Latin America has recently experienced three cycles of capital inflows, the first two ending in major financial crises. The author analyses the dynamics of the second cycle — from the 1989 ‘Brady-bonds agreement’ to the Argentinian 2001/2002 crisis (and 9/11). It is argued that these financial crises took place mostly due to factors that were intrinsic to the workings of over-liquid and under-regulated financial markets — and as such, they were both fully deserved and fairly predictable. In short, these crises point not just to major market failures, but to a systemic market failure.
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