ABSTRACT
The Latin American debt crisis has developed in a period of declining US hegemony. This chapter discusses aspects of the interconnection between the North-South debt crisis and the more recent North-North debt crisis. It takes a systemic and medium-term perspective, in the sense that it neglects all the relevant domestic aspects of the indebted countries as well as short-term developments. The debt crisis thus exploded in 1982 from the workings of an international financial instability dynamic that lacked an international regime strong enough to contain it. The financial picture may be described in terms of overlapping games. The international financial instability hypothesis is described first and connections to the theory of international regimes are drawn. The generation of a stable and sustained rate of growth of demand required the existence of a new macroeconomic regime based on multilateralism. After the transition to multilateralism, the generation of demand and ultimate liquidity no longer lie with the same actor.
