Yes, We Have No Cruzeiros

Can Brazil survive President Collor's cash freeze?

There was virtually no money in Brazil last week. The stock exchange in Sao Paulo registered zero transactions on Monday. Shopping centers were deserted, restaurants empty. Cash-strapped companies laid off thousands of employees. Most flights on Varig, Brazil's international air carrier, and Vasp, the domestic line, were either canceled or flew empty.

The cash crunch was deliberate, the result of new President Fernando Collor de Mello's desperate all-or-nothing attempt to "obliterate" Brazil's inflation spiral, which hit a monthly rate of 73% in February. The severe clampdown, which the President unveiled just hours after his inauguration on March 15, went into full...