In 2001 the head of the Inter-American Development Bank spent much of his time fighting speculation that one of Latin America's giants, Argentina, had enough national reserves to maintain a 1:1 ratio between the Peso and the US Dollar and maintain confidence for investors that they would have their investments returned with acceptable risk. Five Presidents later and six years later, Argentina is fighting to stave off another economic crisis with some added funds in the bank, promises to pay back much of its international debt, and many of its creditors suffering from an economic collapse which might ironically place Argentina in the position to gain added investments if its reputation can handle the latest wave of financial crisis to hit the globe. It is doubtful this will happen of course, but with poor economic and political leadership in the US, the world and its source of international funds have taken a process that was expected to take 40 years and reduce the US into a shared global power into a change in the world economy which is today's reality.

Questions which always have arisen are whether regulations or political leadership had the ability to avert crisis that come from decisions made in private industry and in private boardrooms. One argument regarding Argentina is that loans given to The Argentine and other countries by international creditors place complete onus on the borrower to assume ALL risk in the transaction. As with small business loans in many financial markets, the tradition of incorporation and all of its legal rights for an investor to be separate from the company with separate legal identities is signed away, leaving all risk in the transaction on the head of the borrower. The problem with this on a micro level reflects that of the macro level, leaving all risk on the borrower, but not placing any onus on the lender to make a business decision on their clients in order to avert losses to the company. Like with international lending, risk is always taken by the borrower, so when there is a problem in the relationship, bad business decisions by the lenders result in a situation where gains are taken as profit, but if there are losses the borrowers must go well beyond reasonable measures to pay back a loan that might have been given without consideration to risk, as lending in the modern era has been able to avoid the Invisible Hand of the market as poor economic decisions have little effect on irresponsible lenders who see no ill effects from giving bad loans to people and countries who have no rights to shield themselves from the market.

While Argentina has announced this month that it will make moves to pay back its international creditors (Risk insurance for Argentina is very high or not offered), what is the effect if a whole industry makes poor business decisions and the borrowers simply return their capital and leave the lenders with large numbers of very nice houses? The root of the mortgage crisis is the obvious result, but it must be challenged on three levels. We must return to the ideas of Adam Smith and the root of modern capitalism. Fundamentals such as the Invisible Hand of the market is the basis of the US economy, but in an industry where risk can be passed off to the consumer, sold into the larger market or as we see in the Bail Out, allow for private companies to claim profits but make US taxpayers and government cover their losses, private gains are created and losses are made public. The free market cannot sustain itself as lenders do not take any substantial risk and thus make business decisions which would lead any other company in any other industry into swift bankruptcy, but in the financial industry allows mortgage lenders to make irresponsible business decisions without the consequences of market forces to bear on those decisions.

Regulation and government intervention must be considered, as with such a unique industry which relies heavily on non-risk and government regulation and bail outs, the market forces on the financial industry must invite regulation in order to maintain its non-risk positions and insure losses by way of the national reserves despite poor decision making by those in the industry themselves. The root of financial industry theory is that the market will determine the right course of action for people, but that regulation is needed to insure that losses will not create a catastrophe in the process. In Argentina, the failure of the economy forced banks to literally lock people out of their private savings so that a run on the currency would not create a collapse. Luckily the US does have reserves to cover the losses, but did the crisis comes from regulation impeding the free market, or does the free market simply not work? I would argue that since risk and consequence is the result of any business transaction, an industry which prohibits other industries from growing without giving sensible risk to the lender cannot vent its problems on regulation and a government that is insuring any and all mistakes made as a result of poor decisions collapsing their industry as a whole. Regulation is a key issue as it allowed mortgage lenders to sell their risk into wider financial markets and is the reason why the current catastrophe has echoed worldwide, but the same regulation also is there to keep the US out of the chaos of Argentina, namely, to maintain confidence in the US economy that risk of losses is low and that the market is strong. So is regulation a barrier to the free market and caused the current problems, to some degree it did allow for problems to arise, but mostly due to an industry making decisions without consequence and giving the risk to the public in many forms with no constructive losses to financial companies or threats of real losses to their own private companies.

Leadership, while likely the most media friendly issue and less complicated than the equations needed to understand the Bail Out, has done little to address the true need for proper regulations, the true market effects of the financial industry and creating laws which protect consumers. They have done little to protect the national reserve and provide that economic decision making should bear consequence on those decision makers in private industry and remove the corporate veil for larger financial companies as is the case with many business borrowers and consumers of the financial industry which need those companies to help grow their local economies and communities. As debated by Mr. Obama in last night's debate, the financial crisis we have to date is the final legacy of the Bush Administration, but while a Bail Out may make this issue last week's news, the massive amount of borrowing from lenders in cash rich China, Dubai and other wealthy emerging economies in the last eight years and the economic alienation of US allies in the process in places like Europe, Canada and Latin America may take a process of normalization of investment trends from the US to the world into a situation where those new lender countries will be on par with the US immediately. It was thought by writers like Zakaria and Khanna that over a course of 15-35 years, the US will become one of many economic superpowers in the globe, but due to poor leadership and a financial industry which has chosen to give the death kneel to the American Empire of the 20th Century, measured predictions by those authors will likely come true before the paperbacks of their recently published books become available. The next President, whoever he is, will likely be a better choice than anyone in the last 20 years, and will spend the better half of the next four years cleaning up America as he bears the responsibility for cleaning up everyone else's mess. Like the formidable Cristina Kirchner of Argentina, charm can only go so far when you are the caretaker of a crisis from the past. Suffering politically from chaos which she cannot end and did not create, Obama or McCain will inherit one of the worst jobs you can have in the financial industry, the country's official risk bearer.

