Lula Gloats Brazil Is Better Prepared than Anyone to Tackle Global Crisis

Lula, minister Dilma Roussef and senator José Sarney There is no other country in the world better prepared for the global economic meltdown than Brazil and no other than its president, Luiz Inácio Lula da Silva, guarantees that. The Brazilian leader is defying and mocking those naysayers who he says are betting against Brazil and rooting against his administration's success. 

"I can tell as President," Lula said in a speech during the inauguration of a railway stretch in the northern state of Tocantins," that there is no country in the world better prepared to face this crisis. There is no country in the world better prepared than Brazil, with more stability. We have reserves, we have market, and we have a growing economy."

Lula told Brazilians that Brazil is not going to go broke due to the international crisis as some people wish. He reiterated this is no time to stop consuming and much less giving in to panic. Once again he reminded the public that the current crisis was born out of speculation and that it was speculation that brought the US to its knees and broke the American economy.

The president compared the US meltdown to "a bubble, an egg without yolk", which breaks and has nothing inside.

"But here we didn't go broke and we are not going to go broke. There are people rooting for us to go broke, there are those who go to bed and pray: "I wish the crisis will get Brazil so that Lula will get screwed."

Data from the IBGE (Brazilian Institute of Geography and Statistics) show that the Brazilian economy grew 6.8% in the third quarter of 2008, when compared to the same period last year. From January to September the country's GDP has increased by 6.4, also in comparison to 2007. Commenting on that Lula stated:

"When someone wishes to make money without producing any good, he is a thief or a speculator, because the money of a nation has to be produced at the cost of production. The result of a country's growth is due to the result of the production growth of that country," added the president.

While asking Brazilian to continue buying, Lula also advised those who have already big debts to not get new ones.

"If you have debts, my son,  do not take on more debt, for God's sake. Pay your debt, pay it. What is the advice I give people? If you are in debt,  do not take on more debt. Now, if you have a little money, if you have the 13rd salary (Brazil's year-end extra month salary paid to every employee) and if you have a little money, and wish to give a microwave as a gift, in easy installments, if you can, buy. Because if you do not buy, then we will have a crisis in Brazil. If everyone stops buying and the economy halts, we're going to have a crisis."

Lula said that it is wrong to stop consuming because of unemployment fears, since consumption stimulates commerce, which stimulates the industry. "This is the contradiction," he explained. "Imagine the economy as a Ferris wheel."

Lula insisted that there are people rooting for the crisis to hit Brazil, adding that there is a lot of " organized propaganda in favor of the crisis."

"There are people rooting for us to go broke.  Read and watch television. Listen to the radio. It's almost an organized propaganda in favor of the crisis. I think we should talk about the crisis because it is serious, it is profound, but it wasn't caused by us," he went on.

Presidential Elections

Lula once again talked about making his successor in the presidency. "I'm certain that I will make my successor," he said in the presence of his chief of staff, Dilma Rousseff, who is believed to be his choice to succeed him.

A DataFolha poll shows the governor of São Paulo, José Serra, as the favorite to win the 2010 presidential election, with 36% to 47% of the votes depending on the opponent. Roussef seems to be improving her numbers, but she's still not getting more than 12% of the electorate.

The president of Brazil's Central bank, Henrique Meirelles, commented that the latest numbers from the IBGE showing the Brazilian GDP with a 6.8% growth in the third quarter is proof of the Brazilian economy's solidity and strength.

"This strength gives us objective reasons to believe that Brazil's economic deceleration will be shorter and of smaller intensity than in other countries. As in preceding quarters the Brazilian economy kept on expanding its productive capacity. The consumption by families, which can be seen as an indicator of the population's well-being, has also shown significant expansion," stated Meirelles.

At the end of the day, Lula signed a temporary measure giving US$ 2 billion to the BNDES (National Bank of Economic and Social Development) for loans to businesses, especially exporters, at a lower interest rate than that offered by commercial banks.

The money is part of a US$ 5 billion loan Brazil received from the World Bank to deal with the international financial crisis. Borrowers will pay Libor (international interest rate currently at about 3% a year) interests plus 1%.  For Finance Minister Guido Mantega this is a low rate.

Market

The US dollar lost some ground this Tuesday, December 9. The greenback closed the day being negotiated at 2.471 reais per dollar, a 1,19% devaluation for the day. The trading session was fickle. The dollar went up 2% during the day but backed out following interventions by the Central bank.

Brazil's stock exchange, the Bovespa, had also a volatile day. After ups and downs throughout Tuesday the market closed 0.83 down at 37.965 points.

The volume traded was 4.3 billion reais (US$ 1.73 billion), a little below the almost 4.8 billion reais (US$ 1.94 billion) negotiated on Monday.

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