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WASH CONSENSUS
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WHAT IS THE WASHINGTON CONSENSUS and HOW DID IT EMERGE ? August 1982. Mexican Finance Minister informed Washington it could not make it’s debt repayments. The problem was that in the 1970’s money was cheap, plenty of liquidity in the system – largest banks lent much cash to sovereign nations when inflation was high and real interest rates were practically negative. Effectively banks were effectively paying latin American governments to effectively borrow money. Many of the latin American governments put the money into state projects or some form of political patronage or corruption.
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