!

    For Warren Buffett, dont listen to what he ONLY says, but always do what HE does !!!! He sold his Petro China shares after having made 800 %.
    When everyone thought he sold due to the anti China campaign for human right abuses, it was not due to the campaign but because he smellt a MAJOR TOP !!!!!!
    When he made his European Tour for eventual investments last summer, I said to myself : NO WAY such a wise man is going to invest in an overvalued currency even if he liked many companies-
    And time has proven me right. He invested only in U.S. companies that went down AFTER his European Tour !!!!! But no doubt that after the next round, when the Euro will be much cheaper, he is going to invest much more in Europeans companies !

    Remember, HE is also a VERY GOOD Bridge Player ! He wont show all his cards, or at times he will make you believe he may go into one direction while taking the opposite one !

    And with his life long patience, time is on HIS side !

    I always do a little investment when and where He does, and enjoy even more when temporarily he loses. But I will also exit much too early….compared to him !!!!! But that ends up still with a noice profit !
    i even bought Wells Fargo shares not too far from the low. Why ? Simple : during a CNBC interview he was asked what he thought
    about the bank that was going badly at that time ! His answer : “in my view, the tangible book value of the Bank was high when compared to other banks and he felt therefore very confident for the future”
    Welll……that was a LOUD and clear BUY signal for me ! Yesss… a stock WB owns for years and years…going down to very low prices and when he says he was very confident about the future of the company due to his own tangible book value estimate is a an investment only idiots dont do ! smiles !

    To make things very clear : as I said many times I turned bullish for ALL stocks markets. Agreed…somewhat too early but when already very low.
    BUT….BUT….I dont think that the US$ has run its course. It just started a new 2-4 years bull run…in my view !!!!!
    therefore why should I have too much weighting on the NON US$ investments, be it in Euro, Brl, Won and even Swiss Francs ?
    Nothing against Brazil in particular, except that I also view the emergings nations currencies weak…EVEN AGAINST the Euro !
    HAVING A WEAK CURRENCY, but not a collapsing one, will just make every one very happy ! Brazilians are paid in Brl. Swisses are paid in Swiss Francs, European are paid in Euros……….not in US$ !
    On the other hand some emerging countries will have their currencies collapse.
    Argentina is on the verge of another bankrupt. It will affect to some extend ALL South American countries.
    For the time being the biggest danger is in the Newer Independent Eastern Europe Countries.

    Europe is far more weaker than you can think of. They were the ones who lent by far the most to these countries, on top of having already assumed big losses in the U.S. sub primes debts !!!! Yessssss…when people always believe that the near 700 billion losses already taken, few forget that 40 % were IN…EUROPEAN BANKS !!!!!!!!
    Now they have also have to bear their own sub primes (not in Switzerland – we have/had no sub primes), and losses they will have on the Eastern Countries !!!!

    The Euro is begging….to be weak !!!!!!! smiles
    I would not be surprised it will go 1 to 1 against the US$

  • ch.c.

    Do you really think that I swallowed ?
    Somewhat yesssss !
    There was a massive foreign DIRECT investment, contrary to what you wrote above !
    Many foreign people, bought farm land (even us), produce foods, created direct and indirect jobs that are still there.
    Many firms (cars manufacturers) have offered well paid jobs, you did not have !
    Many International firms such as Dell, IBM, Dell and NestlΓ€Ζ’Β©, Syngenta, Monsanto, Cargill, Bunge etc etc either set up shops or increased their existing investments !
    Many foreign companies raised money in the EU or the USA and invested in SUGARCANE ETHANOL PLANTS !!!!!! Most of these are losing their shirt on these investments, including Soros or Bill Gates ! Sure for them it was…pocket money ! smiles. Still these investments created a lot of direct and indirect jobs.

    For your information the FDI investments is not what is invested in equities when already listed, except if there is what is called a secondary new issue !.

