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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: GraceZ who wrote (25732)12/8/2004 7:10:32 PM
From: Elroy JetsonRead Replies (1) of 306849
 
From 1880 to the mid-1920s Argentina benefited from strong exports, primarily beef and wheat. During this period of extreme prosperity Argentina borrowed heavily overseas to give them tomorrow's benefits today.

When export prices declined from 1926 until 1940 or so, they continued to borrow and spend. Argentina was viewed as one of the few quality credits during the Great Depression.

Argentina's period of "endemic inflation" you refer to was an attempt by the right-wing government of Juan Perón to continue providing a false prosperity with an increased money supply when foreign lenders became reluctant to extend additional credits at the same pace.

Today, Argentina's economy continues to decline as they are unable to provide the investment neccessary to grow. It's hard to escape from the implosion of too much indebtedness.

New Zealand, and to a lessor extent Australia, experienced the same period of prosperity from agricultural exports as did Argentina. But neither New Zealand or Australia indulged in Argentina's orgy of borrowing, so only Argentina lies in economic ruin.

Argentina exists as a warning for those who believe in the magic of debt and it's supposed power to build a brighter future. High debt levels normally leads to future generations celebrating their glorious past as they suffer through the deprivation of today.

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