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Commentary :: Globalization
Carlos Lessa proposes control of exchange rate for Brazil to overcome the crisis.
13 Nov 2008
He says the biggest obstacle to Brazil overcome the crisis and get strengthened out of it is the Central Bank’s President Henrique Meirelles, formed by the Bank of Boston, and that will do nothing that would undermine the private banks.
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The economist Carlos Lessa, former rector of the Federal University of Rio de Janeiro and former president of BNDES – National Bank to Economic and Social Development, proposes control of exchange as the primary measure for Brazil overcome the economic worldwide crisis, responsible for bankruptcy of several banks and even nations such as Iceland and Russia, which are at the verge of a moratorium.

Participating in tv’s program "Brazilian Nation" on Sunday (9) at night, on RTVE (Paraná State’s Public Television Network), in the presence of governor Roberto Requião in the auditorium, Carlos Lessa warned that Brazil must maintain with "teeth and nails" its foreign reserves, so that it will not be weakened by the crisis and have to deliver its oil reserves, the pre-salt, and "everything that remains of the privatization process," initiated by former President Fernando Henrique Cardoso.

He says the biggest obstacle to Brazil overcome the crisis and get strengthened out of it is the Central Bank’s President Henrique Meirelles, formed by the Bank of Boston, and that will do nothing that would undermine the private banks.

"Criticizing Meirelles means going against international financial system, against the capital market, against this madness called financial globalization," recalled Lessa, who was fired from the presidency of BNDES, after that he called nightmare the policy established by Meirelles's Central Bank. "Now we're in the nightmare. Meirelles will do nothing to help Brazil to be Brazil that Brazilians dream. He will do anything to help the big banks, now with more power.

President Lula has just signed an Provisional Measure,
that gave the chairman of the Central Bank full power. He can do anything. He can help any banker, any pension fund or company.

What the nation expects of Meirelles is that he preserves Brazilian international reserves, which two months ago amounted U.S. $ 207 billion in Treasury bonds of the U.S..

I do not know how much he has spent so far, but we have to hold with 'teeth and nails' what remains. I do not believe that Meirelles will hold something, because he is chairman of the central bank of the market and not of Brazil and brazilian people, "he said.

The economist thinks that Brazil, with its foreign reserves, will be placed against the wall. "If it happens, the day after they will deliver the Pre-Salt, the airports, the Port of Paranaguá and all that remains of privatization process. Therefore, Brazil needs to centralize and control the exchange, because we can’nt let more dollars go away from our country.

We need to have a policy to impound dollars, pull in here the dollars that are out. Meirelles is killing the industry and making this country a country of players on high interest rates. The only U.S. dollars that can leave the country must pay machines or to buy shares of Petrobras in the New York Stock Exchange, otherwise staying here, "Lessa said. He felt strange the chairman and other directors of the Central Bank do not know what happened in Aracruz Celulose, Votorantin and Sadia, who lost billions of dollars with the crisis. "This shows that Brazil has a black tip, saying that nobody knows, it can turn into powder our reservations."

ORIGIN OF CRISIS - Carlos Lessa said that crisis are common in capitalist system, but that the current one can be compared with the serious crisis of 1870 and 1929, which were only resolved with big wars. "The novelty of this current crisis is that it can not be resolved by war.

Typically, the crisis is a radical dismantling of a way that only capitalism offers. Generally, some Analysts see it as the sign of the end of an era and the emergence of a new society. What historically capitalism has shown is that it is able to overcome its crisis with very great pain to humanity. The two world wars are two passages in this account of pain. A price too high, "reported. In his view, capitalism always rises after the crisis in a very different way of growth before the crisis. "This is extremely important for everyone to be aware when evaluating the measures that Brazilian government will take to overcome the crisis, otherwise the world will continue living the financial globalization with all its madness."