    Just look at the 57 IPO made in 2007. 100 % of the money was RAISED by the Investments Banks that every one criticize TODAY !!!!
    But without them, THESE HUGE AMOUNTS OF CASH WOULD HAVE NOT BEEN RAISED. This is effectively FDI because it affected
    cash raised FOR the Brazilian companies such as Cosan who got US$ 1 billion ! Then only the stocks are traded at the exchanges between you, me, or whoever but at that time it no longer affects Cosan purse, BUT “just” their market capitalization.
    forget for a moment the price decline that followed. To some extend this is not the problem of Cosan…but to those who lost money. But it provided $ 1 b. to Cosan to buy harvesters, competitors and buiild newer mills, grow their sugarcane fields, etc etc. Cosan got US$ 1 billion CASH in working capital, not in loans and thus NON repayable….CONTRARY TO A LOAN !
    The World is done that way. Every time you see a lot of NEW ISSUES (IPOs), we are never far away from a major multi years TOP !!!! The top will be around one year after many New Issues were launched. By top I mean on the Exchange Index not necessarily on the top of the stocks that got new money. these stocks most of the time TOP well before the MARKET TOPS !!!!
    iF YOU REMEMBER, at or near the top, I made a comment that it was strange that of the 57 Brazilians companies that were listed
    during 2007, 85 % were BELOW their offering price, despite the Bovespa was at a top. Some like Agrenco (in the agricultural sector) was down 85 % from its initial offering price despite grains and foods were at the top !!!!!

    Next time that should ring a bell…to junkies !!!!!!! A classic BUBBLE has been formed !
    The same happened in China, Russia, but also in the USA, Europe or wherever you can think of ! EVERYWHERE !
    In developed countries the TOP was only earlier !
    BUT….BUT…. this is NOT the End of the World !
    NOTHING NEW. HISTORY REPEATS ITSELF FAR MORE THAN YOU THINK !
    Weak companies disappear or are taken over. Strong companies wil survive and grow over time despite the market swings !!!!!
    SELL when it is sunny and every medias articles and financial “experts “CONFIRM” it can only continue to go UP UP UP AND MORE UP !!!!
    ACCUMULATE when it is rainy, and buy more when there is mud everywhere.
    TIMING WILL RARELY BE PERFECT but will end as very good…if given sufficient time and patience !
    But dont go short either, because No one knows the top of the Bubble ! And shorting too early could also be devastating !

  • João da Silva

    dnbaiacu
    [quote]I only wonder if Lula himself knows what the heck is going on?[/quote]

    He was meeting with Fidel yesterday to understand “what the heck” is going on. Probably he got fully briefed.

  • João da Silva

    Ch.C!
    [quote]Now you will have to digest what you swallowed. [/quote]

    Do you really think that I swallowed ? πŸ˜‰

  • ch.c.

    To Joao “but not Brazil. According to our “Rulers”, we are doing extremely well and need not worry about “Tough times”.
    Sure….haven they said not later than 4 months ago that Brazil is immune ?
    That the Us$ is worth crap ?
    And a year earlier….that the Brazilian is guaranteed to have a minimum economic growth rate of 5 % PLUS…for yeaaaaaaaaars to come ?
    That Brazil is the garden of the World ?
    That Grains can only go up due to the China and India theory ?
    And same for oil prices with same theory ?

    And Cia Vale iron ore prices can only go up. Demand is there ? And growing by the day !

    Just read today NEWS FROM Cia Vale, and some analysts newer estimates
    “Oct. 31 Cia. Vale do Rio Doce, the world’s biggest iron-ore producer and second-largest nickel supplier, will lower output because the global credit crisis curbed metal demand.
    The cutbacks that start tomorrow will affect ferro alloys, manganese ore, iron-ore pellets and aluminum, Rio de Janeiro- based Vale said today in a regulatory filing. Vale reiterated an Oct. 24 plan to reduce iron-ore production by 30 million metric tons and cut nickel output in Indonesia by 20 percent, citing a 20 percent decline in global steel industry output.

    The deepening economic crisis, spurred by tight credit markets, is forcing commodity producers including steelmakers, pulp mills and mines to cut back, since demand for raw materials is expected to slow, said Pedro Galdi, a steel and mining analyst in Sao Paulo at SLW Corretora de Valores e Cambio Ltda.

    “Vale will have a much weaker financial result in the fourth quarter and probably in the first quarter of 2009,” Galdi said today in an interview. “Until global access to credit returns to normal, the company will feel the effects.”

    “Vale’s profits may suffer, according to Banco UBS Pactual SA, a Rio de Janeiro-based unit of UBS AG. In a report today, the bank estimated Vale’s 2009 net income will be $10.9 billion, down 19 percent from $13.4 billion projected earlier, on expectations that iron-ore prices may drop 40 percent next year. UBS also estimated 2010 net income of $10.9 billion, down 5 percent from a previous forecast.

    “Chief Executive Officer Roger Agnelli said Vale is the Brazilian company that is most exposed to world markets and that the global crisis will be “intense” “
    `There are people that think the crisis will last two years,” Agnelli said. “I’m a bit more optimistic.”

