O'Neill's Hooverville Trolley

Those old enough to remember, may recall the famous cartoon series, "The Toonerville Trolley." Treasury Secretary Paul O'Neill should remember how President Herbert Hoover went down to disgrace in the matter of the continuing Great Depression of 1929-1933. Hoover was, personally, a nice guy. I am informed that O'Neill is, too. The fact remains, that he is a lousy economist and apparently has a poor memory for crucial facts of U.S. history.

Just so you don't forget the connections, think of the Bush Administration as "Paul O'Neill's Hooverville Trolley."

It was not the 1929 crash that ruined Hoover's Presidency; it was his repeatedly making exactly the same politically fatal mistake which the Bush Administration's O'Neill and others are making right now. The people blamed Hoover's predecessors, Calvin Coolidge and Andrew Mellon, for the 1929 crash; the suffering citizenry came to hate Hoover bitterly for the latter's promises of a non-existent recovery.

O'Neill's statement, that the present financial crisis of Brazil is "an intellectual fiction," is cooking that Administration in the same pot as Herbert Hoover's "chicken in every pot." The difference between the early 1930s and now, is that the Democratic Party, so far, refuses to play "Franklin Roosevelt" to Secretary O'Neill's replay of "Hoover."

In fact, I am the only notable leading figure in the world today, who is addressing the need for steps to bring about an actual economic recovery in the world today. There is a growing number of persons who are interested in hearing what I have to say, but no leading figure outside my immediate circles who is presently prepared to tell the plain truth about the presently onrushing, global economic breakdown crisis of the present world monetary-financial system.

To understand why more and more leading and other figures, such as Secretary O'Neill, repeatedly say the silliest things about the great issues of this time, consider that, despite the fact that they now know of the proof of my strategic assessments, they are unwilling to face the reality which I represent. In fact, the most frequent excuse for pessimism uttered, to my face, by leading circles in various parts of the world, is that no one in the U.S. government or U.S. party leaderships has the brains to support my proposals.

Anyone who thinks that the U.S. population is "not ready to deal with LaRouche," is being no less stupid in their behavior than poor old Paul "I'm in a state of denial" O'Neill. For Democrats, that goes double. The only truthful ones are those who say, "I would rather go straight to Hell tonight, than be caught saying anything truthful about LaRouche."

O'Neill in Never-Never Land

Brazil's problems are political, not economic, so no more IMF aid should be given them, says Paul O'Neill. The U.S. Treasury Secretary told Bloomberg wire service on June 21 that the only reason Brazil is running into financial problems, is that investors are "nervous about how the election is going to come out. I don't think there's an economic antidote for that." Therefore, the U.S. would oppose the IMF extending any more loans to Brazil, he said. "The situation there is driven by politics. It's not driven by economic conditions."

This was pronounced by the same man who a year ago declared that Argentina was having problems, because they like it that way.

Reality Check: Financial Carnage in Brazil

A serious crash occurred on Thursday, June 20, as the real lost 3.4% of its value, closing at 2.8015 (last seen on Sept. 21, 2023). The country's main stock market, the Bovespa, fell by 5.1%. The benchmark C-bondwidely traded internationallyfell by 9.4%. Its bonds which mature in 2014 fell to 58.5 cents on the dollar, with yields at 20.3%the lowest level since the January 1999 devaluation. All this was blamed on the fact that Moody's and Fitch rating agencies downgraded Brazil's debt rating that day.

The bloodbath continued today. The real lost another 1.2%, closing the week at 2.835; the Bovespa, another 5%. The 2014 bond fell a bit further (to 56.9 cents and yields of 21.07%)its lowest levels since the middle of the great Mexico blowout in March 1995.

Now being debated, is not whether, but how soon, Brazil will default. Its country-risk hit just under 1600 on June 20 (no word yet on what happened on Friday), placing Brazil, with its $500 billion in foreign obligations, second worst only to Argentina worldwide. That means the "market" estimate is that Brazil would have to pay over 21% were it to issue bonds. At these rates, Brazil's government and companies are de facto shut out of the world financial markets.

JP Morgan issued a report saying the country-risk is so high because "there is fear of a default in six months." Former Brazilian Central Bank president Alfonso Celso Pastore thinks that time estimate is too long. According to Clarin, he says "the default could occur in two months," the same period of time given by Francisco Petros, head of Brazil's Capital Markets Association.

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