We have seen this movie before, but it rarely has a good ending.

I wrote this article on the balcony of my father-in-law’s house, Tepoztlan is a beautiful and mysterious town 60 kilometers south of Mexico City. Tepoztlan is surrounded by jagged ridges, one of which stands above the Aztec Tepozteco Pyramid, known as the birthplace of the famous Aztec Quetzalcoatl (Quetzalcoatl). The temperature is a pleasant 24 degrees Celsius (75 degrees Fahrenheit). It can be said that there are worse places to have to spend Christmas.

Mexico is now Mos Eisley in the pandemic era: you don’t even need a negative PCR to pass border control. A week ago, my wife and I arrived in Mexico City on a direct flight from Barcelona. This is our first flight in two years. Every seat on the plane was full. We wear thick masks, and fortunately, after contracting the virus in August, we seem to have avoided re-infection with Covid-19. This means that we can now focus on meeting relatives and friends we haven’t seen for two and a half years, mainly outdoors.

Mexico City is in a celebratory atmosphere. After several months of Covid-19 restrictions, the authorities provided the city with a complete list of health in time before Christmas. The residents of this city are making full use of it. Almost every restaurant we passed by during lunch or dinner was packed with people. Based on our conversations with friends and family, most people seem content (or in some cases desperate) to return to some seemingly normal lives. This is often the wrong assumption that the vaccine provides them with strong protection against virus infection.

Mexico, like almost all of Latin America (let’s face it, most parts of the world) has gone through hardships. Many people—perhaps much more than official statistics show—have been taken away by Covid-19.

Arturo, a 60-year-old gardener who had been caring for my father-in-law’s small garden for many years, passed away in just over a week. As far as we know, he is in good health and looks ten years younger than his actual age. It was in August. One month later, Berta, who cleaned my father-in-law several times a week, contracted the virus and ended up in a critical condition in a hospital in Cuernavaca. It was a very close thing, but she succeeded in the end.

Many others in Tepoztlan did not. A few days ago, Berta told me that she had lost many friends and family in the last wave of the epidemic in midsummer. Some of them are thirty or forty years old.

Coronavirus Center

The official death toll of Covid-19 in Latin America and the Caribbean is the highest of any region on the planet. It accounts for less than 10% of the global population, but it accounts for about 20% of global Covid-19 cases and nearly a third of the death toll.

It is not difficult to see why. The local economy, like a shark, cannot stop moving at all. In most cases, the restrictions are not as strict as in Europe.As i wrote Wolf street In May 2020, as the first wave of Covid began to hit the area hard, “blocking entire cities or countries and paying millions of unnecessary workers for not working for several weeks, while medical staff are fighting to control the virus. This is a luxury for countries with first world economies, huge public debt capacity, relatively stable currencies and large central banks.”

For many workers in Latin America and the Caribbean, not working for a few days means bankruptcy, followed by hunger. In 2020, the number of hungry people in the region increased by 13.8 million to 60 million. according to Food and Agriculture Organization of the United Nations. This is roughly equivalent to 10% of the population of the area. Not surprisingly, the worst-hit country is Haiti, where 46% of the population is malnourished. Hyperinflation Venezuela has the highest level of hunger in South America, affecting 27% of the population.

In 2020, a total of 267 million people (equivalent to 40% of the total population of the region) are facing moderate or severe food insecurity, an increase of 60 million from 2019. * This is the highest increase in any region in the world. Although the pandemic has dramatically worsened the situation, the number of hungry people in Latin America and the Caribbean has been on the rise since 2014.

“We have to say loudly and clearly: Latin America and the Caribbean are facing a dire situation in terms of food security. From 2014 to 2020, the number of people living in hunger has increased by nearly 79%,” said Huri, FAO Regional Representative O Bairdge said.

Inflation makes things worse

Soaring inflation in the region has exacerbated these problems because I Report NC was released on December 10. Compared with developed economies, food prices in Latin America account for a much larger share of the inflation index, which means that soaring food prices have a greater impact on overall inflation.

In Mexico, many of the shops that my wife and I visited in recent days have posted signs informing customers that the increase in wholesale prices has left shopkeepers no choice but to increase prices. In November, Mexico’s consumer price inflation reached its highest level in 20 years (7.3%), and it is expected to continue to rise in the first half of December. according to Reuters survey of Mexican economists.

In Chile and Peru, consumer price inflation is at 13-year and 12-year highs, respectively. Latin America as a whole will have the highest price increase in the world at the end of the year. according to The International Monetary Fund predicts that the regional inflation rate in 2021 will be 9.3%.

High inflation not only erodes the purchasing power of workers’ wages; it is also eating away at people’s money for rainy days.In Brazil, which is affected by stagflation, high inflation and Nominal wages fall The savings accumulated by Brazilians during the most severe phase of the coronavirus pandemic are being exhausted, when emergency assistance and reduced consumption to the poorest people led to a sharp rise in the savings rate, Rio Times Report.

Unprecedented public debt

Unlike Mexico, the Brazilian government significantly relaxed its wallets last year.As a result, its public debt-to-GDP ratio soared by 15 percentage points, from 74% to A record high 89%. According to data from the United Nations Economic Commission for Latin America and the Caribbean (CEPAL), other countries in the region have adopted the same approach. As a result, the total debt of the region is now 77% of GDP. The total service cost of this debt—that is, the interest that countries must pay—makes up 59% of the region’s economies’ total income from exports of goods and services, which is shocking. Report nation.

During a period of rising interest rates, a stronger U.S. dollar, and a new round of lockdown (at least in the northern hemisphere), debt repayment will be extremely difficult. Most debt is sold on the global market through the issuance of sovereign bonds. According to El País, the main buyers are large Wall Street banks and investment funds.

In other words, the fate of Latin America’s embattled economies is once again in the hands of Wall Street firms. We have seen this movie before, but it rarely has a good ending.

The silver lining this time is that the largest economies in the region, such as Brazil, Mexico and Chile, are mostly issued in local currencies. Therefore, they are unlikely to face a full-scale debt crisis.In terms of Brazilian local bonds Take up About 90% of sovereign debt; in Mexico, about 70%, in Chile It’s about 75%. Unfortunately, this is not the case for the smaller and weaker economies in the region, who have no choice but to issue bonds in dollars or euros.

Since the beginning of the virus crisis, foreign currency-denominated bonds have defaulted six times. First is Ecuador, then Argentina, then Suriname, Belize and Suriname twice.

Everyone’s conditions are tightening now. After a year of relative recovery after the bloodbath of 2020, economic growth is expected to slow down significantly in the coming months. The Fed has stated that it will soon begin to tighten its monetary policy. This prospect has frightened the heads of state and finance ministers in all Latin American countries. The Fed’s interest rate hike will increase its dollar-denominated costs and may trigger foreign capital outflows, which in turn will put more pressure on its currency, making it more difficult for governments and companies to repay dollar-denominated debt or other foreign currencies. Rinse and repeat.

In October, the International Monetary Fund announced US$650 billion in Special Drawing Rights (SDR) allocations, of which US$44 billion went to Latin American countries.Newly minted money is only a small part of the ocean of needs, and most of it is Went to a high-income country Anyway.

* Moderate food insecurity is related to the inability to eat a healthy and nutritious diet on a regular basis. according to Our data world: “Therefore, the high incidence of moderate food insecurity is an important indicator of the development of health outcomes such as poor dietary quality and micronutrient deficiencies. Severe food insecurity is more related to insufficient food (energy) quantities. So it is closely related to undernutrition or hunger.”