What if the 3 most indebted countries in the 1980s- Brazil, Mexico and Argentina- defaulted at the same time? It doesn't even need to be a conspiracy, say one defaults, then the banks have to increase interests, and the other two say "to hell with it" and default.
Let's say the default happens in 1982, right in the middle- or depending on who you ask, the tail-end- of the early 80s economic crisis. What effect would this have in the developed world? Would the financial system collapse or would it just take a hit?
A few thoughts:
-You just have to worsen the situation slightly in Brazil to make this happen. Throughout the 1980s, Brazil was *this* close to defaulting.
-Would the hot-blooded Argentinian dictatorship accept to default? This I don't know, but again, you only need for the economy to worsen somewhat, say the Ayatollah raises the oil prices again in 1981. Say Brazil defaults just after the Falklands War, and the Argentinian dictatorship goes rogue and decides to jeopardize global finance(it was going to end anyway, better to go out with a bang. You only need someone slightly more deranged than Galtieri, and I'm not even sure he was that sane in the first place)
-Reagan and Thatcher. Are they doomed? In fact, does a "large-scale working-class uprising", of the kind that Hobsbawn predicted in the 1980s but which never took place, actually happen this time? Does this lead to a revival of left-wing terrorism?
-Would the default motivate other countries to do the same?