    Vale’s production of manganese ore and ferro alloys will be halted in Brazil from December to January, the company said in the regulatory filing. Two pellet plants in Brazil that represent about 20 percent of Vale’s capacity will be closed for maintenance starting tomorrow, Vale said. The company also plans to provide paid leave to affected workers in Minas Gerais state.

    Europe, Indonesia, China

    Vale will close a ferro-alloy plant in France until April and will shut the Mo I Rana plant in Norway until June to repair a furnace. Output of manganese ore will be cut by 600,000 metric tons and ferro-alloy production will be reduced by 90,000 tons, Vale said in the filing.

    In Indonesia, the company will stop using a thermoelectric plant, cutting nickel production by about 17,000 tons. A nickel refinery in Dalian, China, will operate at 35 percent of its normal capacity of 60,000 tons per year, the company said.

    Vale said it will reduce activities at its Valesul Aluminio SA aluminum unit in Santa Cruz, Rio de Janeiro state, because of high costs. The company said the plant will operate at 40 percent of normal annual capacity of 95,000 tons.

    Agnelli said Valesul isn’t “viable” at current aluminum prices and that Vale is assessing what to do with it.

    Dont worry about “tough times” !
    Your Cheating Rulers are always right…as usual !!!!!!

    Now you will have to digest what you swallowed.

    πŸ˜€ πŸ˜‰

  • ch.c.

    Furthermore………
    There is a vast MISUNDERSTANDING AND MISCONCEPTION about the US Government debts OWNED by foreign central banks around the world !!!!!!!

    THEY ARE a IOU to the actual holder. But these holders can change since these debts are tradable on the free market ! Right ?
    Let them expire at maturity and only then the U.S. Government will have to repay the debts owners, not before.
    If everyone ask repayment at maturity and doesnt roll over, guess who is the most penalized ??????
    Or stated otherwise if one has 1 trillion of US Treasuries, and ask let say every week at maturity to the US Government not to renew 25 billion.
    No problem….they pay you $ 25 B. and what are going to do with these 25 B ? And how much worth will the remaining 975 B, then 950, then 925, then 900 B. worth in your book against your own local currency ?????
    YOUR LOSSES GROW THE MORE YOU SELL US$ WITH THE OTHER MAJOR US$ OWNERS. and at what exchange rate or interests rate the eventual buyers will pay against their own currency ?????
    REALITY BEING YOU ARE TRAPPED…LIKE A RAT AT YOUR OWN TRICKY GAME !!!!!!

    But when the FED make a loan to the Brazil Government or whoever such as Korea, AIG, GM etc.
    It must be these governments or firms that MUST REPAY the FED. AND NO ONE ELSE !!!!!
    THESE LOANS ARE NOT TRADABLE IN THE OPEN AND FREE MARKET !
    Exactly the same if they were an….IMF LOAN !
    And IMF/World Bank loans have always PRIORITY in case of bankruptcy ! They are always repaid 100 % of the loan, contrary to those individuals who bought the Argentina Government Bonds issued in US$ who were repaid ONLY 30 cents to the dollar.
    And looks like that those who loaned again in 2006 and 2007 are going to LOSE AGAIN.
    Not only their previous default was the World largest in size, but also the worst on the restructure : 30 cents to the dollar decided unilaterally instead of an average of 60 cents to the dollar when negotiated bilaterally !!!!!
    And they will probably have another 2 World records : 2 bankruptcies in a decade and during the same decade !

    And going back to ther US$, those having trucksloads of U.S. Treasuries are NOT the countries with the safest local currency !
    IT HELPS YESSS….. but doesnt avoid their own LOCAL currencies to go DOWN !!!! Just have a look at the OPEC MEMBERS countries currencies, Russia or Brazil ! ALL WENT DOWN RECENTLY AGAINST THE US$, but not the Japanese yen because it is also a low cost LENDER !

    And this is just the tip of the iceberg !!!!!!
    Things are more darker longer term for emerging nations CURRENCIES !
    You are playing a NATURAL LOSING GAME DUE TO YOUR TRICKY AND CHEATING MINDS !!!!
    This is why your currencies remain in A SECULAR DOWNTREND AGAINST EVEN THE US$ !
    And the only way to change course is obviously to eliminate your tricky and cheating minds.

    More details….another time !!!!!!

