Will Prudence Prevail ?
Following an overwhelming victory, Brazil's President-elect Luiz Inácio Lula da Silva now must show investors he can control spending and inflation, and continue to pay the
Luiz Inácio Lula da Silva called his triumphant
battle for the presidency the "Peace and Love" campaign,
meaning that his fiercely anti-capitalist language had become a
thing of the past and that he had chosen the path of moderation
and consensus. Brazilians, tired of years of economic
stagnation bought his message and gave Lula and his Workers
Party (PT) a massive victory in the country's presidential
elections at the end of October. The financial markets only
began to come round earlier in the month, during the final days
of the campaign. Suddenly, it seemed there was peace and love
everywhere. Bond prices began retreating, the real started to
recover and share prices edged back up. Investors believed that
Brazil was oversold, liked some recent economic data and above
all, began to be swayed by Lula and his promise that the
government would pay all its debts. They paid...
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