The oil price has skyrocketed over the past few months and the finger often points to Libya and claims of supply disruptions have dominated the press. However, are these claims grounded in fact or are we watching yet another sentiment driven bubble?

As the economic crisis abates, there is an emerging consensus that a better safety net is needed to enable countries with good policies to insure against bad outcomes, especially when they are innocent bystanders.

In our highly globalized economy, large and rapid flows of money across borders are here to stay. The challenge for emerging economies is to find ways to manage these flows so that they don't exacerbate boom-bust cycles.

There is good reason to believe that South America, in particular, can weather this storm with minimal damage if it adopts the right macro-economic policies.