    πŸ˜€ πŸ˜‰ πŸ˜€ πŸ˜‰ πŸ˜€ πŸ˜‰ πŸ˜€ πŸ˜‰ πŸ˜€ πŸ˜‰ πŸ˜€ πŸ˜‰ πŸ˜€ πŸ˜‰ πŸ˜€ πŸ˜‰ πŸ˜€ πŸ˜‰ πŸ˜€ πŸ˜‰ πŸ˜€ πŸ˜‰ πŸ˜€ πŸ˜‰ πŸ˜€ πŸ˜‰ πŸ˜€ πŸ˜‰ πŸ˜€ πŸ˜‰ πŸ˜€ πŸ˜‰ πŸ˜€ πŸ˜‰

  • João da Silva

    dnbaiacu
    [quote]I just may be able to get out of here in time! [/quote]

    Now you are getting paranoiac.Good ole U.S. of A is not going to impede your leaving it. πŸ˜‰

  • João da Silva

    dnbaiacu
    [quote]I am looking forward to hearing Ch.c also[/quote]

    It did not too long for Ch.C to oblige us with his comments!

    Worth highlighting part of his comments:

    [quote][b]The ones with the lowest rates will always end up as the LENDERS, The ones withe the HIGHEST rates will always end up as the BORROWERS ! Believing otherwise is an HERESY !!!!!!!![/b][/quote]

    Think about it and you will agree.He is talking about competition and treating Loans as a “Product”.

  • ch.c.

    To Brazilians and Foreign junkies : YOU GET IT ALL WRONG
    Part but not all of the 9 trillions are owned by foreigners who BOUGHT THEM ! That part came against shoes, oil, socks or whatever !
    The other part has been bought internally by the American System, such as individuals, pensions funds, mutual funds such as PIMCO, and like financial institution like these days, etc etc.

    The NEW 2 TRILLIONS…are NOT against something such as shoes, oil or whatever.
    100 % OF THESE LOANS THE US GOVERNMENT MAKE TO BOTH THEIR OWN FINANCIAL SYSTEM……AND FOREIGN FINANCIAL SYSTEMS MUST BE REPAID. THEY WERE/ARE LENT AT A HIGHER RATE THAN THEIR BORROWING COSTS.
    Therefore the FED is going to make a profit…on these loans !
    All these loans are short term loans that will or will not be renewed, depending of what the borrowers will chose in agreement with the lenders. And if renewed in part or in whole, they will be subject to higher/lower interests rate at the time of renewal !
    thus making sure the FED will not lose, but always make a profit.

    Part of the 700 billion will/are/were to take over some failing financial institutions or buy distressed debts that HAVE VALUE LONGER TERM whenever things will be rosier again, wether it will be in 2 or 5 years IS NOT IMPORTANT ! Therefore the FED will again make money, since they are borrowing at very low rates, which are EVEN well below the inflation rate !!!!!!!!!!!!!

    Conclusion :
    a) the U.S. government is providing US$ LIQUDITY TO THE WORLD FINANCIAL SYSTEM, NOT ONLY TO THEIR OWN SYSTEM.
    We should applaude them, not criticize them !
    b) these loans are bought by the borrowers, therefore will have to be repaid, contrary to shoes, socks, oil that has already been used by the Americans either through their trades or budgets deficits !!!!
    c) The Fed will end up making a bundle of profits either through the difference between the borrowing and lending costs, but even more longer term from what they acquired, namely distressed debts. They are NOT buying the SUB PRIMES DEBTS.
    d) HOPEFULLY…HOPEFULLY…..YOU CAN MAKE FINALLY THE DIFFERENCE between T-bills ISSUED against socks, and T-bills ISSUED AGAINST LOANS !!!!!

    E) iF AND WHEN YOU WILL UNDERSTAND THIS, YOU WILL SEE FINALLY REALIZE WHY THIS IS BULLISH FOR THE US$ MEDIUM TERM (NEXT 2 TO 4 YEARS)

    F) BUT…BUT….this doesnt solve their Budgets and/or Trade Deficits. Meaning that longer term the US$ will reverse DOWN…once more, just as it did for the last nearly 40 years !!!!!!

    G) BUT…BUT….On the other hand looking at secular trends, you should note that the US$ has been VERY STRONG against the EMERGING NATIONS CURRENCIES. Therefore YOUR CURRENCIES had just a bear market rally against the US$ in the last 5 years, but remain in a secular DOWNTREND.
    AND YOU WILL NOT AND CANNOT CHANGE THIS SECULAR TREND AS LONG AS YOUR GOVERNMENT LOCAL INTERESTS RATES ARE HIGHER THAN THOSE IN THE USA !
    The ones with the lowest rates will always end up as the LENDERS, The ones withe the HIGHEST rates will always end up as the BORROWERS ! Believing otherwise is an HERESY !!!!!!!!

