LatAm finances flounder over financial mess

Global financial figures have taken a massive hit today over the events over the past 48 hours involving the purchase of Merrill Lynch by Bank of America and Lehman Brothers’ bankruptcy. Stocks, bonds and currencies in emerging markets have posted big losses and Latin America has been no exception.

Brazil’s Bovespa index fell by 7.3% as stocks for state-run Petrobras tumbled the most since 2002. In Mexico, the peso dropped to a six-month low as analysts anticipate further loses due to growing inflation. Bonds in countries like Argentina and Venezuela moved closer to default according to one source while an expert interviewed by CNN en Español anticipated a rapid withdrawal of foreign investments. One “senior currency strategist” with Brown Brothers Harriman & Co. warned about declining currencies especially the Argentine peso, Peruvian sol and Chilean peso.

U.S. Treasury Secretary Henry Paulson tried to put a brave face on the financial mess though he cautioned that happy days wouldn’t be coming soon:

"The American people can remain confident in the soundness and resilience of our financial system."

However he warned that uncertainty remained and it was likely that there would be further "rough spots" ahead before the market was corrected.

Turmoil would continue in financial markets until the housing correction was completed, he added.

Both John McCain and Barack Obama tried to spin the crisis in their favor; McCain promised to “replace an outdated, patchwork quilt of regulatory oversight” on Wall Street while Obama emphasized the need for tougher financial regulations. (The mess cannot be addressed in mere bullet points by either candidate so please take the aforementioned remarks with a massive grain of salt).

Image- Canada.com (“A ticker sign announces Lehman Brothers losses yesterday in New York City.”)

Sources- Bloomberg, BBC News, Economist.com, CBC, Guardian UK, MarketWatch