The “Irresponsible Debtors” in the North

INTRODUCTION

Default, insolvency, fiscal irresponsibility, debt crisis and similar terms form part of the vocabulary used to describe countries in the developing South in the 1980s and 1990s. A decade later, the world seems to have turned upside down. The “irresponsible debtors” are now in the industrialized North, and the countries of South America, victims of the “lost decade” of the 1980s and the subsequent financial crises, are now working hard to protect themselves against contagion from the crisis in the United States and Europe. A meeting of economy ministers in Lima (Peru) and another scheduled for Buenos Aires (Argentina), where the ministers will be joined by central bank presidents, are being held to discuss the coordination of policies among the Union of South American Nations (UNASUR) to deal with the knock-on effects of the crisis still lingering in the developed world.

WRITTEN BY

SHARE THE WORD

PUBLISHED ON

There is talk about working together to mitigate the impact. But the developing world does not have financial power, nor does it have anything like the International Monetary Fund (IMF) to impose the adoption of fiscal adjustment policies or to “aid” the rich countries, like what occurred when it was the poor countries that were insolvent. The crisis today is universal, very different from the recessions suffered by some countries as a result of contagion from the “Mexican,” “Argentine,” “Asian” or “Turkish” crises of the 1990s. With the recently-decided budget cuts in the United States, a condition set by the Republicans to agree to raise the debt ceiling in order to head off default, and the increasing stagnation in Europe, the impact is global, with recession or slowdowns everywhere.

Fernando Cardim, a retired Federal University of Rio de Janeiro professor, said that Brazil, one of the emerging economies, is not likely to suffer much, in the short term, as a result of the U.S. deficit reduction package agreed on July 31, which he called “a disaster, politically.” But he added that prospects for the future “are dim.” The long-term effects are “unpredictable,” but the tendency is for things to get worse, since “the right wing in the United States could demand more and more,” such as further fiscal tightening, while Europe’s crisis could spread to other countries, he said during a break at a meeting of economists.

In the case of Brazil, the effects on trade of reduced demand from the United States would be less harmful than in the past, when that country was the chief market for Brazil’s exports, absorbing one-quarter of the country’s sales abroad. By last year, that share had shrunk to 9.5%, while China’s share had risen to 15.2%. While Brazil has diversified its export markets, its trade deficit with the United States climbed to 7.7 billion dollars last year – due to imports of 27 billion dollars – after the country had chalked up a surplus of 9.9 billion dollars in 2006. The losses in the U.S. market are not just quantitative but qualitative as well, because Brazil mainly exports manufactured goods to that country, while China almost exclusively buys commodities from Brazil, such as iron ore, soy and oil.

The increasing concentration of exports in mineral and agricultural commodities, a phenomenon that goes hand in hand with the process of “de-industrialization,” is a problem facing Brazil that could be aggravated by the economic troubles in the United States and Europe. Besides the trade surplus it achieves, thanks to high commodity prices, Brazil is likely to attract greater financial flows, leading to a further overvaluation of the local currency and thus to a reduction of the weight of industry in the national economy, a loss of exports, and an increase in imports of industrial goods.

With regard to coordinated action on the part of the countries of South America, Cardim was skeptical. Interests in the region are too diverse, he noted, saying it might be more effective to agree on certain responses to the crisis with other emerging countries, like India or South Africa. In Argentina, the impact of the U.S. fiscal tightening will likely be a result of slower global economic growth and the subsequent drop in demand, according to Enrique Aschieri of the International Society for Development. Argentina is much less vulnerable today after running up a trade surplus in the last eight years, he said. The United States is now the fourth biggest importer of goods from Argentina, after Brazil, China and Chile, in that order.
www.ipsnews.net / Mario Osava. With reporting by Marcela Valente (Buenos Aires) and Emilio Godoy (Mexico City).

Share Your Thoughts

All comments are moderated

From The Same Issue

The articles and content about this issue

From The Same Issue

The articles and content about this issue

In Focus

A Model Farm

From This Topic

The articles and content about this topic

From This Topic

The articles and content about this topic

Explore Other Topics

Browse other coverage

Explore Other Topics

Browse other coverage

WM SPECIAL

Presents, discusses and draws readers to reflect on issues of outmost relevance to the world today.


FRONTIERS

Very often, mission is carried out in frontier situations around the world. Those who embrace these situations have much to share.


UNITY IN DIVERSITY

Writer Ilsa Reyes will be exploring the richness of Pope Francis’s latest encyclical Fratelli Tutti with a view of helping our readers to get a grasp of the this beautiful papal document.


FRONTLINE

Puts to the front committed and inspiring people around the world who embrace humanitarian and religious causes with altruism and passion.


IN FOCUS

Focus on a given theme of interest touching upon social, economic and religious issues.


FAITH@50

As the Philippines prepares to celebrate 500 years of the arrival of Christianity. Fr. James Kroeger leads us in this series into a discovery journey of the landmark events in the history of faith in the Philippine archipelago.


INSIGHT

Aims to nurture and inspire our hearts and minds while pondering upon timely themes.


FILIPINO FOCUS

The large archipelago of the Philippines, in its richness of peoples and cultures, offers varied and challenging situations for mission.


FOLLOW ME

Reflections and vocation stories that shape up the lives of young people.


MISSION IS FUN

As humor and goodness of heart are qualities of Christian and missionary life, the new column “Mission is fun” will be publishing some anecdotes and stories that have happened in a missionary context to lighten up the spirits and trigger a smile in our faces.


LIVING COMMUNION

To help readers of World Mission live this year dedicated to Ecumenism, Interreligious Dialogue and Indigenous Peoples, Tita Puangco, writer and lecturer, shares in this section insights on the spirituality of communion.


