(At least as of 10:30 am)... NEW YORK (CBS.MW) -- The global economic event that the markets had feared the most in recent months, a Brazilian currency devaluation, creased U.S. stock prices Wednesday. At 10:30 a.m. ET, the Dow Jones Industrial Average stumbled 216.44 points, or 2.3 percent, to 9,258.47... From the CBS MarketWatch update. How do we shore up an important foreign economy like Brazil, PLUS pay for their Y2K remediation, PLUS excuse their debts, PLUS repeat this scenario for who knows how many other countries, and still have anything left over??

Stocks Gored

-- Brooks (brooksbie@hotmail.com), January 13, 1999

Answers

Financial Turmoil in Brazil
Central Bank Chief Resigns, Currency Losing Value

By Peter Muello, The Associated Press
R I O D E J A N E I R O, Brazil, Jan. 13  The head of Brazils central bank resigned today, one day after the president sought to calm investors by pledging the nation would honor all its foreign debt obligations.

Citing personal and chiefly professional reasons, Gustavo Franco said today from Brasilia, the capital, that he was leaving his post because I feel an obvious tiredness after five years of non-stop work (in the public sector).

Its time to give room for new people ... to consolidate the Real Plan, Franco said.

Central Bank monetary policy director Francisco Lopes, who was named to replace Franco, said today that there would be no major change in policy. Finance Minister Pedro Malan canceled a trip to Portugal because of the economic turmoil at home.

Money Flows Out of Brazil Markets
Francos resignation comes at a delicate time for Brazil. Investors have pulled more than $40 billion from the country since July, and reserves have plunged to about $35 billion. On Tuesday alone, $1.2 billion left the country.

The real, Brazils currency, was off by 8 percent against the U.S. dollar in trading today.

In November, international lenders put together a $41.5 billion aid package to shore up the economy. But to get the funds, Brazil must sharply reduce its $65 billion deficita goal that looks ever more elusive.

Franco, who became head of the countrys top monetary authority in 1997, has strongly defended high interest rates to attract foreign investors.

But that policy is increasingly under fire from businessmen and workers, who claim it strangles growth and raises unemployment.

President Reassures Investors
The move follows President Fernando Henrique Cardosos promise that debt obligations would be honored.

The market can rest assured, Cardoso said. We know what we will do, we know what we are doing, we will pay all our debts.

His comments, however, failed to stem losses on the Sao Paulo Stock Exchange.

The Sao Paulo exchangeLatin Americas largestclosed down 7.6 percent Tuesday.

Today, the Central Bank allowed the real to devalue against the U.S. dollar by changing the band within which the two currencies trade. The new wide band is 1.20-1.32 reals to the dollar, up from 1.12-1.22.
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-- Leska (allaha@earthlink.net), January 13, 1999.

Blame It On Rio

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Bonds also received a boost from renewed concerns about the Brazilian economy. Late Monday, a second Brazilian state, Rio Grande Do Sul, said it couldnt pay its debts to the federal government. However, the state didnt go so far as Minas Gerais, which last week declared a 90-day moratorium on its federal debt payments. Dow Jones Industrial Average leaped past 9600 for the first time Friday.
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-- Leska (allaha@earthlink.net), January 13, 1999.

Here is another one:

Global markets sent into a tizzy as currency effectively devalued

http://www.msnbc.com/msn/231619.asp

-- Gayla Dunbar (privacy@please.com), January 13, 1999.

There was a story on TV last night about Amazon.com. Their stock opened a year or so ago at $3. Now its at $163. They will not show a profit for another two years (yeah, in 2001, right..), and will never pay dividends. This one company, that distributes books, using no new technlogy, no proprietayr business model, no value added, is right now being copied by dozens of other startups, who will ruthlessly compete for a limited market share. Yet their stock is valued more than the entire stock market of some countries.

Now I undersatnd why somebody paid 3 million $ for Mark McGuires record breaking baseball yesterday.

-- a (a@a.a), January 13, 1999.

So, we've entered the financial portion of the show...

How will the countries and corporations affected by economic uncertainty and turmoil manage to remediate their "critical systems" for y2k compliancy? We have a one world economy now. It can't be contained within borders and the effects of chaos and turmoil can't be held off at arms length.

However painful this news is not a surprise. What other expected failures can we expect? Maybe our jaded reaction to bad news already expected is a good thing.

I'm watching CNBC where the term "domino effect" and the feel pessimism seem to have found another home.

Mike =================================================================

-- Michael Taylor (mtdesign3@aol.com), January 13, 1999.

a couple of facts I just picked up on CNBC -

Brazil is the 8th largest economy in the world and the largest economy in South America

Brazil accounts for 1/5th of our exports

Mike ====================================================================

-- Michael Taylor (mtdesign3@aol.com), January 13, 1999.

