Since winning the presidency of Latin America's largest country on Oct. 27, Luiz Inacio Lula da Silva has behaved as well as he possibly could.
There has been no gloating -- as might be expected from someone who finally took the prize on his fourth run at the presidency -- and little thumbing of his nose at investors.
Lula -- as the Brazilian president-elect is known -- has produced measured statements, underscoring that he and his Workers' Party will continue paying the country's $240 billion debt, will adhere to fiscal discipline and keep a lid on spending.
All that has allowed for Brazil's main stock index to make a 30 percent jump in the past two weeks of trading.
"It appears to be a very responsible administration and one that has clear social objectives, but at the same time is taking care with its macroeconomic direction," Enrique Iglesias, the president of the Inter-American Development Bank, said before a meeting with Lula on Wednesday.
"That brings tranquility to the markets. It's important that the markets give an answer to the president-elect's constructive attitude."
That's the good news for Brazil's economic situation.
However, the lurking monster of Brazil's massive debt reared its head Wednesday, bringing into question the country's ability to remain solvent, whether Lula's benevolent attitude toward free markets remains or not.
Officials from Sao Paulo, Brazil's business capital and South America's largest metropolis, reported that the municipality would not make an optional $851 million debt payment to the federal government.
The city's contract with the federal government allows it to make the payment later -- so the city is not considered insolvent -- but the news underscored for foreign investors that Brazil may be heading toward the world's largest default, regardless of the action it takes now.
Many of Brazil's cities, and more importantly its state governments, are in dire economic straits, and some analysts worry the action of Sao Paulo -- which is governed by Lula's Workers' Party -- could be repeated across the country.
Logically, if the federal government cannot collect debts the state and cities owe it, servicing its own debt becomes more difficult.
That makes investors nervous and they pull money out of the country and contribute to a weakening of the local currency. All of which makes it even that much tougher for Brazil to control its debt, much of which is linked to the dollar or floating interest rates.
The lack of a bright spot in the region has even forced the economist John Williamson -- who coined the phrase "Washington Consensus" in regard to the development finance approach followed by many in Latin America nations in the 1990s -- to say that new policies must be found.
Williamson, a fellow at the Institute for International Economics and a former International Monetary Fund and World Bank official, said at a Washington conference on Wednesday that Latin American nations need to insulate themselves better from the whims of international investors and to distribute wealth more justly.
The economist went so far as to point to Lula -- who has loudly decried the very policies Williamson helped to create -- as the possible model for the region's politicians to follow, one that combines free-market policies with heightened social awareness.
If indeed Lula -- the former union boss who stood up to Brazil's military dictatorship in the 1970s -- is the model of capitalism for 21st century Latin America, no one would be more delighted than local investors.
But most are holding out to see what direction Lula takes before handing him Adam Smith's crown.
As for the markets, Brazil's Bovespa stock index rose 1 percent to 10,167 last Thursday as the local currency finished at its strongest close in a month. Heavyweight phone company Telemar rose 2 percent, while the oil company Petrobras gained 1.8 percent. On Friday, the index ticked down to 10,140. Telemar dropped 1.4 percent on expectations its third quarter results would disappoint.
Profit taking on Monday brought a loss of 2.2 percent to 9,912 for the Bovespa. Petrobras shed 3.1 percent, while power company Light fell more than 1 percent. On Tuesday the index lost 0.5 percent to 10,023. Utilities were hit as talk of intervention by the next government on prices worried investors. Electricity company Eletrobras dropped 1.6 percent.
Wednesday brought a loss of 1.61 percent to 9,703 for the Bovespa. Eletrobras lost 4.38 percent, long-distance carrier Embratel shed 5.8 percent and Telemar lost 2.45 percent.
In Mexico, the IPC index nudged up 0.1 percent to 5,968 Thursday, despite a loss on Wall Street, which Mexican shares closely track. Construction company ICA gained 6.8 percent while financial group Banorte rose 3 percent. On Friday, the index rose 1.3 percent to 6,045, following the Dow up. Cement maker Cemex gained 5 percent.
On Monday the IPC inched up to 6,059 in heavy trading. Cemex rose 2.4 percent while brewer Modelo added 2 percent. Tuesday saw the index close 0.3 percent lower at 6,040. America Movil lost nearly 1 percent. Financial group BBVA-Bancomer rose 1.8 percent. On Wednesday the index gained 0.4 percent to 6,064. America Movil rose 1.15 percent in heavy trade. Cemex gained 1.93 percent.
Argentina's Merval index rose almost 1 percent to 434.8 Thursday. Investors were anxiously awaiting any word from Washington, where Argentina's economy minister was meeting with IMF officials. Steelmaker Acindar gained 3.8 percent. On Friday the index fell 1 percent to 430.4 as it looked like talks with the IMF had stalled. Heavyweight energy company Perez Companc lost 1.5 percent.
The Merval fell 1.3 percent to 424.8 Monday as news that the IMF talks indeed were unproductive soured investors. Grupo Financiero Galicia -- which controls Argentina's largest private bank -- fell 9.3 percent. On Tuesday, the index rose 0.58 percent to 427.23. Acindar gained nearly 8 percent, while Perez Companc lost 1.54 percent. The market was closed for a holiday Wednesday.
The IPSA index in Chile gained more than 1 percent to 81 Thursday. Power company Endesa added nearly 4 percent. The market was shuttered Friday for a holiday.
On Monday, the IPSA rose 0.5 percent to 81.38 as investors seemed reassured that tranquility would reign in Brazil. On Tuesday the index rose 0.8 percent to 82.07. Telecom Entel gained 1.6 percent, while energy company Enersis rose 1.4 percent. On Wednesday the index gained 0.23 percent to 82.26.
In Venezuela, the IBC index rose 0.8 percent to 7,741 Thursday, despite tensions between President Hugo Chavez and his political opponents calling for his ouster. On Friday the index ticked up just 1 point to 7,742. The market was closed Monday for a holiday. On Tuesday the IBC lost 1 percent to 7,664, then lost slightly to 7,661 Wednesday.