Brazil Teeters. Will It Be Contagious?, asks NYT:
For months, Brazil’s financial markets have been in turmoil, and unless there is emphatic international financial support soon, the country, South America’s largest economy, could well face mass corporate defaults.
Brazil’s currency, the real, has lost 23 percent of its value against the dollar this year – most of it in July alone. Brazilian companies cannot borrow money, especially from foreign banks, which are even pulling money out of the country. Last week, Brazil sent an emergency delegation to negotiate aid from the International Monetary Fund. In Brazil’s presidential campaign, meanwhile, the growing appeal of two opposition party candidates is making international lenders and multinational investors even more nervous. And many economists expect Brazil to renegotiate its $250 billion public debt no matter who wins the election in October.
When neighboring Argentina plunged into recession four years ago, the international damage was largely contained. But Brazil is different. Its economic tentacles reach into every country on the continent and beyond.