VZCZCXYZ0014
OO RUEHWEB

DE RUEHSO #0032 0241039
ZNR UUUUU ZZH
O 241039Z JAN 08
FM AMCONSUL SAO PAULO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7843
INFO RHEHNSC/NATIONAL SECURITY COUNCIL WASHDC IMMEDIATE
RUEHBR/AMEMBASSY BRASILIA PRIORITY 8999
RUEHRI/AMCONSUL RIO DE JANEIRO PRIORITY 8553
RUCPDOC/USDOC WASHDC 3012

UNCLAS SAO PAULO 000032 
 
SIPDIS 
 
SIPDIS 
 
STATE INR/R/MR; IIP/R/MR; WHA/PD 
 
DEPT PASS USTR 
 
USDOC 4322/MAC/OLAC/JAFEE 
E.O. 12958: N/A 
TAGS: KMDR OPRC OIIP ETRD BR
SUBJECT: MEDIA REACTION: ECONOMY: STOCK EXCHANGE TURBULENCE; SAO 
PAULO 
 
 
¶1. "Anxiety And Panic In The US" 
 
IMF Managing Director Paulo Nogueira Batista Jr. (representing 
Brazil and eight other nations in the organization) commented in 
liberal, largest national circulation daily Folha de S. Paulo 
(1/24): "As everyone knows, the economic and financial situation 
here in the US is a terrible one. Brazilian immigrants, for example, 
have begun returning home or planning their return.... The Americans 
are perhaps paying the economic price for having given two terms to 
George W. Bush.  Eight years!  The result is that the nation has 
accumulated in these years indicators in some important areas of the 
economy and of the financial system that are typical of a banana 
republic.... The fiscal package whose general lines President Bush 
announced last Friday was considered vague and insufficient, thereby 
provoking an almost panic situation in international financial 
markets.... Monetary and fiscal officials underestimated the extent 
of the crisis and now have to act on short notice. There is certain 
haste in the Fed and in the Executive, as well as in the Congress. 
The decision to cut the prime rate, for example may have an 
ambiguous result, especially when made in haste." 
 
¶2. "Brief Relief" 
 
Liberal, largest national circulation daily Folha de S. Paulo 
editorialized (1/24): "The US officials' attitude involves basically 
two interpretations.  The optimistic, which prevailed briefly, is 
that the officials are willing to act promptly to prevent a 
recession in the US.  And the pessimistic, which is once again 
prevailing, is that the scenario is perhaps more serious than one 
supposed. Therefore, it is expected that the prime rate will be 
reduced again on January 30. Such a prospect was reinforced by the 
fact that following the recent hasty cut, inflation expectations did 
not worsen. It is very uncertain whether a possible additional 
reduction in the prime rate will be enough to stop the wave of 
pessimism and prevent a recession in the US - or at least to shorten 
it, because for many analysts the world's largest economy is going 
through a contraction." 
White