First, borrow a lot of foreign debts

In the second half of the 20th century, in order to realize their own industrialization, Latin American countries urgently need to increase the scale of investment, especially the construction of infrastructure. At that time, the low interest rate policy pursued by developed countries had a great temptation to these countries, so many Latin American countries used debt to make up for the investment gap, and foreign debts accumulated more and more. By the early 1980s, the scale of foreign debt exceeded its ability to pay, and it was in debt crisis. According to statistics, by the end of 1982, the total foreign debts of the four major debtor countries in Latin America reached US$ 257.56 billion, accounting for 8.358% of the total foreign debts in Latin America, including the balance of Mexican foreign debts of US$ 87.6 billion, Brazil's 9 13 billion, Argentina's US$ 43.6 billion and Venezuela's US$ 35.06 billion.

The total debt of the five European countries reached 3,330.677 billion euros, including Irish debt ratio 104.95%, deficit ratio debt ratio 9.85%, Greek debt ratio 160.8 1%, deficit ratio debt ratio 9. 18% and Italian debt ratio/kloc-.

Second, the background of the two crises

The Latin American debt crisis occurred after the international capitalist crisis, and the European debt crisis broke out after the American subprime mortgage crisis, resulting in similar international environment. After the crisis broke out, it had a negative effect on the psychological expectations of consumers and investors, which greatly reduced the consumption and investment demand in the crisis-stricken areas and affected areas, further depressing the economy. At this time, the government generally uses the fiscal deficit to stimulate economic development and makes up for the deficit by borrowing. When the total debt exceeds the government's solvency, debt crises will break out, such as Latin American debt crisis and European debt crisis.

Third, the increase in borrowing costs.

Most of the debts of Latin American countries are borrowed from western developed countries, and they have to make up for the deficit by borrowing new debts. These loans have short repayment periods and harsh conditions. Western developed countries have raised interest rates for their own interests and in response to the capitalist economic crisis, which has caused huge losses to Latin American countries. According to statistics, for every percentage point increase in interest rates, Chile will pay an extra $85 million, Brazil will pay an extra $570 million, and Argentina will pay an extra $654.38+0.8 billion. The increase in interest rates has greatly increased the debt burden of Latin American countries. From the end of 2009 to July of 20 1 1, Standard & Poor's downgraded Greece's sovereign rating from A- to CC, Portugal and Spain were also downgraded, and Italy's rating outlook was adjusted to negative on the night of May of 201/. The downgrade of credit rating aggravated investors' panic, caused capital flight and increased financing cost.

variation analysis

First of all, the lack of physical industries in the five European debt countries is the chief culprit of the crisis, and the economic structure of these countries is unbalanced. The five countries in crisis are relatively backward countries in Western Europe, which mainly rely on tourism and labor-intensive industries. The service industry in five European countries accounts for 66.57% in Ireland, 72.5 1% in Italy, 78.8% in Greece, 74.82% in Portugal and 74.06% in Spain. The service industries of the five countries are all tourism without exception. Tourism has a strong periodicity, which will bring huge income and promote its own economic development during the period of economic prosperity. However, during the economic recession, it will be very fragile, and affected by the subprime mortgage crisis in the United States, it will bring great impact to the tourism industry of these countries. Without the support of the real economy, when the economy has problems, it is easy to have a crisis. In addition, high welfare is also an important reason for the European debt crisis. In these countries, medical expenses and school expenses are relatively low, and the unemployed also get rich wages, which is easy to cause moral hazard. Over the years, the high welfare system in Europe has increased the burden on the government. After the financial crisis broke out, the government had to borrow money to maintain high welfare. Thirdly, the five European countries do not have independent monetary autonomy, and the euro zone does not have a unified fiscal policy. The monetary policy of the European Central Bank is the result of balancing the interests of countries in the euro zone. Compared with other member countries, the policies formulated by the European Central Bank are not optimal, which means that when the crisis breaks out, the five Greek countries hope to implement expansionary monetary policies, while Germany and France hope to implement stable monetary policies in order to stabilize their own price levels. This is also an important factor in the emergence of the crisis.

There are many differences between Latin American countries and the five debtor countries in Europe. First of all, Latin America is a developing country with a relatively backward economy. Although there is no high welfare policy to increase the government's burden, these countries mainly rely on exports to earn foreign exchange on the road of industrialization, and most of the export products are primary agricultural products and mineral resources. Among them, Brazil, Colombia and Ecuador mainly export coffee and bananas, while Venezuela and Mexico produce oil. After the capitalist economic crisis, oil prices continued to fall, and coffee was lost in the international market. The prices of agricultural products such as bananas have been falling again and again, which has made these countries miserable, the economic development has further deteriorated, the solvency has decreased, and the total debt has been rising, making the Latin American economy worse. Secondly, these countries in Latin America don't have as strong backing as the five European countries. Once there are problems in European member States, the European Central Bank and other member States of the euro zone will not sit idly by and avoid the spread of the crisis. It can be said that the problems in five European countries are more due to moral hazard in these countries. However, Latin American countries are not backed by the strong economic strength like the European Central Bank. Once there are economic problems, those western creditor countries will not only lose their reputation, but also make it worse, which is an important factor in the Latin American debt crisis.