Tommy i think AG got the desired effect by jawboning the markets down...i doubt he would raise rates in the face of a slowing economy and the slow but potential turn around of all those countries that have such fragile economies...
Agreed.
Namely....
Argentina... (I am willing to say, they will adopt the US Dollar as their own currency, sooner than most expect).
If so,
1. the "evils" of devaluation dissapear, as now, they will have a currency that is strong, asset pricing will be dependant on how productive these assets are in terms of returns based on US dollars, as opposed to what local supremo decides to steal or squander from the local economy.
2. the politician's tricks become harder to hide.
3. "trade globalization" becomes easier, since the currency exchange risk is eliminated, or at least reduced to a point of a more visible risk, given the fact that local policies would still affect the competitiveness of local industries, in terms of what costs they would face based on specific social/fiscal policies.
But the use of the US Dollar would stand in the shadows vigilant of collectivist policies. In essence "devaluations" would occur in specific products, (or industries), becoming less competitive.
4. if Argentina does take such measure... then Brazil and Mexico would follow easier, setting aside local "strong nationalist sentiments", particularly in Mexico, the country that is...
"So far from god and sooooo close to the US!!"
Similar, for other countries... Russia, Indonesia, Arkansas.....<g> |
