Word: brazile
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Dates: during 2000-2009
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...Paul O'Neill just before a visit to the continent. Even as a parade of U.S. CEOs stood accused of corruption, O'Neill remarked that Washington shouldn't help save the region's debt-choked economies because the money might wind up in Swiss bank accounts. His quip sent Brazil's faltering currency, the real, into free fall...
Once O'Neill saw South America's financial chaos up close during that quick tour of battered Brazil, Uruguay and Argentina, he wasn't so flip. Before he reached home, the Bush Administration surprised everyone by signing off on a $30 billion International Monetary Fund (IMF) rescue loan for Brazil, which began to restore stability. O'Neill gave tiny Uruguay $1.5 billion from the U.S. Treasury to stop a run on that country's banks. Now even profligate, bankrupt Argentina, which has sunk into bottomless recession through corruption and misguided policies, hopes to get in on the aid, though...
...abrupt policy change followed a familiar pattern for the Bush team: resist, resist, resist--especially if Bill Clinton championed it--then relent when reality intrudes. Brazil, with Latin America's No. 1 economy and the world's ninth largest, was simply too big to fail. The fallout would have rocked Wall Street, where major U.S. banks and businesses have huge exposure--more than $100 billion in loans and investments. While diehard ideologues cried betrayal, the business-first wing of the G.O.P. was delighted by the Administration's about-face. "The bank stocks are all up," said a Republican operative...
Politics was the bottom line, after all. Investors set off Brazil's crisis out of fear that the two leftist candidates leading in presidential election polls would reverse the country's laudable efforts to adopt free-market reforms. A Brazilian default could upset the tenuous U.S. recovery and cost U.S. Republicans in November's congressional elections. That vote also coincides with the start of new negotiations for a giant hemispheric free-trade pact. If Brazil's economy continues to melt down, those talks will implode, causing Bush political embarrassment...
...Brazil, as the theory goes, too big to fail? We may never know, since whenever Latin America's largest economy gets in trouble, it also gets bailed out. Last year, the International Monetary Fund sent in $15 billion to protect Brazil from the aftershocks of Argentina's economic collapse. Last week, the IMF doubled up, putting together a $30 billion rescue package to both stabilize the troubled Brazilian economy and boost international faith in the rest of Latin America. The IMF hopes the package - its largest-ever in dollar terms - will break Brazil's downward spiral of plummeting currency values...