U.S. Credit crunch ‘echoes Latin debt crisis’

by Dave

Reading Minister Velasco’s comments reminded me of a statement made by Nouriel Roubini, as part of an NYT profile on him, a couple of weeks ago – “that the US looked like the biggest emerging market of them all“!! That movie ending that Latin America knows “full well” is scary – hyperinflation, capital flight, currency controls, and ultimately the destruction of the middle class.
FT.com / World

US financial regulators are making the same mistakes as their Latin American equivalents in the debt crisis of the early 1980s, according to Andrés Velasco, Chile’s finance minister.

Public guarantees for private financial activities had to be coupled with strong regulation, he said, while regulators and credit ratings agencies should have been more vigilant about the risks associated with new financial instruments.

“You learn the hard way,” Mr Velasco told the Financial Times. “This is a more modern and a much bigger version of what we have seen in emerging markets over the last couple of ­decades.

“The US has made, on a different scale of course, some of the same mistakes Latin America made two decades ago. The US [is living] through [the] movie whose end in Latin America we know full well.”