Yet this week investors seemed to view South America as standing on the brink of a chain of defaults of the kind that whipped through the region in the 1980s.
In two unprecedented moves, the Fed engineered a marriage between JPMorgan Chase and Bear Stearns, lending $29 billion to JPMorgan to prevent a Bear bankruptcy and a chain of defaults that might have felled much of the financial system.
If it now went under, there could be a chain of catastrophic defaults among banks that hold the securities and related investments.
In the event of a chain of south European defaults, there is no political mandate for the injection of tens of trillions of euros of liquidity into the European financial system; nor any plan for dealing with bank insolvencies arising from cross-border lending that would induce large-scale bank failure inside and outside the eurozone.
It would also deprive doctors, pensioners, contractors and millions of others of money needed to meet their own obligations, setting off a chain reaction of defaults.Nor would the sanctity of the debt be guaranteed.
Henry M. Paulson Jr., the current Treasury secretary, vigorously endorsed the Fed's rescue efforts on Sunday and made it clear he was much less worried about the "moral hazard" of bailing out a Wall Street firm than he was about a chain reaction of defaults if Bear Stearns were to abruptly collapse.
When liquidity dries up, as I said, it can produce a chain reaction of defaults.
The moves amounted to a sweeping and apparently unprecedented attempt by the Federal Reserve to rescue the nation's financial markets from what officials feared could be a chain reaction of defaults.
However, the monetary union will not be able to survive in the long run unless something is done in the next few months to avoid a chain reaction of defaults among countries in the euro zone.
The longer European leaders deny and temporize, the higher the risk that panicked investors could set off a chain reaction of defaults and bank failures that could fracture the 16-country euro zone.
