Thursday, August 15, 2002

Pat Buchanan (via Gretchen and Dave Stratman) explains that the Brazil bailout is really a US bank bailout. He got all his info, except for the attack on Robert Rubin, from this article in the Times:
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 $264 billion is more than double that of Argentina, and American banks like Citigroup, FleetBoston and J. P. Morgan Chase have much greater exposure to Brazilian loans than to Argentine ones....

It is unclear how much American banks and manufacturers lobbied for the Brazilian rescue plan, but they will certainly benefit from it. Shares of Citigroup and FleetBoston jumped 6 percent as soon as the markets opened today, long before the rest of the stock market began soaring to a large increase.

This just clarifies the suggestion made earlier: the "bailout" is political engineering, for the purpose of guaranteeing repayment.

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