Posted by: Dirk | May 26, 2007

Economonitor: Latin America @ RGE

Roubini and associates have started a new blog on Latin America. The main discussion right now is on the current account surplus in most Latin American countries:

The previous booms were associated with large current account deficits and therefore were heavily dependent on a steady flow of international financing which ultimately collapsed. Actually, collectively the region displays a current account surplus of about 4 percent of GDP.[1] Under these circumstances, why would Latin America suffer from a tightening in international liquidity for EM that brings its economy to a halt for lack of finance? After all, the region is a net lender, and net lenders can finance themselves by simply refusing to lend. The last statement is right but, unfortunately, the general conclusion is wrong!

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