A controversial $700 million bailout was defeated by U.S. legislators on Monday, thus triggering a massive 777 point drop in the Dow Jones Industrial Average. Other stock indices in the Western Hemisphere also plummeted in trading today. The Morgan Stanley Capital International Latin American stocks index sunk to its lowest point in a decade with a 12.6% drop. Brazil's Ibovespa index nosedived by over 10% this afternoon before closing with a 9.5% loss. Meanwhile, Argentina’s Merval index plunged by 8.7% while Mexico’s main index tumbled by over 6%.
Regional financiers panicked over the lack of a bailout unlike Latin American leaders who have been upset at the plan from the get go. Presidents like Michelle Bachelet and Leonel Fernandez expressed resentment at their northern neighbor for advocating helping tycoons instead of the impoverished masses. As Fernandez mentioned yesterday at a forum with ex-Chilean president Ricardo Lagos:
In light of the current financial crisis, Lagos and Fernandez both questioned international economic institutions in relation to Latin America.Lagos criticized the unregulated free markets as showing "arrogance," insisting instead that the market should focus on improving citizens' lives by alleviating poverty and bettering education and health care - a premise for which he received rousing applause.
Fernandez agreed. "Globalization needs rules," he said, pointing to the hyperinflation, debt and deficits that free-market policies caused in his country, which resulted in a distrust of democracy.
Image- SignOnSanDiego.com (“Traders work on the floor of the Brazilian Mercantile and Futures Exchange in Sao Paulo, Monday.”)
Sources- AFP, Reuters, BusinessWeek, IHT, Guardian UK, Brown Daily Herald
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