U.S. Domestic Interests and The Latin American Debt Crisis

Abstract

<p>The most recent Latin American debt crisis is a fascinating political phenomenon because it demonstrates very convincingly the complexity of the relationship between economics and politics. The rapid growth of u.s. commercial bank lending to Latin American governments in the 1970s helped to make many banks vulnerable to the decisions of Latin American government officials. Given that many of the most vulnerable banks were also the largest in the American and international financial systems, the u.s. government had an understandable interest in devising means and goals to manage the situation once the Mexican financial crisis unfolded in 1982. The goals and means chosen over the next several years reflected a special consideration for the largest American commercial banks, and clear apathy for the interest of other American and Latin American interests. To understand the choices made by U.S. government officials, one has to understand the relationship between the American government and u.s. commercial banks in general, and with the largest u.s. commercial banks in particular.</p>