They're demanding higher premiums to hold Latin or Asian debt compared to U.S. Treasuries. Asia's crisis has also dried up demand for the commodities Latin America relies on for export, especially crude oil, sugar and metals. There are trouble spots all across Latin America. But most investor fears begin in Brazil. Brazil is the regional giant and gets the lion's share of foreign capital.
Investment banks package Latin American debt together.
So if Brazil goes down, it takes the entire region with it. President Fernando Cardoso has no desire to return to the days of hyperinflation. His real plan has kept the currency stable and price increases relatively low. That's been key to restoring investor and consumer confidence. But while he's taken steps to open up the economy and privatize state-owned enterprises, he hasn't cracked down on government spending.