4 ideas
Latin American debt and banking crises are usually set off by shifts in the financial centers, such as London or New York tightening credit, raising interest rates, or suffering their own panic, and not mainly by local mismanagement. Capital flows into peripheral economies during booms at the center and stops suddenly when the center contracts, so the periphery defaults on the downswing of a cycle it did not control.
In August 1982 Mexico told its creditors it could no longer service roughly $80 billion in foreign debt. Its borrowing had been built on petrodollar bank loans at floating rates, and Paul Volcker's interest-rate shock and falling oil prices made those loans unpayable.
Treat 1873, 1890, 1929, 1982, 1994–95 and 2008 as linked episodes of one repeating pattern of financial globalization, not as unique national disasters. Seen this way, each crash follows a cross-border lending boom fed by cheap credit and financial innovation. The 2008 crash then looks less like an unprecedented event and more like the latest turn of a century-and-a-half cycle.
When crises strike peripheral debtors, creditors and international institutions demand fiscal austerity and debt repayment, which pushes the cost onto local populations. When crises strike the core, as in 2008, governments and central banks act as lenders of last resort with large bailouts and monetary expansion. This asymmetry determines who bears the losses of the same kind of financial failure.