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At the risk of upsetting the free marketers, I'm frankly somewhat pleased to
see some of the central banks around the world (e.g. Hong Kong) putting the
interests of their countries ahead of the hot money, hedge funds, and
bankers who expect a bailout when their ill-considered loans go bad. I am
not referring to countries (e.g. Indonesia) which support unbridled cronyism
in financial matters. I think that the long term bottom line for responsible
countries which take strong defensive action (preventing unreasonable flight
from currency and equity markets), will be the ability of these countries to
establish and maintain a sound economy. Bankers have short memories and will
always lend where they think they can make money.
Earl
-----Original Message-----
From: Timothy Morge <tmorge@xxxxxxxxxxxxxxx>
To: alfredo.simas@xxxxxxx <alfredo.simas@xxxxxxx>
Cc: omega-list@xxxxxxxxxx <omega-list@xxxxxxxxxx>
Date: Friday, September 11, 1998 10:40 AM
Subject: Re: Brazil!
Alfredo:
I wouldn't compare brazil with Russia. But as a very long-time currency
trader,
I've seen alot of central banks flex their might, and heard every country
say
that their box of tools would thwart speculators. The truth is, if a country
wants the luxuries that capital flows from outsiders brings, the country
must
also be beholding to market forces. Countries, like people, can't always
have it
both ways. And the longer a central bank remains under pressure from market
forces, the more disasterous the effects will be when the market forces
force
the central bank to stand aside.
That's my opinion. I don't dislike Brazil. I hope you don't take it
personally.
It's trading.
Best,
Tim Morge
alfredo.simas@xxxxxxx wrote:
>
> Hi Netters,
>
> Iīve been watching commentaries about the melt down of Brazil
> recently in this list. I would like to add to these my opinion.
>
> Do not bet against Brazil. Brazil is very rich.
> Speculators have already been severely punished during march
> 1995 and mildly so last october.
>
> On march 1995, under the first severe attack, the Brazilian stock
> market fell around 20% in one day. That morning, during the heat of
> the attack, the Brazilian Central Bank devalued the currency
> slightly, only to entice speculators to short sell the Real even
> more.
> When they did it enough, the Central
> Bank rose the Real's quote and bought it all back making a
> handsome profit for the country. The speculators were severely
> battered then.
> I guess this time the strategy will be different but the Brazilian
> Central Bank has megatons of dollars to unload at anyone.
> Brazil is not Russia! Brazilīs economic team is orders of
> magnitude more competent. Brazil may not have nuclear weapons
> but, on the other hand, the Brazilian financial weapons are infinitely
> more strong than those of Russia.
>
> Alfredo
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