[PEN-L:69] Re: "Old panaceas do not work"

[Gary Dymski <dymski@xxxxxxxxxxxx>]

Thanks for the post, Louis.  One point reminded me of one thing.  QUoting:
>
>There is, however, one effective remedy on which most economists agree.
>Russia and other besieged countries cannot pay off their Western loans.
>Just as debt relief was the key to South America's recovery in the 1980s,
>debt relief will have to be part of any solution to the current plight of
>Russia and Asia. The sooner it comes, the sooner a widespread economic
>rebound can begin.
>

Quick comment based on observations made by friends in Rio.  One aspect
of the relief in the 1980s were the infamous Brady Bonds.  These are traded
in an offshore secondary market.  Any effort Brazil might make to control
exchange or capital will be met by a reaction in the BB market.  So while
Brazil has been SOMEWHAT protective even while opening its financial
markets in many ways, the BB-solution of the past allows a mechanism whereby
the markets can freely react to developments in Brazil as they happen, to the
detriment of Brazil's flexibility in this crisis.

Gary D.
Gary Dymski
Department of Economics
University of California, Riverside
Riverside, CA 92521-0427
Phone: 909-787-5037 x1570
Fax: 909-787-5685
Email:  dymski@xxxxxxxxxxxx (office)
             gdymski@xxxxxxxxxxxxx (home)