ANDRES OPPENHEIMER

aoppenheimer@MiamiHerald.com

Don't be fooled by the universal sigh of relief that was heard Friday when the U.S. Congress approved a $700 billion package to rescue the U.S. banking system.

The measure will help avoid an economic collapse, but the U.S. economy will remain in the doldrums, and Latin America will be hit harder than many suspect.

Granted, the Wall Street crisis that rocked world markets in recent weeks will not mean ''the debacle of capitalism,'' as Venezuelan President Hugo Chávez triumphantly proclaimed, nor will it cause the First World to ''plunge like a bubble,'' to use Argentine President Cristina Fernández de Kirchner's mixed metaphor.

That's not going to happen. More likely, it will mean a shift of the pendulum from the Bush administration's excessively deregulated free market economy to a more regulated one, as has happened so many times after cycles of U.S. overspending and undertaxing.

But judging from what I heard from Latin American presidents, economy ministers and leading economists at The Herald's Americas Conference hours after the House passed the bailout, the U.S. credit crunch will hit us all for the remainder of this year and in 2009, if not longer.

''The shock has been so big that it's going to take some time for the American consumer to start buying again, or to start taking up credit,'' said Mustafa Mohatarem, chief economist of General Motors. ``Consumer spending will be more curtailed for at least a couple of years.''

That will mean a slowdown in U.S. economic growth, the engine of the world economy, and the main source of trade, tourism and investment for most Latin American countries. The U.S. economy, which was projected to grow at 3 percent a year for the rest of the decade before this crisis, is now projected to grow by 1 percent next year, or not to grow at all.

As a result, Latin American countries will see a drop in their exports to the world's biggest market, fewer U.S. tourists, and less family remittances from their migrants living in the United States. This will especially hurt Mexico and Central America, whose economies are closely tied to the U.S. market.

But South America will also be hit hard by a drop in commodity markets because a slowing world economy will result in less demand for oil, soybeans and other raw materials that have fueled the growth of Venezuela, Brazil, Argentina and other countries in the region.

''The commodity bubble, while not bursting, is clearly deflating,'' Mohatarem said.

Financially, Latin America as a whole will have greater difficulties to access foreign loans to pay for infrastructure projects or meet their foreign debt payments. In addition, the financial crisis comes at a time when many countries already are facing higher oil and food import bills.

''We have four crises that are affecting our countries simultaneously,'' Dominican Republic President Leonel Fernández said. ``The financial crisis, the energy crisis, the food crises and the global warming crisis. There is no question that this will have an immediate, direct impact on us.''

While international financial institutions have not yet officially downgraded their economic projections for Latin American economies in 2009, they probably will do so soon.

Augusto de la Torre, the head of Latin American department of the World Bank, told me in a television interview that Latin America's economy may grow by 2.5 percent to 3.5 percent in 2009. Previous World Bank projections, and those of most international financial institutions, were forecasting a Latin American growth rate of at least 4.5 percent for next year.

THE BOTTOM LINE

My opinion: The U.S. bailout is good news, but won't be enough. It will not spur economic growth unless Washington starts reducing its $11.3 trillion debt, and people renew their confidence in the economy. The next U.S. president should impose an austerity package -- much like those prescribed to Latin American countries whose financial crises rocked world markets in the 1980s and 1990s.

As for who will get hurt the most in Latin America, the list will include the very countries that have been celebrating the U.S. financial crisis as the alleged ``collapse of capitalism.''

The decline in commodities prices will hurt the export income and may increase political tensions in Venezuela, Argentina, Ecuador and other raw material-exporting countries that have been spending above their means. Their populist policies were based on sky-high commodity prices -- and that's an era that may have come to an end.

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