This week Venezuelan leader Hugo Chavez was lucky enough to avoid an assassination plot against him. Two unknown men were found in the State of Zulia on the border with Colombia with a number of grenades and an anti-tank weapons system that officials say was going to be used to bring down Chavez's plane in a recent action. The two men were detained and little information has been released about the attempt since then.

Assassination attempts against Chavez, or at least talk of possible attempts have become commonplace in the political dialogue between Chavez and the local media. Recently the US Ambassador was removed from Venezuela, partially for the reason of planning a possible assassination from the Embassy and this past year accusations of attempts by the US and Colombian government have been made more than once by Hugo in his verbal war against the US and its allies. While the origin and rationale behind the possible attackers is unknown, recent criticism by Human Rights Watch on Chavez's government may point to tensions between the President and his population as many have become disenchanted with moves by Chavez to bypass the Venezuelan Constitution to enshrine his power in the country and other moves to increase his permanent role as President, going beyond respected Constitutional norms which were brought into law by Chavez himself. With the publication of the independent Human Rights Watch report, HRW human rights expert Miguel Vivanco was coercively ejected along with a colleague from Venezuela for his statements against the President, accusing Human Rights Watch of working with the US in falsely tarnishing the reputation of Chavez. While having offices located in New York, Human Rights Watch and Mr. Vivanco are well respected as one of the world leaders on independent human rights reporting. Next to Amnesty International, Human Rights Watch is known for its independence of thought are universal criticism of human rights abuses worldwide.

Assassinations are never a proper way to seek political change, but with so many accusations of attempts on his life mixed in with real plots against his life, the attention given to Venezuela from abroad is often derailed by drug wars in Mexico, kidnappings in Colombia and elections in the US which often only drop Chavez's name in brief discussions on the future of relations with Venezuela. With the removal of the US Ambassador, Venezuela may become a state which becomes known only with the rising cost of oil and assassination attempts as more internationally minded leader take control in United States. Venezuela's future has been tied to Chavez and oil, two commodities which often change drastically over time.

In much of the popular political debate in English speaking media, issues of defense and economy often shape the question of what is considered a democracy. Defensive explanations for altering a country towards a democratic systems is most notable in Iraq and Afghanistan, where many who took the stance similar to the Bush administration that the actions the US and its allies took in Iraq were for the democratization of the country and its people. While the true effect of the war in Iraq will most likely be seen only in hindsight, the strategy of democratization of foreign countries in order to ensure stability was used before Iraq and Afghanistan were issues on the world stage, often claiming that open trade and stable economics is the root is democratic government.

Two of the regions which took to democratizations through economics were Asia, most notably China and Latin America. The first example, while a great success story in economic policy for China, is very much devoid of democratic ideals. To claim China as more of a democracy for its open economic policies is likely as creditable as saying the US is less democratic with the recent bout of economic troubles plaguing its financial industry and citizens as a whole. While an open economy can help with stability and help ensure democratic institutions, it is not the seed in which democracy is produced, and is often used as a rationale for linking democratic governments into those non-democratic ones by way of just cause. No one would argue that a stable economy does not help a democracy, but it is an issue of great debate if one can claim that an open neo-liberal policy is the root of a democratic system. Just this week the US Government took to paying down the debt of some of America's largest private companies, and even assumed control of Fannie and Freddie, bulking the trend of privatisations in the 1990s and post- 2000 era which was adopted by many in regions like Latin America in order to place corruption and populism in the background and grow democratic institutions from the ground up using private capital. Now government intervention is helping the economy, at least in crisis, and Latin America is progressing somewhat with a leftist leader in Brazil with sensible economic policy, a populist in Argentina who is dedicated to paying back her country's debts, an increasingly privatized Chile which is the darling of the region and a very populist Hugo Chavez trying to bring the region back into the 1970s with a lot of oil money and many words with have done little towards his popularity this year, even pushing the King of Spain to tell him to shut up on international television.

Venezuela has stood out as a pariah, linking his modern policies to those of past governments in the region which sought to claim economic independence from the US by way of populist policies and anti-foreign investment strategies. Neo-liberal economic activities by those in the US and other investor countries were often the catalyst for populist policies which could always look at failures in Iraq and other democratizing nations by way of defense or economic policy and gain local support by way of failures abroad. An interesting shift has taken place however, with the neo-liberals losing much of their influence and democracy and economy as a theory being unravelled with each American voter voting for anyone but Bush, as too do populist lose their support as the focus shifts from Bush to their local policies themselves.

