Hard economic times may just be starting

The finantial crisis in USA will especially hurt Mexico and Central America, whose economies are closely tied to the U.S. market.

Wednesday, October 8, 2008

Don't be fooled by the universal sigh of relief that was heard Friday when the U.S. Congress approved a $700 billion package to rescue the U.S. banking system.

The measure will help avoid an economic collapse, but the U.S. economy will remain in the doldrums, and Latin America will be hit harder than many suspect.

Granted, the Wall Street crisis that rocked world markets in recent weeks will not mean ''the debacle of capitalism,'' as Venezuelan President Hugo Chávez triumphantly proclaimed, nor will it cause the First World to ''plunge like a bubble,'' to use Argentine President Cristina Fernández de Kirchner's mixed metaphor.

That's not going to happen. More likely, it will mean a shift of the pendulum from the Bush administration's excessively deregulated free market economy to a more ...

More on this topic

Central America: External Vulnerabilities in Focus

October 2008

This special report examines the channels through which Fitch-rated sovereigns in this sub-region could be impacted by external shocks, the robustness of their various policy frameworks and the implications for creditworthiness of increasingly challenging international conditions.

The US financial crisis has spread across the international financial system.

Hard economic times may just be starting

October 2008

The finantial crisis in USA will especially hurt Mexico and Central America, whose economies are closely tied to the U.S. market.

Don't be fooled by the universal sigh of relief that was heard Friday when the U.S. Congress approved a $700 billion package to rescue the U.S. banking system.

The financial crisis: the inevitable adjustment

October 2008

When the true economic value is too far from the fabulous figures invented by financial engineering, crisis - and an adjustment - is inevitable.

Cristóbal Perez-Jerez Alvarado, MBA in international economics, analyzes, with the very much needed academic indifference of today (and also the very scarce common sense), the current financial crisis.

Why has this crisis occurred?

October 2008

The current financial crisis demonstrates how powerful and decisive the expectations of investors and the economic agents in general can be.

Expectations created a bubble in the prices of homes and properties in the US. By bubble I mean a price established mainly due to optimism (which can be irrational - even though there is experimental evidence that bubbles can be created when all the investors are rational - Vernon Smith).

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