Tuesday, October 07, 2014

Interpreting Latin America's Slowdown

Latin America's economic growth is slowing. By chance I happened to see two accounts that use the same variables but come to completely different conclusions. So the Wall Street Journal and a political economist writing for Telesur both say the slowdown is due in large part because of China's decreased demand for commodities and the United States winding down its stimulus.

The WSJ conclusion is mostly "glass half full":

There is a silver lining to the slowdown. After decades of going through debt-fueled booms followed by costly busts, the current downturn appears to be part of a more conventional business cycle, which the World Bank describes as an “unprecedented experience” for the region. 
“That is good news because the bust is very bad for equality, very bad for growth and can set the region back several years,” Mr. de la Torre said.

The Telesur conclusion is conspiratorial and even apocalyptic:

It should also be noted that certain recent USA government policies have also been exacerbating Latin America’s emerging recession.  The USA is taking advantage of the emerging recessions in Latin America to put additional economic pressure on two of the region’s most important economies: Argentina and Venezuela. This further destabilization suggests that the USA may be ‘turning’ again toward a focus on Latin America in an effort to reassert its hegemony in the region and to roll back the progressive developments and governments there that have arisen in recent years. But how the USA is now attacking both Argentina and Venezuela—i.e. by defending the vulture capitalist hedge fund billionaires in the case of Argentina debt payments and by working with US multinational corporations to artificially create a dollar shortage and runaway inflation in the case of Venezuela in a USA effort to still further destabilize the slowing economies of both countries—s the subject of a subsequent essay and analysis.

Take your pick!


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