Friday, October 24, 2008
Many of these countries are production platforms for exports of products into the US and Europe. Today, it is a crisis of credit, but, tomorrow, it will be a crisis of demand. What happens when these economies, economies that have restructed their economies around export, are forced to confront it? And, then, of course, there are China and India.With the financial crisis engulfing developing countries from Latin America to Central Europe, raising the specter of market panic and even social unrest, Western officials are weighing coordinated action to try to stabilize these economies.
The International Monetary Fund, which is in negotiations with several countries to provide emergency loans, is also working to arrange a huge credit line that would allow other countries desperate for foreign capital to borrow dollars, according to several officials.
The list of countries under threat is growing by the day, and now includes such emerging-market stalwarts as Brazil, South Africa and Turkey. They have become collateral damage in a crisis that began in the American subprime housing market.
The fast-growing economies of the developing world depend on money from Western banks to build factories, buy machinery and export goods to the United States and Europe. When those banks stop lending and the money dries up, as it has in recent weeks, investor confidence vanishes and the countries suddenly find themselves in crisis.
Labels: Credit Crunch, Global Recession, Neoliberalism
