The crash on the New York stock exchange in 1929 brought depression to the world. That is probably why when the global financial crisis broke in 2008, some observers thought the contagion originating in New York would again spread south, causing a collapse in Latin America and the Caribbean. But that didn't happen. Why? The region's internal situation in 2008 was "lean and … [Read more...] about How Can Latin America and the Caribbean Avoid the Next Financial Crisis?
On Sept. 15 2008, Lehman Brothers filed for bankruptcy heralding the most serious financial crisis since the Great Depression. A couple of years after, I was at a conference and a senior (European) official gave a presentation entitled The Global Financial Crisis, Lessons for Latin America. I asked whether there was a typo. Shouldn’t that be lessons from Latin America?, I … [Read more...] about Banks and the Global Financial Crisis 10 Years On: Lessons from Latin America and the Caribbean
An old Irish joke has a tourist in the rural west of Ireland asking a local if he knows how to get to Dublin. After a long pause and considerable thought, the local replies, “yes, but I wouldn’t start from here.” Unfortunately, with the highest overall fiscal deficit of any region of the world in 2017 (over 6% of GDP) this is a bit how it feels in Latin America and the … [Read more...] about The Big Adjustment: Fiscal Challenges for Latin America and the Caribbean
Caribbean countries still face a delicate fiscal situation. While a number of Caribbean economies have reduced their debt burden, the majority face high sovereign debt levels that weigh on their prospects for strong and sustainable growth. In the context of weak fiscal stances and high dependence on foreign external conditions, it makes sense to implement fiscal rules that … [Read more...] about The Good, Bad and Unexpected of Fiscal Rules
They have risen bit by bit. But since the financial crisis in 2008, the Fed has kept interest rates in the United States exceedingly low. Now with healthier economic growth and employment in the United States, that may be changing, and Latin American countries need to be on their guard. Latin America's major economies have accumulated large amounts of foreign corporate debt … [Read more...] about Dealing with Corporate Debt and Rising Interest Rates