Friday, 12 December 2008

Earlybird, Dec. 12, 2008

Headlines for Friday Dec. 12, 2008

BRAZIL -- Brazil launches tax cut package to counter crisis: (Valor Economico) It seems that President Lula thinks that he will be able to fend off the impact of the worst global economic crisis since the 1930s. Delirium, some may call it. 

BRAZIL -- Brazil's central bank to bolster trade financing: (Valor Economico) The central bank is clearly concerned over the long-term scenario for trade and debt refinancing for 2009.  In a few months, it will help bring the real back to pre-crisis levels.

U.S. -- Aid package for automakers collapses in the Senate: (Reuters) The chances of survival for GM and Chrysler lowered significantly after the Senate rejected the measure to extend $14 billion in aid to automakers. The Brazilian subsidiary of GM, one of the group's most profitable globally, shouldn't suffer considerably in the event of its parent company's bankruptcy filing.

MARKETS -- Stocks, Dollar Tumble After Aid Collapse: (Bloomberg) The obvious result. This is likely to be enough to halt temporarily the market rally of the previous week.

U.S. -- Former Nasdaq Executive Confesses $50 Billion Fraud Scheme to Employees: (Bloomberg) This news deserves a separate comment, but to understand the extent of this, Bernard Madoff's confession will likely accelerate redemptions in the hedge fund industry -- which is reeling from declining asset prices and a widespread loss of confidence by the public.

BRAZIL -- BNDES to step up lending to record in 2009: (Valor Economico) Brazil's irrational exuberance story. President Lula is using the BNDES to increase the state's grip on private affairs and making large borrowers more dependent on state aid. Will this backlash in the future? Of course! ... 

COLOMBIA -- Uribe scolds lawmakers for delays in the passage of legislative agenda: (El Tiempo) The Uribe administration is falling apart -- and investors have been late to perceive it. As 2009 approaches, and criminal probes against half of Congress reach their final stages, we wonder what is to happen to the list of economic reforms needed to streamline Colombia's public finances and a safe haven for investors. 

VENEZUELA -- National Assembly passes '09 budget draft; oil estimated at $60/barrel: (El Nacional) This 2009 budget will become a litmus test for Chavez. Rating agencies have begun to do what they should have done years ago -- cut Venezuela's credit ratings. It is unclear whether the country will resist oil below $50 a barrel for a prolonged period (the more probable answer is no.) 

VENEZUELA -- Chavez says failure of re-election amendment would trigger his departure: (El Nacional) I don't want to spoil the party, but I doubt that 2009 will bring us such wonderful present!