Fed interest rate hike devastating to LatAm: Mexican academic

The U.S. Federal Reserve's recent decision to raise interest rates would have a devastating impact on Latin America, according to a Mexican academic this week.

Alfredo Jalife-Rahme, professor of political science at Mexico's National Autonomous University (UNAM) and author of numerous books, believed the move would lacerate regional economies.

In an article published earlier this week in various regional news outlets under the headline "U.S. Fed's global currency war: Latin America against the ropes," Jalife-Rahme warned the "unilateral" decision would cause "cataclysmic collateral damage" and have "profound geopolitical implications in the rest of the catatonic planet, in particular in Latin America."

Due to the U.S. dollar's "pernicious hegemony," any decision the Fed, the "de facto global central bank," made was bound to impact world economies, explained the academic.

The quarter of a percentage rate hike announced this month would be followed by similar increments throughout 2016 to reach a target rate of 1.375 percent, according to the Fed, wrote Jalife-Rahme.

"Will the world and 'Mexico's neoliberal (camp)' withstand another four consecutive quarter-point increases when the first led to the bankruptcy of ICA, one of the leading construction firms in Latin America?" asked the author.

Mexico's dependency on U.S. monetary policy had led to Mexican peso plummeting nearly 30 percent in less than a week, according to the New York Times, noted Jalife-Rahme.

U.S. global intelligence agency Strategic Forecasting, better known as Statfor, "acknowledged that the Fed handles the rates in an egotistical and unilateral way, with no consideration for the cataleptic state of the rest of the planet," wrote the author.

Peter Spence, writing for British the Daily Telegraph, said "the countries most vulnerable to the measure are 'Brazil, Chile and South Africa,'" wrote Jalife-Rahme.

According to the financial journalist, said the author, "the emerging markets could be particularly vulnerable as many of them have amassed enormous quantities of debt (that) could be unmanageable."

Both Brazil and South Africa were members of the BRICS bloc of emerging economies, which "fuels the theory that the Fed hike is collaterally intended to squarely hit them," he said.

"The real problem," wrote the author, lay in the 9 trillion U.S. dollars in foreign debt that countries had accumulated, and the political fallout, as seen in Venezuela and Argentina, where the ruling parties recently took a beating at the polls.

"Are we facing a global currency war waged by the Fed against the rest of the catatonic world?" asked Jalife-Rahme.

Far from bolstering the global economy, "the Fed hike has pushed the world dangerously into uncharted waters," the academic concluded. Endi