    H) only the currencies with LOWER INTERESTS RATES ON AVERAGE THAN THE USA…will have a continued SECULAR BULL MARKET AGAINST THE U.S. DOLLAR ! There are not many of these countries ! Just TWO : Japan and -Switzerland ! But both will also have their SECULAR BULL MARKET….CORRECTION !!! The Swiss currency started, but remains very strong against the EURO, their major trading partners. In fact last Monday the Swiss Franc touched the 2003 and all time high against the EURO !
    China is way too early to predict since they opened their currency to GOVERNMENT CONTROLLED flucuations only in 2005 and so far are still manipulating it since they limit at their wishes the available quantity of China Currency to foreigners !

  • João da Silva

    [quote]This credit swap line is not done to really help Brazil, it is done to buy time for the American Hedge funds who massively invested in Brazil and other countries to orderly swap out of those markets with out loosing too much in local currency collapse.[/quote]

    This is a very interesting comment. Our “massive” build up the currency reserve was really done at the cost of wiping out the small and medium sized export industries that went belly up because of the “strong” Real. The foreign “investment” was really in BOVESPA and not in any productive areas. In reality, during the past two years, we became commodity exporters to generate the reserve. Now that the foreign “investors” are pulling out and the Real is being devalued. We have already blown around $30 B to save keep the $ down and I always said that our $207 B are going to evaporate if our Central Bank continues to auction off Dollars. Also in trouble are the companies that speculated with the Currency and so are some of the small banks.

    Now we get an offer of a “loan” of $30 B! Al.B makes lots of sense. More comments after hearing from Ch.C. πŸ˜€

  • Al.B

    It is called more looting
    This credit swap line is not done to really help Brazil, it is done to buy time for the American Hedge funds who massively invested in Brazil and other countries to orderly swap out of those markets with out loosing too much in local currency collapse. This way, these countries get into new debt while the filthy rich Amricans minimize their losses , all paid for by the US treasury. Now Bush and the Fed justify this by labeling it a loan to these naive countries (i.e. Brazil, New Zealand ..etc) that would be paid back in the future when their economies stabilize. This is the last Hurrah for Bush and his cronies to loot before an honest and decent president takes over in Januray.

  • George

    Brasil Beware
    This is like a crack dealer giving out samples.

    It is an attempt to ensure primacy of a fiat currency and dominance of a corrupt US Federal Reserve.

  • João da Silva

    [quote]”These are large, relevant emerging countries that have followed responsible fiscal and monetary policies for the past several years and now are going through tough times.” [/quote]

    Korea, Singapore and Mexico may be undergoing tough times, but not Brazil. According to our “Rulers”, we are doing extremely well and need not worry about “Tough times”. Every day I see on the news, our “fearless leaders” exhorting the citizens to continue spending to prevent the economy going into recession. It appears that U.S.Fed/IMF are trying to trick us again into borrowing this paltry sum of $30 B and enslave us again.

    My answer to them: No, thanks πŸ™

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Fitzpatrick Gets His Own Site to Talk Brazilian Politics

A new site covering Brazilian politics and business has been launched. It’s Brazil Political ...

Brazil in New York Wooing Foreign Investors

The São Paulo Stock Exchange (Bovespa), Brazil’s most important stock market, sent a task ...

WTO Accord Is Must to Keep the World Order, Says Brazil in South Africa

The heads of State who participated Sunday, February 12, in the Progressive Governance Summit ...

Brazil Rises Anticipating Interest Cuts

Latin American markets ended mixed. While profit-taking and weakness in the U.S. weighed on ...

Brazilian Fishing Industry Hopes to Cash In on Bird Flu

A sharp increase in fish consumption, especially in Europe, caused by consumer bird flu ...

World’s Flu Doesn’t Give Brazil Pneumonia Anymore, Says Minister

In an address to foreign investors, Monday, June 5, on the first day of ...

World Social Forum Says Bye to Brazil

The V World Social Forum (WSF) came to an official end, January 31, with ...

Jeffrey Sachs Applauds Brazil for Raising Its Voice

Renowned economist, Jeffrey Sachs, who is presently a UN consultant on the Millennium Targets ...

Wit and Witchcraft

Samba for the next millennium won’t be restricted to the borders of Brazil. Thanks ...

New World Bank Chief Wants a Can-Do Team While Brazil & Friends Won’t Do US Will

Global economic governance is flailing – and the Bush administration seems determined to deprive ...