Saturday, January 10, 2009
Zedillo for TreasSec
"Latin America has just experienced six years of the highest GDP growth it's had in more than 40 years. Because this minibonanza was continuing a year after the subprime meltdown began, some people believed that for the most part the Latin American nations' economic performance had become decoupled from the developed countries' economic ills. ... These governments had better come to terms with this reality right away and stop creating expectations among their people that they can effectively compensate for the recessionary effects of lower export volumes, much reduced commodity prices, diminshed remittances from their citizens working abroad and acute scarcity of credit and investment in international markets. ... Most Latin American countries responded to the oil shocks of 1973 and 1979--which were followed by economic contraction and mugh higher inflation in the OECD countries--with massive expansions in government expenditure, price controls, subsidies to inefficient sectors and firms, the creation of numerous state-owned enterprises, unrealisitic exchange-rate policies and unbridled trade and investment protectionism. The international contractions, far from eliciting prudent austerity, triggered an unprecedented populist explosion throughout the region", my emphasis, Ernesto Zedillo (EZ) at Forbes, 12 January 2009.
EZ was president of Mexico. Is the US following Latin America of the 1970s?