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Is the financial crisis in Latin America simply a threat or a reality?

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There have been several analyses of the effects of the sub-prime crisis in Western countries since the beginning of 2008. However, we notice that similar studies on the reaction of Latin America to this crisis are much rarer. This "lack of interest" in relation to the situation in the South American continent, seems to be explained by the attitude of some economic or political leaders, who had long refused to consider that this crisis was a danger for the sub-continent.

This "attitude" can be fully summarized by a short extract from the statement of Brazilian President Lula Da Silva on September 16: "What crisis? Go ask Bush!? Luis Moreno, the president of the Inter-American Development Bank, said that even the international financial crisis would "strengthen" the countries of Latin America.

September 2008, however, constituted a break in the perceived impact of the crisis on the Latin American continent. Stock values plummeted, highlighting the fact that in a global economy, crises know no borders. The fact that during the famous month of September, the Argentine stock market lost 39% of its value, or that the economy of Chile declined by 9.5% brought the Ibero-American leaders to the harsh reality that they had to face after 5 years of uninterrupted economic growth. The Latin America index MSCI, which measures the value of Latin American shares, fell 19.8% in September 2008.

The article by former Secretary of State for External Relations of Mexico, Jorge Castaneda, "The crisis begins to affect Latin America," was published on October 25, 2008 by El Pais. This was the first presentation of a more realistic impact of the crisis on the continent. On October 24, 2008, President Lula himself declared that Latin America cannot remain on the sidelines of the subprime crisis, by declaring: "The progress of our countries is threatened. The global financial crisis may be unfair and particularly severe in developing countries". The debate no longer would be whether, the Latin American continent is affected by this crisis or not, but what will the extent of the inevitable consequences of it be.

Many consider this financial crisis as a test for Latin American countries: according to various economic crises symbolized including that of Argentina in 2002, they must demonstrate their stability.
Despite a glaring lack of a step back from this crisis and despite the low academic sources we have to weigh the consequences of this global financial crisis in Latin America. We will organize our thinking in four phases. We will present initially, the channels through which financial problems was born in the United States (I).

We will then see the effects of this crisis with respect to different countries (II) before analyzing how the "inequality" faces the consequences of the crisis preventing the emergence of any coordinated economic response (III). We will then finally consider, a fourth part, the social consequences of this financial crisis on a continent already known for the importance of this inequality (IV).

Tags: Western countries, financial crisis, Latin American countries, inequality, social consequences, Lula Da Silva

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