FW: Latin America Monitoring ,
 Leo/Monika,

Mea culpa.  I forgot to include you on my distribution list.  Sorry.

KC
 -----Original Message-----
From: =09Carter, Karen E. =20
Sent:=09Wednesday, November 07, 2001 3:10 PM
To:=09Crane, Bob; Klein, Stephen; Fiandt, Terri; Crump, Jim; Conner, Andrew=
 R.; Bryja, James; Braune, Carlos; Ferrell, Daniel; Juvane, Danilo; Hermans=
, Greg; Kristal, Yana; Carter, Ray; Tamariz, Angel; Tamariz, Angel; Bhatia,=
 Om
Cc:=09Reed, Andrea V.; Allan, David
Subject:=09FW: Latin America Monitoring
Importance:=09High
Sensitivity:=09Confidential

Please find attached Competitive Intelligence's current assessment of recen=
t events in several emerging markets, particularly Argentina.  As the situa=
tion there appears to be getting more dire, we will continue monitoring the=
 potential ramifications for other emerging markets such as Brazil.  Please=
 note that this information is highly proprietary and should not be shared =
outside Enron Industrial Markets.  Additionally, if you have any further qu=
estions, please feel free to forward them to me as Brendan Fitzsimmons supp=
orts a very broad audience and may not be able to field the request.  Thank=
s.

 -----Original Message-----
From: =09Fitzsimmons, Brendan =20
Sent:=09Tuesday, November 06, 2001 6:04 PM
To:=09Carter, Karen E.
Cc:=09Johnston, Robert; Landry, Kimberly
Subject:=09Latin America Monitoring
Importance:=09High
Sensitivity:=09Confidential

Hello Karen:

I have returned to Houston after a trip to the East Coast: In Washington an=
d New York I had the opportunity to further discuss and update the issue of=
 Argentina, and Latin America more broadly, with sources in both the financ=
ial and economic communities. =20

Here is an overall update with some specifics highlighted:

As we had reported in July and August and as we discussed lat month, the ba=
sic thesis still holds, at Treasury and the IFIs and in the emerging market=
 financial community: i.e.
=20
Differentiation in DC and NY: Argentina is on its own and Brazil will be gi=
ven support, as will Turkey and Indonesia.  Policy since 9/11 relative to P=
akistan has been indicative of the evolving Washington calculus; experience=
 of sustained weakness and unexpected shock of 9/11 has revealed that conta=
gion is a secondary driver right now
Differentiation between BA and Sao Paulo: Decoupling of Brazilian Real and =
C-Bond from Argy Peso NDFs and FRB in currency and bond markets continues t=
o strengthen the base policy bias of quarantine/reinforce relative to BA an=
d SP, as has relative flight to quality in the EM asset class that has been=
 seen over the last few weeks, most notably in case of Mexico =20
Another waiting game vis-?-vis Argy: Despite the 'effective default' condit=
ions in Argy and a new spate of downgrades, the once again much rumored swa=
p/restructure is by no means a settled issue, and even if/once achieved sti=
ll leaves open the underlying problem of the peso-$ peg, w/ a dollarization=
 above parity scenario still lurking.  As with the saga all year, this is p=
rimarily a political drama being conveyed through economic channels
Oil in the policy mix: Collapse and continuing pressure in oil market will =
expose and exacerbate underlying fault-lines both within OPEC and between O=
PEC and non-OPEC producers: apart from obviously more visible Russian role,=
 this will continue build in a focus on regional players inside and outside=
 the cartel: Venezuela (including internal Chavez dynamic, Venezuela within=
 OPEC, and price v. market share debate) and Mexico, incl. relative to West=
ern Hemisphere supply security.  The end of the Congressional year in DC, w=
ar politics, and the upcoming OPEC meeting next week will continue to contr=
ibute near term volatility
Domestic US politics: Current breakdown of post-9/11 bipartisan consensus n=
ow in full throat as appropriations and special needs bills are facing prob=
lems in committees, on the floors of both chambers and/or in the face of a =
conferencing.  Of particular importance at this time is the Senate Finance =
Committee's consideration of a stimulus bill.  The lack of progress, despit=
e an attempt late last week by the White House to bring more executive pres=
sure to bear, has led to concern that a final stimulus bill may not be read=
y until just before Christmas, and there remains a danger that no stimulus =
bill will go through.  A new wrinkle in this drama is the effort by Alaskan=
 Sens. Stevens and Murkowski to potentially attach an energy bill, includin=
g ANWR drilling, to any Senate stimulus bill, focusing on national security=
 interests in order to sway moderates.  Given that the markets have already=
 priced in a stimulus bill by around thanksgiving and on the order of $100B=
, there is downside risk in delay or defeat.  These dangers have been heigh=
tened further over the past week as weak data has come in even weaker than =
expected, putting a further premium on a sooner, more dramatic recovery

Let me know if this is helpful and if there are any macroecon or political =
specifics that you are particularly concerned about.=20


Regards,
Brendan
x54763
leonardo.cardoso@enron.com, monika.causholli@enron.com