Sam Sez

Date: January 13, 1999

Question: "Blame it on Rio? Or, the financial crisis in Brazil."

Answer: The sudden departure of Brazil's central bank chief sent tremors throughout the global markets. U.S. treasuries soared early in the morning while many stock markets fell. The widening of the real trading range triggered the selloff. This de facto devaluation resurrected concerns about that country's ability to service its debt. Also, the plummet in the Brazilian real quickly translated into higher prices. This inflationary reaction should reduce Brazil's imports and diminish economic activity.

It makes one wonder, "What would happen if Alan Greenspan departed abruptly?"

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