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Why Not Default?$
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Jerome Roos

Print publication date: 2019

Print ISBN-13: 9780691180106

Published to Princeton Scholarship Online: May 2019

DOI: 10.23943/princeton/9780691180106.001.0001

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“The Rich Got the Loans, the Poor Got the Debts”

“The Rich Got the Loans, the Poor Got the Debts”

(p.158) Eleven “The Rich Got the Loans, the Poor Got the Debts”
Why Not Default?

Jerome Roos

Princeton University Press

This chapter takes a closer look at the outcomes of the Mexican debt crisis and the consequences of the reduced state autonomy at the heart of the crisis of the 1980s. The first section considers the brief period of tension between Mexican policymakers and their foreign lenders, and discusses Argentina as a counterfactual case in which a democratically elected government came to power that was strongly opposed to debt repayment. The second part of the chapter considers the final resolution of the Mexican debt crisis through the Brady debt restructuring deal of 1989–1990, which, far from constituting a coercive default, was actually undertaken at the initiative of the Wall Street banks with their own interests firmly in mind. Finally, the chapter considers the unequal distribution of adjustment costs inside Mexico as a direct consequence of the creditors' power to shape the outcome of the crisis in their favor.

Keywords:   Latin America, Mexico, financial crisis, debt crisis, Argentina, Brady debt restructuring, debt repayment

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