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To: stockman_scott who wrote (45321)	12/18/2001 4:25:58 PM
From: Sully-	Read Replies (1) \| Respond to of 65232

IMF Blasts Argentina Economic Policy IMF Decries Argentina's Economic Policy As Country Struggles to Pay Off $132 Billion Debt By TONY SMITH AP Business Writer BUENOS AIRES, Argentina (AP) -- The International Monetary Fund turned up the heat Tuesday on debt-ridden Argentina, saying its current economic policy was unsustainable. Speaking in Washington, the Fund's chief economist, Kenneth Rogoff, told reporters ``it's clear that the mix of fiscal policy, debt, and the exchange rate regime is not sustainable.'' Hobbled by a four-year recession that has sparked deflation, spiraling unemployment and an 11 percent drop in industrial production in November compared with a year earlier, Argentina is struggling to pay off its $132 billion debt. The IMF earlier this month held back $1.3 billion after Argentina failed to meet previously agreed upon budget deficit targets. Rogoff did not criticize any specific policy and said the mix was ``the subject of ongoing negotiations'' with Argentina. There was no immediate comment from the Economy Ministry. But Finance Secretary Guillermo Mondino said in neighboring Uruguay that Argentina desperately needed IMF support for an upcoming debt swap. Argentina is asking creditors to exchange existing government debt for longer-term bonds with lower interest rates. ``If the IMF does not support (the swap), it won't be successful,'' Mondino said in a speech ahead of a meeting of the four-nation Mercosur trading bloc. ``It's clear that if we don't have an orderly debt restructuring, we're dead meat,'' he added. The second, international phase of restructuring Argentina's $132 billion debt is slated to begin in late January and should be over in February. Failure to renegotiate would likely result in a default and economic chaos in South America's second-largest economy. Rogoff's comments came a day after Economy Minister Domingo Cavallo said he wanted to slash more than $9 billion from his 2002 budget, cutting public spending from $49 billion to $39.6 billion. But the proposed cuts have angered some opposition lawmakers, who worry that further austerity measures could spark widespread social unrest. Increasingly desperate Argentines have staged their eighth general strike in two years, sacked supermarkets and trashed ATMs to protest a partial bank freeze introduced Dec. 1 to prop up the financial system. ``We hope to have the budget passed before the end of the year,'' Cavallo told a news conference Monday. ``We must make the cuts to superfluous expenses that Argentines are demanding.'' Central to Cavallo's proposal is a plan to save $5 billion by lowering costs through a debt swap with international investors. Further, unspecified spending cuts would take care of the remaining $4 billion, he said. He did not rule out further cuts in public sector wages. Rogoff's comments raised a few eyebrows among foreign analysts. Some said they showed the Fund was pressing for a relaxation of the peso's one-to-one fixed exchange rate with the U.S. dollar. The dollar peg, introduced by Cavallo in 1991, brought a decade of price stability and initial economic growth. But it has since been blamed for helping to make Argentina's economy less competitive than neighboring Brazil's, which has a floating currency. ``It's difficult to know if there is a hidden message that the exchange rate is unsustainable,'' said Neil Dougall, chief Latin American economist at Dresdner Kleinwort Wasserstein in London. ``But one gets a feeling there are certain people within the Fund who want a change'' to the dollar peg. Cavallo has insisted on maintaining the peg, forcing him to limit Argentines' bank withdrawals to $1,000 a month, which in turn sparked speculation savings could be confiscated to pay the country's debt installments. Despite the partial banking freeze, the financial system has continued to bleed. On Dec. 13, two weeks into the freeze, the central bank said net foreign reserves were down $400 million to $19.57 billion and bank deposits were down $940 million to $67.93 billion. Two Wall Street analysts told The Associated Press the drain was more serious than official figures suggested, meaning Argentina's financial liabilities already outstripped its dollar reserves. The analysts, who spoke on condition of anonymity, estimated total ``real'' reserves at $15.4 billion and total financial liabilities at $16.97 billion -- a nearly $1.6 billion shortfall. biz.yahoo.com

To: stockman_scott who wrote (45321)	12/18/2001 4:59:38 PM
From: Jim Willie CB	Read Replies (4) \| Respond to of 65232

recovery may not be as robust as these housing builders are planning for Japan will absolutely guarantee a slow recovery in US as they do a slomo implosion, they will buy USBonds and our rates will come down this spring and summer deflation tsunami will hit in next 3-5 months could be over by March31st, Japan repatriation deadline Japan is extremely likely to buy USBonds big big big they want to devalue their jyen currency and we wont stop them only trouble is moron Euro Central Bank is still fighting inflation these fools are fighting the war of the 1970's inflation their irresponsible actions will slow the worldwide economic recovery / jim