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Cablegate: Media Reaction: Economy: Stock Exchange Turbulence; Sao

VZCZCXYZ0014
OO RUEHWEB

DE RUEHSO #0032 0241039
ZNR UUUUU ZZH
O 241039Z JAN 08
FM AMCONSUL SAO PAULO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7843
INFO RHEHNSC/NATIONAL SECURITY COUNCIL WASHDC IMMEDIATE
RUEHBR/AMEMBASSY BRASILIA PRIORITY 8999
RUEHRI/AMCONSUL RIO DE JANEIRO PRIORITY 8553
RUCPDOC/USDOC WASHDC 3012

UNCLAS SAO PAULO 000032

SIPDIS

SIPDIS

STATE INR/R/MR; IIP/R/MR; WHA/PD

DEPT PASS USTR

USDOC 4322/MAC/OLAC/JAFEE
E.O. 12958: N/A
TAGS: KMDR OPRC OIIP ETRD BR
SUBJECT: MEDIA REACTION: ECONOMY: STOCK EXCHANGE TURBULENCE; SAO
PAULO


1. "Anxiety And Panic In The US"

IMF Managing Director Paulo Nogueira Batista Jr. (representing
Brazil and eight other nations in the organization) commented in
liberal, largest national circulation daily Folha de S. Paulo
(1/24): "As everyone knows, the economic and financial situation
here in the US is a terrible one. Brazilian immigrants, for example,
have begun returning home or planning their return.... The Americans
are perhaps paying the economic price for having given two terms to
George W. Bush. Eight years! The result is that the nation has
accumulated in these years indicators in some important areas of the
economy and of the financial system that are typical of a banana
republic.... The fiscal package whose general lines President Bush
announced last Friday was considered vague and insufficient, thereby
provoking an almost panic situation in international financial
markets.... Monetary and fiscal officials underestimated the extent
of the crisis and now have to act on short notice. There is certain
haste in the Fed and in the Executive, as well as in the Congress.
The decision to cut the prime rate, for example may have an
ambiguous result, especially when made in haste."

2. "Brief Relief"

Liberal, largest national circulation daily Folha de S. Paulo
editorialized (1/24): "The US officials' attitude involves basically
two interpretations. The optimistic, which prevailed briefly, is
that the officials are willing to act promptly to prevent a
recession in the US. And the pessimistic, which is once again
prevailing, is that the scenario is perhaps more serious than one
supposed. Therefore, it is expected that the prime rate will be
reduced again on January 30. Such a prospect was reinforced by the
fact that following the recent hasty cut, inflation expectations did
not worsen. It is very uncertain whether a possible additional
reduction in the prime rate will be enough to stop the wave of
pessimism and prevent a recession in the US - or at least to shorten
it, because for many analysts the world's largest economy is going
through a contraction."
White

© Scoop Media

 
 
 
 
 
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