Clinton moves to reassure global financial markets<\/p>\n
WASHINGTON (AP): President Clinton is trying to restore
\nconfidence in financial markets after an abrupt devaluation of
\nBrazil's currency called into question his strategy for dealing
\nwith the 18-month-old global economic crisis.<\/p>\n
Clinton said on Wednesday he and members of his economic team
\nwere monitoring the crisis in Brazil closely and had been in
\ncontact with Brazilian authorities, the International Monetary
\nFund and U.S. allies.<\/p>\n
\"We have a strong interest in seeing Brazil, with whom we have
\nworked on so many important things around the world, carry
\nforward with its economic reform plan and succeed, and we
\ncertainly hope that they will,\" Clinton told reporters at the
\nWhite House.<\/p>\n
Latin America accounts for 20 percent of U.S. export sales.<\/p>\n
Last fall, with the financial crisis threatening to claim
\nBrazil as its next victim, the administration convinced the IMF
\nto try a new approach -- offering bailout money up front as a way
\nof keeping nervous investors from fleeing developing nations
\nrather than offering assistance only after a country's economy
\nhas been leveled.<\/p>\n
Brazil became the first test case of that strategy in November
\nwhen the IMF put together a US$41.5 billion bailout package,
\nincluding $5 billion from the United States.<\/p>\n
The effort bought time, but there has been renewed turmoil in
\nBrazil in recent weeks as President Fernando Henrique Cardoso ran
\ninto roadblocks in starting the economic belt-tightening he
\npledged in return for the IMF money.<\/p>\n
The abrupt resignation of the head of the Brazilian bank and
\nthe effective devaluation of Brazil's currency by 7.6 percent
\nsent a jolt through financial markets Wednesday. The Dow Jones
\nindustrial average lost more than 250 points in the first hour of
\ntrading before recouping some of those loses to close down 123.48
\npoints.<\/p>\n
Private economists have warned that more turbulence is likely.<\/p>\n
\"The administration's test case is looking shaky right now,\"
\nsaid Clyde Prestowitz, head of the Economic Strategy Institute
\nthink tank. \"The problem is that the Brazilians haven't been able
\nto get their act together and that is posing a lot of real
\ndangers for the rest of the world.\"<\/p>\n
Administration officials, informed by Brazilian authorities of
\ntheir intention to devalue Tuesday night, spent Wednesday on the
\ntelephone to other rich G-7 nations and developing countries in
\nan effort to assess the damage.<\/p>\n
Treasury Secretary Robert Rubin said what's needed is
\n\"implementation of a strong, credible economic program\" by
\nBrazil.<\/p>",
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