7 responses

  1. ANDRES
    16 April 2012

    I am Argentinian and live in my country.

    Your view is perfect IMO

    Regards
    Andrés

    • Edward Harrison
      16 April 2012

      I have many Argentine friends, Andres and I have great sympathy for you. Good luck. I hope I am wrong about Fernandez de Kirchner but she is becoming ever more dictatorial and that’s no good for Argentina.

  2. Paul
    16 April 2012

    “Yes, Argentina’s decision to default was realistically the right call given the crushing debt load. And that is the path the euro zone periphery is on. But, beyond this, I fail to see where Argentina is the model.”

    Are commentators actually suggesting that Argentina is a model in other ways? My impression has always been that people reference Argentina to take away the whole stigma of national default as if the country is immortally screwed if they go through with it (not to say that default is costless, but as you say sometimes it is the best option). Whether or not the government screws things up later seems moot imo.

    • Edward Harrison
      16 April 2012

      Commentators are actually suggesting that Argentina is the model in other ways. They point to the growth trajectory of Argentina post default as a sign not just of defaulting allowing the economy to be unburdened by unpayable debt but also of Argentine economic policy post-default as something worthy of emulation. I am making the point here that the two are not the same. Moreover, the same urges that led to default in the first place have nationalistic overtones. That means as I said above for the EU: “any move toward economic nationalism and unilateral action in the EU will be part of a whole campaign of nationalism that will pervade all parts of the political economy.”

  3. Cap’n Credit
    18 April 2012

    I agree that ARG practically had no choice but to default in 2001. However, it is my impression that the country wasted the subsequent decade of commodity boom (bubble?) driven growth by failing to reform its fiscal infrastructure. The subsequent actions of the government (nationalizing the pensions/fudging econ data/export controls/YPF) are merely increasingly desparate measures to ward off further decline. The EU should take note that default without subsequent structural reform (ie. labor markets/ease and cost of doing business) merely perpetuates decline. And the EU will not be able to rely on the vast natural resources that benefitted ARG.

    • Edward Harrison
      18 April 2012

      100%. The government is now facing peak oil. That is what is behind the YPF grab. Kirchner wants to show she is doing something about the fact that Argentina is now a net importer of energy while demand continues to increase and production drops. It is only going to get worse.

      • David Lazarus
        19 April 2012

        As a Brit my concerns are that if she becomes desperate she may drag the country into another war over the Falklands. That is what dictators do to deflect criticism of their leadership.

        I can understand to an extent the nationalisation of YPF. The deals struck with oil companies are far too one sided in favour of multinationals and if that is not redressed then sovereigns have no option but to stop the theft of national assets by a foreign power. The same will happen in Spain once the Troika have their way. Private banks will walk away the Spanish, Greek Irish Portuguese French, and eventually German gold and silver.

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