> As to Julio's point about the BRICs being able to carry on, I suppose that
> will depend on the whether the American downturn is relatively brief and
> shallow or, as appears increasingly likely, extended or severe. It's hard to
> imagine that the high commodity prices which have supported growth in Russia
> and Brazil and the outsourcing of manufacturing and services by foreign
> multinationals into China and India which have driven growth in these
> countries would not be vulnerable to a serious slowdown in the core
> capitalist countries. None of these rapidly growing economies yet have the
> domestic demand to pick up the slack, although a sharp curtailment of
> incoming FDI and exports would provide the impetus to more urgently reorient
> their economies in this direction.
Again, there's no doubt that the global economy is going to feel it if the U.S. economy falls. The U.S. is huge. The beta of the BRICs is not zero. But what drives growth in the global economy is not only share, but share times growth rate. The BRICs have been growing fast and that has inertia. Yes, on the downside, they've proved to be very volatile -- great years followed by lousy ones. But the question is, Can the BRICs keep up the pace by re-orienting their economies inwards by the sheer force of public investment? I think they can. In principle, they can. The high price of commodities and the fact that, in the latest round of cheap credit, they didn't get as carried away as they did back in the 1970s, they are in a better position to use those resources for decoupling. I was just interviewed by a radio station in Mexico City and right before they introduced me, the news reader said that Guillermo Ortiz (Mexico's central banker) had just declared that Mexico had resources to cushion the impact of a recession in the U.S. And that's Mexico! I think there's some bluffing there. I'd bet that you're mostly right about Mexico -- and perhaps most of Central America. But I don't think this is necessarily the case of the rest of South America. But we'll see soon.