" Money Flows Out of Brazil Markets Francos resignation comes at a delicate time for Brazil. Investors have pulled more than $40 billion from the country since July, and reserves have plunged to about $35 billion. On Tuesday alone, $1.2 billion left the country."

This is happening not only in Brazil, but most of Asia as well, and even in Canada.

Can this explain our Stock market's amazing rise lately???? Where else would all these "foreign" billions be invested?

Sheila

-- Sheila (sross@bconnex.net), January 13, 1999.

Think manufacturing supply chain, Mike.

Ball-bearings come to mind.

Wanna bet we start seeing larger Fortune 500 layoffs come February, IF the supply gets disrupted?

Y2K is not operating in isolation. Overseas economic and changing global weather-related disasters are marching hand-in-hand.

Diane *Sigh*

-- Diane J. Squire (sacredspaces@yahoo.com), January 13, 1999.

a.. that amazon.com stock has also split three times. Real "value" is $490.00. Last time I checked today it was down 20 points per share. Lets see, I shorted it yesterday (500 shares) that means I made $10,000.00 today. Getting ready to short Yahoo!!.com with my profit soon. Wish I would have done it yesterday. It was down 70 points this morning and came back in about 2 hours to have a slight gain. Mike..Brazil only receives 2.4% of our exports. Never the less the whole financial world is going up in smoke. Thats why I'm buying real money. Silver and gold. Mike

-- flierdude (mkessler0101@sprynet.com), January 13, 1999.

Yeah....the market is volatile. But not only on the downside. The DOW had lost over 250 points in early trading, but recouped 200 of those by mid afternoon.

-- Craig (craig@ccinet.ab.ca), January 13, 1999.

Looks like it's time for another one of Alan Greenspan's interest rate cuts...

-- Kevin (mixesmusic@worldnet.att.net), January 13, 1999.

a.. that amazon.com stock has also split three times. Real "value" is $490.00. Last time I checked today it was down 20 points per share. Lets see, I shorted it yesterday (500 shares) that means I made $10,000.00 today. Getting ready to short Yahoo!!.com with my profit soon. Wish I would have done it yesterday. It was down 70 points this morning and came back in about 2 hours to have a slight gain... Can you imagine that. Wonder who made that happen. I wonder who new it was going to happen two weeks ago. I bet a few people made a million dollars in that swing today. I wonder if this kind of "stuff" is why my family members 401K's have not gone up even a quarter as quickly as the Dow has over the last 5 years. Chuckle..chuckle.. The whole financial world is so amusingly ludicrous. I can't wait until it all falls apart. Mike..Brazil only receives 2.4% of our exports. I'm buying real money. Silver and gold. Mike

-- flierdude (mkessler0101@sprynet.com), January 13, 1999.

Resignation By Head of Brazil's Central Bank Roils World

RIO DE JANEIRO, Brazil (AP) - Brazil's central banker unexpectedly resigned Wednesday and his successor devalued the currency by 7.6 percent, roiling world financial markets. Many feared the economic contagion could spread through Latin America and even threaten the United States.

Wall Street fell sharply after the announcement that Central Bank chief Gustavo Franco had stepped down. Investors worry that if Brazil falls, Latin America's largest economy and most populous country could drag others in the region into the maelstrom.

An estimated 2,000 American businesses operate in Brazil, including such giants as IBM, Coca Cola, Ford and General Motors. U.S. banks have a $27 billion stake in Brazil, and weak operations overseas could pinch profits back home.

In Washington, President Clinton consulted with the IMF and the G-7 group of wealthy nations, saying: ``We have a strong interest in seeing Brazil ... carry forward with its economic reform plan and succeed.''

Just a day earlier, Treasury Secretary Robert Rubin listed Brazil as among his chief concerns, along with the financial mess in Russia and Japan's continuing struggles to right its economy.
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-- Leska (allaha@earthlink.net), January 13, 1999.

Has anybody heard anything with regards to anything about a "Plunge Protection Team"? Todays action was remarkable.

-- militantagnostic (york.im@usa.net), January 13, 1999.

"Can this explain our Stock market's amazing rise lately????"--Sheila

"The DOW had lost over 250 points in early trading, but recouped 200 of those by mid afternoon. "--Craig

Could it be that we too have a "Zombie Market" Japanese style? y'know zombies keep on walking up the stairs...up and up...you knock them in the forehead they go back a step...keep climbing the stairs...clink clunk..

Zombie investers unafected by Y2K...they walk...clink clunk...moneeeyyy...clink clunk...moneeyyy...clink clunk...mooooore...clink clunk...moneeyyy...clink...

-- Chris (catsy@pond.com), January 13, 1999.