WINDS OF THE SPIRIT

A historic view of the Catholic movements that emerged from the grassroots as an inspiration by the Holy Spirit.


BRIDGE BUILDERS

On the Year of Ecumenism, Interreligious Dialogue and Indigenous Peoples, radio host and communicator Ilsa Reyes, in her monthly column, encourages Christians and people of good will to be one with their fellow people of other sects, religions and tribes.


INTERVIEW

Questions to a personality of the Church or secular world on matters of interest that touch upon the lives of people.


WORLD TOUCH

News from the Church, the missionary world and environment that inform and form the consciences.


CARE OF THE EARTH

A feature on environmental issues that are affecting the whole world with the view of raising awareness and prompting action.


EDITORIAL

The editor gives his personal take on a given topic related to the life of the Church, the society or the world.


YOUNG HEART

A monthly column on themes touching the lives of young people in the Year of the Youth in the Philippines by radio host and communicator I lsa Reyes.


SCROLL

A missionary living in the Chinese world shares his life-experiences made up of challenges and joyous encounters with common people.


EXTRAORDINARY PEOPLE

Life stories of people who deserve to be known for who they were, what they did and what they stood for in their journey on earth.


ONE BY ONE

Stories of people whom a missionary met in his life and who were touched by Jesus in mysterious ways.


INCREASE OUR FAITH

Critical reflection from a Christian perspective on current issues.


SPECIAL MOMENTS

Comboni missionary Fr. Lorenzo Carraro makes a journey through history pinpointing landmark events that changed the course of humanity.


PROFILE

A biographical sketch of a public person, known for his/her influence in the society and in the Church, showing an exemplary commitment to the service of others.


WM REPORTS

Gives fresh, truthful, and comprehensive information on issues that are of concern to all.


LIFE'S ESSENTIALS

A column aimed at helping the readers live their Christian mission by focusing on what is essential in life and what it entails.


ASIAN FOCUS

Peoples, events, religion, culture and the society of Asia in focus.


THE SEARCHER'S PATH

The human heart always searches for greatness in God’s eyes, treading the path to the fullness of life - no matter what it takes.


INDIAN FOCUS

The subcontinent of India with its richness and variety of cultures and religions is given center stage.


AFRICAN FOCUS

The African continent in focus where Christianity is growing the fastest in the world.


JOURNEY MOMENTS

Well-known writer and public speaker, Fr. Jerry Orbos, accompanies our journey of life and faith with moments of wit and inspiration based on the biblical and human wisdom.


IGNATIUS STEPS

On the year dedicated to St. Ignatius of Loyala, Fr. Lorenzo Carraro walks us through the main themes of the Ignatian spirituality.


THE SEVEN LAST WORDS OF JESUS

Fr. John Taneburgo helps us to meditate every month on each of the Seven Last Words that Jesus uttered from the cross.


INSIDE THE HOLY BOOK

In this section, Fr. Lorenzo delves into the secrets and depths of the Sacred Scriptures opening for us the treasures of the Sacred Book so that the reader may delight in the knowledge of the Word of God.


CONVERSATIONS

Reflections about the synodal journey on a conversational and informal style to trigger reflection and sharing about the synodal path the Church has embarked upon.


VATICAN II

This 'mini-course' series provides a comprehensive exploration of Vatican II, tracing its origins, key moments, and transformative impact on the Catholic Church.


COMBONIS IN ASIA

This series offers an in-depth look at the Comboni Missionaries in Asia, highlighting their communities, apostolates, and the unique priorities guiding their mission. The articles provide insights into the challenges, triumphs, and the enduring values that define the Comboni presence in Asia.


BEYOND THE SYNOD

Following the Synod on Synodality, this series examines how dioceses, parishes, and lay organizations in the Philippines are interpreting and applying the principles of the synod, the challenges encountered, and the diverse voices shaping the synodal journey toward a renewed Church.


A TASTE OF TRADITION

This series introduces the Fathers of the Church, featuring the most prominent figures from the early centuries of Christianity. Each article explores the lives, teachings, and enduring influence of these foundational thinkers, highlighting their contributions the spiritual heritage of the Church.


A YEAR OF PRAYER

In preparation for the 2025 Jubilee Year under the theme “Pilgrims of Hope,” 2024 has been designated a Year of Prayer. World Mission (courtesy of Aleteia) publishes every month a prayer by a saint to help our readers grow in the spirit of prayer in preparation for the Jubilee Year.


OUR WORLD

In Our World, the author explores the main trends shaping contemporary humanity from a critical and ethical perspective. Each article examines pressing issues such as technological advancement, environmental crises, social justice, and shifting cultural values, inviting readers to reflect on the moral implications and challenges of our rapidly changing world.


CATHOLIC SOCIAL DOCTRINE

This series unpacks the principles of Catholic Social Doctrine, offering a deep dive into the Church's teachings on social justice, human dignity, and the common good.


HOPEFUL LIVING

Hopeful Living’ is the new section for 2026, authored by Fr. James Kroeger, who dedicated most of his missionary life to the Philippines. In this monthly contribution, he will explore various aspects of the virtue of hope. His aim is to help readers align their Christian lives more closely with a hopeful outlook.


PHILIPPINE CROSSROADS

Filipino Catholic scholar Jose Bautista writes each month about how the Philippines is at a crossroads, considering the recent flood control issues and other corruption scandals that have engulfed the nation. He incorporates the Church’s response and its moral perspective regarding these social challenges.


BIBLE QUIZ

Test your knowledge and deepen your understanding with our Bible Quiz! Each quiz offers fun and challenging questions that explore key stories, themes, and figures from both the Old and New Testaments.


Shopping Cart