Carlos Lessa said that the crisis originated in the breaking of confidence in the fundamental foundation of the capitalist system, which is the dollar. "When ended the Second World War, the victors were the United States. There was a meeting in Brettonwood, where they discussed the organization of finances in the world.

Lord Keynes, English economist who now returned to unorthodox fashion, suggested the existence of a currency Combined with the major currencies, with fixed parity which would support the system of world trade and finance. The United States did not accept the proposal with the following argument: we have 90% of all gold in the world and we will establish a fixed parity between the dollar and gold. The dollar became the world's central currency, and thereby begin a period of prosperity to Americans.

" DOLLAR - In his explanation, Lessa mentioned that in 1971, the United States canceled the dollar with gold. "Since then the dollar began to assert a dollar. So what maintains the dollar itself is the dollar. This is a powerful tool, because if the object of desire of the world is the dollar and whether the dollar is a debt of North American economy, all other countries are reflecting that. Then, on top of confidence in the dollar, there was a frenzy of expansion of the financial game, which triggered the present crisis.

" He said that the crisis is similar to a castle of cards. "Everybody knows that the first floor of the castle is easy, the second a little more difficult to move around and the third floor will certainly fall if we open the door of the room. Now, if we make a house of cards pasting with Araldite (glue-based resin), we reach the size of the Eiffel Tower.

What the government, the people and the American banks did was build a giant castle of cards, with hundreds of floors and mazes cross, with the most stunning connections.

This building cards were pasted with Araldite, and the party came when punk (the North American real estate crisis), collapsed. " The biggest culprits were just the banks, that with the recovery of the property, began to offer more loans to the North American families, excited about the valuation of its property, go to bet on the stock market.
"Millions of families have done this and the roles of banks issued their debts, which were acquired by 'millionaires' and companies, including Brazil.

Farmers have learned to operate the Commodities Market to protect the values of harvests and found that it is better than play in casinos.

A person with ten hectares began to bet as if he had thousand acres of soybeans. There is a name for this securitization. And everything is merely the construction of a castle of cards, because when the trust ends, the " Araldite "spit and turn the letters begin to fall.

It's so impressive the fall of the cards that at the most conservative country of financial world, Switzerland, its largest bank (Bank Suisse) lost $ 40 billion with the Lehmam Brothers.

" The crisis, that president Lula believed at the principle that would not cross the Atlantic, reached the British, French and Belgian banks, and countries hitherto considered as strong economies as Japan and China.

"The president said that the crisis in Brazil would have the effect of a small wave. I do not like this speech, because it means that the country is not prepared to deal with the crisis. Something must be done to make this crisis hit in Brazil with minimal social evil effect.

"STRENGTHENING - Despite the gloomy picture, Lessa believes that Brazil has enormous potential to get out of the crisis strengthened. "We are very prepared to grow in the direction of the dreams of Brazilians, described in the 1988 Constitution, which is to make every Brazilian has adequate level of education, food, housing and has access to culture, recreation and social collective happiness.

If there is a country in the world that has potential for all this is Brazil. I've said that before the discovery of the Pre-Salt (oil in the deep sands of the sea), which runs from Espirito Santo to Santa Catarina, a field of 800 kilometers in length, with more or less than 200 miles wide, where there are certainly 15 to 20 billion barrels of oil. Probably, there may be 70 billion barrels, but there are those who believe in more than 100 billion. So we have a 'blue Amazon' with a reserve of oil that elevates the condition of Brazil to the fifth oil producer in the world.

"He believes that this is a great opportunity but also a huge threat to Brazil. "If we handle this crisis badly overwhelming the world that have weakened Brazil so we will be obliged to deliver this rich reserves of oil.

The U.S. is not interested in Brazilian ethanol, but in pre-salt. The fourth north - american fleet has been reactivated, because the problem of Carib and of brazilian Pre-Salt. The United States has no oil. They jumped to Iraq because their reserves are only sufficient for five years. So, having in our backyard a reserve fund as the Pre-Salt, becomes an object of desire, "he added.

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