"Hope" and "history" are two words Brazilians often use in talking of their new president, Luiz Inácio Lula da Silva, who took office on January 1st, 2003. He has already made history by becoming the first left-winger to be elected to the office, by a landslide; it is a sign of how much Brazil's democracy has matured that nobody is surprised that not a peep has come from the armed forces, who ruled from 1964 to 1985. The hope is that Lula, as he is universally known, who was born poor and came to politics via the factory floor and the picket line, will restore Brazil's economic fortunes in a way that lifts up the poorest in a notoriously unequal society. In an emotional inauguration that drew 100,000 supporters to Brasilia, Lula promised to wage war on hunger and unemployment without upsetting Brazil's fragile finances. He takes charge of a country in financial peril. Brazil's debts frighten its creditors: net public debt is nearly 60% of GDP, some $250 billion, and net foreign debt, both public and private, is $165 billion. Over the past year, fears of default, stoked by Argentina's insolvency and the past radicalism of Lula and his Workers' Party (PT), helped push up interest rates and the value of the dollar, to which much of Brazil's local-currency debt is linked. Since the final weeks of the election campaign, Lula has worked hard to turn investor panic into mere wariness. Some of his ideas are likely to come from Marcos Lisboa, the economic-policy secretary and co-author of "Lost Agenda", a recent paper that advocated microeconomic reforms, such as trimming the role of Brazil's overgrown labour courts. The new government seems likely to adopt a pragmatic stance on trade policy, despite the PT's traditional support for protectionism. Brazil's prospects turn on whether Lula can turn these pragmatic intentions into policy achievements.