LatAm in the Eye of the Storm: Brady (1)

Latin America cannot escape the storm ripping through developed markets unscathed, warns Nicholas Brady, former US treasury secretary. “What is happening in this country can’t help but affect Latin America’s future,” says Brady in a speech at the LatinFinance 20th Anniversary Gala Dinner & Awards Ceremony in Miami Saturday night. “Because we operate in an increasingly global economy, it’s impossible for Latin America to avoid some collateral damage from our present malaise,” he adds. Brady compared the current US economic duress to the major systemic crisis the economy faced two decades ago when he was treasury secretary. “In 1989 and ‘90 remedial steps were called for, and we took them. And today with a banking system that faces systemic predicaments and an economy that may be on the brink of the deepest recession in a generation, that’s where we are again,” Brady says. However, he notes, while two decades ago it was possible to identify the borrowers and lenders, as well as their capacity, now it is not. “I’d recommend that we do what we did with the commission that President Reagan asked me to chair after the stock market crash in 1987 – namely to identify the market participants, describe the actions they took, figure out the weaknesses in the system, and put forward a solution,” Brady says. He adds that the process of de-leveraging and re-pricing will take time, but adds that a great deal of the success in the ’89-’90 timeframe came from prompt action. The official also warned against over regulating in response.