The New Nation - Internet Edition

BRAZIL'S President Luiz Inacio Lula da Silva has reportedly said that the recent global financial crisis is real, but for the first time the world is trying to find a solution. The crisis is a 'challenge to capitalism', he remarked adding 'for the first time, you have a crisis attacking the core of rich countries and capitalism itself.' It did not start in the periphery, in the poor countries. It started in the centre of world capitalism, the United States.

The Brazilian leader blames the United States and its deficient market regulation. The recent tumble in stock market and slide in the currency compelled Brazil's central bank to pour billions into the market to shore up the real. The key factor in this crisis is 'confidence'. What the United States and Europe have done is not sufficient to control the sharp end of the crisis as Brazil's finance minister suggested - 'They have to do more.' Brazil has a 'solid financial system, a growing economy, a domestic market that other countries don't have, and 200 billion dollars in reserves. Situation, however, could change for a contraction of the world economy and a fall in commodity prices.

The International Monetary Fund (IMF) has forecast advanced economies would contract next year for the first time since World War II and called for government spending to battle the crisis. Global stocks, meanwhile, fell as world economies showed 'deepening distress' and the downward trend, extending through Asia into Europe, followed another grim development in the United States, the world's biggest economy, undermining hopes that coordinated action by governments around the globe could keep the world downturn from getting worse. Only Canada might be able to resist the downturn. Meanwhile, the global financial crisis has cast fresh doubts in IMF's effectiveness in monitoring the world economy.