The Economic Collapse Of South America Is Well Underway

[GliderGuider]

The Economic Collapse Of South America Is Well Underway

The 7th largest economy on the entire planet is completely imploding. I have written previously about the economic depression that is plaguing Brazil, but since my last article it has gotten much, much worse. During 2015, Brazil’s economy shrank by 3.8 percent, but for the most recent quarter the decline was 5.89 percent on a year over year basis. Unemployment is rising rapidly, the inflation rate is up over 10 percent, and Brazilian currency has lost 24 percent of its value compared to the U.S. dollar over the past 12 months.

During the “boom years” governments and businesses in South America absolutely gorged on debt. Unfortunately, many of those loans were denominated in U.S. dollars, and now that the U.S. dollar has appreciated greatly against local South American currencies it is taking far more of those local currencies to service and pay back those debts.

Collapsing prices for oil and other commodities have been absolutely brutal for South American economies. They rely very heavily on exporting commodities to the rest of the world, and so at the same time their debt problems are exploding they are getting a lot less money for the oil and industrial commodities that they are trying to sell to North America, Asia and Europe.

And of course Brazil is not the only South American economy that is a basket case right now. In fact, things in Venezuela are far worse. In 2015, the Venezuelan economy shrunk by 10 percent, and the official rate of inflation was a staggering 181 percent.

As prices have escalated out of control, citizens have attempted to hoard basic supplies in advance, and this has resulted in food shortages that are absolutely frightening.

Here in the United States, there are still people who doubt that an economic crisis is happening. But in Venezuela and Brazil there is no debate.

[PatrickforO]

1. That's why sovereign nations need to get rid of the international bankers and

print their own money. We could all have a world of plenty if we did this, instead of the capitalist shithole it has become.

[GliderGuider]

2. Some background commentary from another source

This collapse actually of South American economies has its roots in neoliberal capitalism and the imposition of the debt regime upon South America. With this debt regime came what is known as Structural Adjustments Programs (SAP) delineating among other things: cuts in social spending, gearing of economy for import/export, wage cuts, privatization, open borders (globalization). All this coordinated, organized and enforced by international institutions such as World Trade Organization, IMF, World Bank and of course further enhanced by Trade Agreements.

What it actually is, is a deeply exploitative regime intended to profit Trans National Corporations and the wealthy countries at the expense of the poor countries and especially the poor people. So even before plunging oil and commodity prices and China’s downturn set in motion deflationary pressures, South America economies were straining under onerous debt and lack of a vibrant domestic economy all due to outside influences adversely affecting the positive development of these economies.

[Hydra]

3. That's really horrible

And not really surprising in context. I wonder if the dominoes have already started to fall again.

[Baobab]

5. Thats how the US looks at countries that still have public health and education.

Despite our efforts to get them to eliminate them.

[Baobab]

4. Concentration of wealth.

Less concentration of wealth would paradoxically lead to more wealth for everybody.

[Zynx]

6. This is a failure of policy. I know some want to blame foreign investors.

It isn't their fault. It's the fault of those governments and their wretched policies.