This past year has been a clear example of how the waning interest in Bush has lead to increased criticisms of Chavez and his personal activities and policies as leader. With the year beginning with an insult from the King of Spain, well respected for his assistance in the democratization of Spain in the late 1970s, Chavez helped in the release of some kidnap victims in Colombia, followed by his open support for the FARC in Colombia and threats of attacks on Colombia due to their assault on a FARC leader in Ecuador and eventual pulling and reinstating of Ambassadors between the two nations. In a page from the same playbook, on September 11th Chavez pulled his ambassador from the US and recalled his own in support of political troubles between the US and Bolivia and claiming that the US Embassy in Venezuela was being used in an assassination plot against him within Venezuela itself. Despite all of these activities, the Bush administration has had little reaction to Chavez, allowing Colombia to take much of the lead on dealing with the FARC and Chavez while the world cheered the release of Ingrid Betancourt, and justified claimed that Chavez has been supporting the FARC and the drug trade which has left Colombia in ruins for the last 30 years. Sympathy and support could no longer be blamed on Bush and democratization in Latin America, as the narrative moved on, Chavez has been seeking a role to play in the next stage of the region's politics, hanging on with oil revenues and seeking to increase his power before oil prices and political ideals bring his term in office to an end involving economic collapse or violence.

In reality, democracy is and always will come from he construction of institutions which promote relative equality while balancing power in the hands of the people and their representatives as opposed to one leader. In Latin America there is an added dimension however, as poverty and democracy allowed for those in need of basic needs to have some influence on the government via voting, not a characteristic of a fully functioning democracy, but a move towards creating institutions and political movements in the long run. Economics, while not the source of democracy, is needed to ensure stability and create an environment where proper laws and rights can be formed around the relationship between citizens in the economy. Democratization can work if it is not seen as an alternative or used in the same way as populism. The intricacies of rights and culture create the economic relationship, in the same way in which the ambitions of one individual is not always reflective of the country itself. The result of each is often harsh, with failed democracies being born out of the policies of the last 8 years of Bush, also being reflected in a recent Human Rights Watch report on the restrictions on rights which have resulted within the last 10 years of Chavez in Venezuela. In either case, it seems that an end of an era in the Americas will come to an end with a new President and possible reductions in oil prices and support for Chavez as its result.

The HRW Report "A Decade Under Chavez: Political Intolerance and Lost Opportunities for Advancing Human Rights in Venezuela," can be seen here.

For articles on the Expulsion of Ambassadors between Venezuela and the US, see the articles below:

Associated Press

International Herald Tribune

CNN

Argentina has always been marked by two political trends that have been eventful enough to attract the attention of foreign investors and playwrights alike. Regarding investment, Argentina has always been a special case because of the large amount of potential in its economy that often seems to end in varying degrees of chaos as opposed to bringing the country on to another well deserved economic level. The second trend has always been that of having power couples in the Presidency during times of economic upheaval, without a doubt an interesting dynamic, but in recent history likely not exciting enough to be put on Broadway. As Nestor Kirchner's popular term in office was finally concluded by the election of his wife, Cristina Fernandez de Kirchner, the beginning of a Presidency which is entangled in the result of years of populist policies and less than ideal economic planning began and has been taking a toll on the popularity and support of President Cristina. Cristina has not been adopted as the next Evita by any means, but likely has a few strong words for her husband regarding the current predicament. Publicly she has made other moves to slow the decline in growth from 8% to 5% and again place Argentina on the world stage for investment and commerce.

In a Sept 4th Economist.com article on Cristina Kirchner's national financial problems, the issues surrounding Argentina's new economic troubles were discussed targeting the recent decision to pay back much of the loans from the country's financial crisis from 2001-2002. The targets of the repayments are the Paris Club nations, especially Japan and Germany who have taken a loss on their loans to Argentina since 2002. Cristina hopes that the repayment of loans will secure future investment in Argentina and allow for enough financial security for lenders, creditors and export financing agencies to reinvest in Argentina's economy and national infrastructure without fear of losing their funds in another economic collapse. Despite much blame towards the IMF and international lending institutions during her husband's term in office, Cristina has had to assume the obligation of dealing with those same creditors in order to move the country to the next economic level and avoid taking 15% interest on loans from countries such as Venezuela who has mastered losing investment in all but one of its industries in the last decade. As the Economist argues, this move could have avoided a lump sum payment, and have been done earlier and over time, but is a positive step for investor interests in Argentina, albeit a small one as other debts still remain unpaid in the larger scheme of Argentina's ever present repayment obligations. An added effect could be the eventual loss of the Presidency by Cristina due to an ever increasing loss of popularity and an inability to claim financial problems on poor IMF policies after taking repayment advice from them in the end of the debate. While Cristina Kirchner has achieved alot in her political career and may end her Presidency with a mere lack of popularity and avoid a legacy of corruption and scandal as many past Presidents have not done in the past, it is unlikely that an end of economic troubles in Argentina will alter the trends of the past to any great degree or make Cristina the next Evita and Broadway star.