The Meltdown : North and South

...Countries that have played by the open-economy rules of the Washington Consensus, like Brazil and Mexico, as well as those that have tried to chart a course of greater independence, like Venezuela and Bolivia, are all feeling the effects of declining commodity prices and rising import and foreign-debt costs...

...dollar, or simply covering losses elsewhere, private investors, both foreign and do­mestic, pulled their money out of Latin American stock markets at the onset of the crisis in October, provoking enormous devaluations, especially in Mexico and Brazil...

...Currency devaluation is also wreaking havoc with regional economies...

...This devaluation has further raised the price of imports and has made foreign debt payments more expensive...

...Seeking the “safe ha­ven” of the U.S...

...All the South American countries have indicated a willingness to join...

...JANUARY/FEBRUARY 2009 taking note The Meltdown: North and South by fred rosen A s the u.s...

...The next few months will tell whether the attempts by some countries to diversify their import and export markets has allowed them to more successfully withstand the current cri­sis...

...Brazil, for example, has more than $216 billion in foreign exchange reserves...

...Guatemala,” he said, “should not have to pay for the failure of a model that we never wanted...

...Argentina has $47 billion in its central bank, and Venezuela has reserves of $30 billion, the largest per capita total in South America...

...This may allow some countries to cover their need for credit while they wait out the slump...

...Similar declines have been reported in Brazil and Colombia, but, curi­ously, remittances directed to Central America have continued to rise...

...Meanwhile, speaking to the Ibero-American Summit in El Salvador in October, Mexico’s con­servative president, Felipe Calderón—who ran for office in 2006 on an explicitly pro-neolib­eral platform—called for a “new international economic order...

...To foster the construction of a more inde­pendent regional economy, Venezuela and Brazil are leading an effort to found the Bank of the South (BancoSur), which would pool a portion of participating countries’ reserves...

...This decline has been particu­larly sharp in Mexico, which, according to the Bank of Mexico, received about $25 billion in 2007, making up about 3% of its GDP...

...And then there is the decline in remittances, the money sent home by migrants working abroad, a key source of income for millions of poor families...

...I hope they don’t ask us for more poverty because we can’t give more...

...As demand contracts, the prices of the region’s principal exports—crude oil, nat­ural gas, metals, grains, livestock, and food— are plummeting, converting the region’s terms of trade from pretty good (especially over the past five years) to very worrisome...

...For Brazil, and perhaps for Argentina and Venezuela, the cultivation of trading partners in Europe and Asia may well act as a buffer to the decline of U.S...

...But just as Mexicans were facing higher expenditures on food imported from the United States—more than $20 billion in 2008, a 30% increase over 2007—Mexicans working in the United States, laid off from construction, meat packing, and supermarket jobs, were becoming less able to send money home...

...There has been no unified response to the U.S.-led meltdown...

...Guatemalan president Álvaro Colom also blasted deregulation...

...He is the editor of Empire and Dissent: The United States and Latin America (Duke University Press, 2008...

...According to Business Monitor International, only 14% of Brazil’s 2008 exports have been destined to the United States, compared with 80% of Mexican exports...

...Another buffer has been the amassing of for­eign reserves, both dollars and euros...

...The Bank of Mexico estimates that when it’s all counted up, Mexicans working outside the country will have remitted home about three quarters of a billion dollars less in 2008 than they did in 2007...

...The current crisis,” he said, “stems from a process of accelerated deregula­tion, in other words, the false premise that fi­nancial systems can regulate themselves without the presence of the state...

...Fred Rosen is NACLA’s senior analyst...

...Oil prices, from highs of nearly $150 a barrel in July, had fallen to under $70 a barrel by November, distressing oil producers Venezuela, Mexico, Bolivia, and Ecuador...