Derivatives markets can destabilize elected governments in the Global South

Evidence

At this scale and scope, it is necessary to consider that we may be witnessing, as LiPuma and Lee argue, “a planetary shift in power away from national state political systems, or perhaps political systems of any kind, and toward the global financial markets.” As the structural form that circulates and globalizes risk, derivatives are a key determinant in this paradigm shift. This destructive power is perhaps most evident in the many countries of the Global South that have felt the wrath of derivatives markets. For example, the election of Luiz Inácio Lula da Silva of the Workers’ Party in Brazil in 2002 set off a wave of depreciation of Brazil’s currency driven by the derivatives markets. The Brazilian real fell by 30 percent compared to the dollar and euro, swelling Brazil’s debt obligations and severely limiting Lula da Silva’s ability to remedy the country’s economic and social injustices, the platform for which he was elected. — Andrew deWaard, Derivative Media, 161

Categorization

Category: Causal Relationships

• XREF: Connects to LiPuma & Lee’s ‘Financial Derivatives and the Globalization of Risk’ — the reader’s own financialization thread.

Related

• Financial markets destabilized governments without directly orchestrating their fall (similarity 0.96)
• Derivatives markets can punish elected governments via currency depreciation (similarity 0.94)
• Financial markets punish governments through currency devaluation and downgrades (financialization’s disciplinary power). (similarity 0.80)
• Speculative capital inflicts violence on the Global South that no state can regulate (similarity 0.78)