Tuesday, October 08, 2013

U.S. Brinkmanship and Latin America 2

Following up on yesterday's post about how brinkmanship in the United States can have significant negative effects on Latin America, the Christian Science Monitor looks specifically at Mexico.

The US government shutdown, which today entered its second week, is expected to cost the US economy 0.10 percent to 0.15 percent of its GDP growth weekly. The shutdown will have little if any impact on Mexico – the debt cieling [sic] is the real risk – says Gabriel Casillas, chief economist and head of research at Banorte-Ixe. The possibility of a default and the associated uncertainty is more concerning, Mr. Casillas says. 
“The first thing that reacts is the exchange rate,” he says. 
The peso has already lost 5 percent of its value since Sept. 19. 
The uncertainty extends to the border region, where exporters are concerned that the debt ceiling debate could derail US investments and slow down border crossings.

Over the past several years, we've seen time and time again that the United States government acts precisely in a way that it criticized Latin American governments for acting in the past. Whatever moral authority there once was is now completely gone. Even worse, incompetence and ideology in the U.S. government can hurt lots of people abroad.


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