The market was probably expecting Lula to make a stronger statement, not just a simple apology. This speech will hardly calm down the opposition.
The market is more exuberant, spreads are at ridiculous levels but nobody cares because there is too much money and fundamental news continue to be very positive. That will remain in the short term.
Now, Chavez and his backers can do what they want. Congress used to serve as a check, and that's not going to be the case.
This will have more political rather than economic ramifications.
This buyback would further improve the country's creditworthiness.
This is part of the give and take that we've seen in the past few months. The timing is a bit complicated for Washington as it comes when the U.S. is trying to figure out what to do with Iran.
Somebody from the left is much more likely to make a decent challenge to Chavez.
It's pretty much a fact Uribe will be reelected, and therefore from an outside point of view these elections are more important. Lack of support in the current legislature led the government to withdraw a tax bill and have a watered-down pension law.
Needless to say, a victory of the most left-leaning factions of the party would be a significant defeat for Lula.
The opposition is not outside the process. They can't influence the process. The government, however, now has no one to blame for its policies.
