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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (5190)	12/4/2001 10:46:23 AM
From: Hawkmoon	Respond to of 33421

Yeah... it would appear that dollarization in Argentina is a dicey issue. It certainly would be deflationary, providing them a currency much stronger than their economic fundamentals warrant. Sometimes I find myself in the Paul Krugman camp, believing that a devaluation is often the only way in which to spur economic recovery and bring the currency and economic variables back into balance, and reflective of the true state of events. But I could see dollarization working should their foreign debt be placed on hold and restructured, or even with US Fed taking the treacherous path towards acting as Argentina's central bank and buying up their national debt. I'm not sure if the US Fed has previously acted in this manner, but it's probably inevitable that will be required to do for those nations opting for dollarization. And long term it could have some real benefits towards merging the economies of Latin and North America. But of course, there's those nasty issues about soveriegnty to deal with... :0) And if anything, the Argentinians are a proud people, who's history and culture are probably the closest analogy to the US multi-cultural experience. If you were immigrating from Europe during the 1800's and early 20th century, there were generally two places you went to.. the US, or Argentina. Was it something to do with the climate?... :0) Hawk