August 1, 2002 [LINK]

[Brazil stock market blues]

Investor nervousness at the growing likelihood of a leftist victory in the upcoming elections, plus an inopportune remark by U.S. Treasury Secretary Paul O'Neil, have precipitated a major sell-off of Brazil's currency, the real, which has fallen in value by about 30% in the last two weeks. This has spoiled the World Cup victory party. Hopes for Brazil's conservatives in the upcoming elections are fading fast as their candidate Jose Serra has slipped to third place in the polls. To his credit, incumbent President Fernando Henrique Cardoso has refrained from playing any active role in the campaign of his preferred candidate, thus upholding the prestige of his office, if not his own personal and policy legacy. Many conservatives would rather vote for the radical "Lula" da Silva in the second round election rather than the moderate leftist Ciro Gomes, whom they fear would be more likely to actually change policies, since he has actual governing experience.