Chavez says US slump hits like "hundred hurricanes"

Sep 30, 2008 02:00 AM

Venezuelan President Hugo Chavez said the turmoil in US financial markets will stunt growth in Latin America and may send oil down to as low as $ 80 a barrel.
"This is a hurricane, or more than one hurricane, it's a hundred hurricanes,'' Chavez told after arriving in Manaus, Brazil for a meeting with Brazilian President Luiz Inacio Lula da Silva. "I'm in the group that believes this will be worse than the 1929 crash. No country can say it won't be affected.''

Oil prices should stabilize between $ 80 and $ 95 a barrel, Chavez said, adding the credit crisis in the US will likely make it more difficult to obtain financing in Latin America.
Both Venezuela and Brazil have announced measures to brace for the fallout. Venezuelan Finance Minister Ali Rodriguez on Sept. 27 called on Venezuelans to practice "austerity'' amid the uncertainty, and Brazil's Trade Minister Miguel Jorge said the government may take steps to help exporters cope with a worldwide credit contraction.

"Very serious"
During a ceremony with Chavez in Manaus, Lula said that rich nations are responsible for the global financial crisis, and called on the US Congress to pass a solution quickly. Emerging markets, including Brazil, are better prepared to weather the crisis than the US, he said.
"We did our homework and they didn't,'' Lula said. "Those that spent the last three decades telling us what to do, didn't do what they had to do. The crisis is very serious and so profound that we don't know how big it is.''

The crisis has already started to hurt lending in Brazil, said Altamir Lopes, head of the economic research department for Brazil's central bank, on Sept. 26. External funding for corporate loans dropped 2.6 % in the first two weeks of September compared with a month earlier, he said.
Chavez said Latin American economies from Argentina to Ecuador have been disconnecting themselves from the US economy. Venezuela is the fourth-biggest supplier of foreign crude oil to the US.

Chavez said the government will continue to tap central bank reserves when they rise above $ 33 bn to finance investment projects, and can also rely on money from a joint investment fund established with China. An oil price between $ 80 and $ 90 a barrel is "sufficient,'' and Venezuela isn't facing any immediate shortage of funds, he said.
The president said the Caracas stock exchange saw one of the only gains in the world because it is "completely disconnected'' from Wall Street. Venezuelan stocks are some of the least traded in Latin America.

Some $ 820,000 in trades were made in Caracas, compared with $ 3.6 bn in Sao Paulo.
The Venezuelan president said the surge in oil prices earlier this year was caused in large part by speculation. Venezuela will continue to push for the Organization of Petroleum Exporting Countries to create a bank to use oil wealth for global financing as US banks fail, he said.

Chavez reiterated he'll promote the creation of a Latin American-based regional development bank called the Bank of the South, and said part of the plan for surviving a slump in the US should be for Latin American countries to increase trade with each other.
"We can't and shouldn't waste another day to activate the Bank of the South,'' Chavez said. "Bureaucratic and technical issues have prevented our bank from getting started.''

Chavez met with Lula to discuss integration of the region's natural gas market. The president said that his proposed "Great Gas Pipeline of the South,'' which would connect Venezuelan gas fields with cities as far south as Buenos Aires, wouldn't be discussed.
Brazil and Venezuela have agreed to develop gas fields in Venezuela's Sucre state and to build re-gasification plants in Brazil, Chavez said. At a signing ceremony attended by Lula and Chavez, Construtora Andrade Gutierrez, a Brazilian construction company, won a $ 1.8 bn contract to help build a mill for Venezuela's state-owned steel producer.

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