1998 Brazilian Political Economy Crisis

The collapse of the Mexican economy in the early 1990s and the subsequent American intervention to save Mexico from international-debt bankruptcy, was controversial in the US. Under leadership of Carlos Salinas, Mexico undertook massive internal reforms in the later 1980s and early 1990s, though domestic conditions worsened, with inflation running at 30%, real wages declining, and economic growth slowing. A longtime political rival of Salinas wrote in early 1990 that Salinas's policies would perpetuate Mexico's status as a subordinate nation to the US (Cardenas, 1990), hence guarantor of US Latin American regional policy. The Economist of London took a different view, noting that Mexico's performance was good compared to that of other Latin American debtors. Internal reforms included cutting public spending and opening commercial markets, and in 1991 and 1992, the road was being cleared for Mexico's participation in NAFTA:

The government negotiated a deal on foreign debt in March 1990. This, admittedly, had less to do with the government's skill at negotiation than with Mexico's proximity to America, ever fearful of an uncontrollable flood of Mexican immigration. T

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loyment opportunities. Equally, the PT and Lula were among the strongest advocates of public spending, which Cardoso had trimmed to good effect except in the matter of pension reform. In the event, PT rhetoric and analysis of the economic problems overtaking Brazil over the course of the presidential campaign of 1998 could not overcome the sense that Cardoso and not Lula could best maintain political and economic stability for the country. Cardoso was reelected in October 1998. Curiously, however, certain of the PT's criticisms of Cardoso's policies had been substantiated by events. Beginning in 1997 with the Asian crisis and peaking in full force and effect by August 1998, Brazil experienced what was to be described as economic meltdown. In 1997 and 1998, expert observers considered the real to be overvalued by up to 20% (Can Brazil, 1998), but formal devaluation of the currency would immediately increase the money supply and trigger inflation, the malady that Cardoso's Plano Real had successfully targeted in 1994 and 1995. In order to sustain the valuation of the real, however, new money would have to appear in the market. To accomplish this, the Brazilian government "rammed interest rates up to 40% above inflation; pushed Con
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Some common words found in the essay are:
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Approximate Word count = 3710
Approximate Pages = 15 (250 words per page)

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