Word: braziller
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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...
...backlash can be felt in the rise of left-wing politicians vowing to temper market coldheartedness with old-fashioned protections for workers and the poor. Erstwhile radicals like Luiz Inacio Lula da Silva, 56, fiery head of Brazil's Workers Party, are running on rejection of "the Washington Consensus," as the capitalist reforms have come to be called...
...neither he nor second-ranked Ciro Gomes, the candidate of the Workers Front coalition, is regarded with much enthusiasm in Washington. A former metalworker known for probity, Lula insists he won't nix the capitalist reforms but will make them fairer--starting with a crackdown on Brazil's epic tax evasion...