What the U.S. economic crisis means for Latin America

Rather than engage in reform, slash spending and put away some rainy-day money, Latin American governments preserved the status quo and boosted public expenditures by 10 percent annually in matters mostly unrelated to infrastructure, creating alarming new commitments. Except for Chile, which managed the revenue from its copper sales prudently, many of the nations that produce oil (Mexico, Venezuela, Ecuador), minerals (Brazil, Peru) or agricultural commodities (Argentina, Brazil, Uruguay) went on a binge. They will now find themselves starved for cash at a time when they are pledging new forms of government profligacy in the face of the global recession. The temptation to fund it via inflation will be irresistible.

More here.