Most nations in South America are either already experiencing an
economic recession or are right on the verge of one. In general, South
American economies are very heavily dependent on exports, and right now
they are being absolutely shredded by the twin blades of a commodity price collapse
and a skyrocketing U.S. dollar. During the boom times in South
America, governments and businesses loaded up on tremendous amounts of
debt. Since much of that debt was denominated in U.S. dollars, South
American borrowers are now finding that it takes much more of their own
local currencies to service and pay back those debts. At the same time,
there is much less demand for commodities being produced by South
American nations in the international marketplace. As a result, South
America is heading into a full-blown financial crisis which will cause
years of pain for the entire continent.
If you know your financial history, then you know that we have seen
this exact same scenario play out before in various parts of the world.
The following comes from a recent CNN article…
The dollar’s gains should make history nerds shake in their boots. Its rally in the early 1980s helped trigger Latin America’s debt crisis. Fifteen years later, the greenback surged quickly again, causing Southeast Asian economies, such as Thailand, to collapse after a run on the banks ensued.
In particular, what is going on right now is so similar to what took
place back in the early 1980s. At that time, Latin American governments
were swimming in debt, the U.S. dollar was surging and commodity prices
were falling. The conditions were perfect for a debt crisis in Latin
America, and that is precisely what happened…
The Economic Collapse/Michael Snyder/July 29th, 2015
