Was Argentina’s default just a dress rehersal for Brazil’s?

[erik_kosberg]

What might happen to the U.S. stock market if Brazil goes the way of Argentina and a lot of big American banks find out that the billions they’ve loaned to Brazil won’t be repaid?

[erik_kosberg]

Wow, even $30,000,000,000 from the IMF doesn’t seem to be helping:

Brazilian sovereign bonds plunged almost 11 percent on Friday, thrashing the broader market, as the euphoria unfurled by this week's $30 billion IMF package shriveled and investor worries about Brazil's presidential election caught fire anew.

Brazil's share of the J.P. Morgan Emerging Markets Bond Index Plus dove 10.90 percent in terms of daily returns as early session lows snowballed. Brazil's benchmark C bond ... lost a massive 5.125 points to 55 bid.

Investors disregarded the $30 billion IMF lifeline, designed to cushion markets collapsing under the election uncertainty, and honed in on rumors that Wall Street's favorite man for the presidency -- government-backed Jose Serra -- may have slipped even lower than his current third place standing.

[Joubert[$]]

I think that the budget surplus requirement is a sham that the investiment bankers already see through. The IMF is supposedly going to monitor the situation quarterly to ensure Brazil is going to stick to a 3.75% surplus excluding interest payments.

And what happens in the first quarter or the second quarter that this doesn't happen? The whole situation is a classic Latin American squeeze. I also wholeheartedly believe that the US endorsement is aimed at shoring up political rather than economic matters.