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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: unclewest who wrote (14344)	12/21/2001 8:32:10 AM
From: Condor	Read Replies (1) \| Respond to of 281500

many of the leaders of such orgs are strongly anti-American. Why? C

To: unclewest who wrote (14344)	12/21/2001 8:41:33 AM
From: Condor	Respond to of 281500

Peronists to Inherit Argentine Economy Dec 21 3:23am ET By Guido Nejamkis and Cesar Illiano BUENOS AIRES, Argentina (Reuters) - The Argentine opposition Peronist Party, poised to take power after the resignation of President Fernando de la Rua, faces the grimmest of tasks: resuscitating a moribund economy in the midst of a four-year recession that has pushed millions into poverty. None of the possible cures for the patient are palatable for any politician, and the disease is likely to worsen before it gets better, with joblessness now at more than 18 percent, ever more people joining the ranks of the unemployed and many companies going belly up. But the Peronists' economic doctors know they have little time to find a cure to address the overvalued currency that has priced Argentina out of world markets. They already have seen how the pressure of the people accelerated De la Rua's departure on Thursday following the worst civil unrest in more than a decade, leaving a score dead and hundreds seriously injured. And as Argentina, with its $132 billion debt pile, sits on the brink of potentially the biggest default ever, there is no quick fix in sight. "The Peronists have the instinct to rule, but ... the difficulties (they face) will continue to grow because it will not be possible to satisfy the hopes of the people in the time the public wants," said political analyst Vicente Massot. Trying to figure out the Peronists' strategy is an exercise in futurology. The party, which controls Congress and 13 of 24 provinces, is a complex movement founded on trade unionism and Populism by Juan and Eva Peron in the 1940s. Former President Carlos Menem turned it into a pragmatic, vote-winning machine in the 1990s. Menem government introduced the convertibility system, in which the peso has been pegged at one to the dollar since 1991.But today the Peronists seem firmly divided between the dollarization of the economy and its "pesification," which would allow the currency's exchange rate to float freely. LACK OF LIQUIDITY IS KEY "You have those who want dollarization, a minority linked to Menem, and those who want to boost economic activity with a strong presence of the state, like Sen. Eduardo Duhalde and other governors," said a party economist, who spoke on the condition of anonymity. With dollarization, the peso would be substituted by the dollar, doing away with the fears of devaluation that have sapped domestic demand, the motor of Argentina's growth. But dollarization's rigid structure could also drown the economy -- and infuriate its major trade partner and neighbor, Brazil. Duhalde's position, on the other hand, envisages converting banks' assets and liabilities into pesos and later letting the peso float, thereby preventing Argentines indebted in dollars from going bankrupt. Raul Ochoa, an economic advisor for the Peronists in the lower house, said "pesification" of the economy will win the debate because "there is an urgent need to give the economy liquidity." Another Peronist economist, Alejandro Mayoral, vice president of the Bank of the Province of Buenos Aires and former trade undersecretary, said the third option mulled by the party is a new currency that would exist alongside the dollar and the peso but permit an increase in system liquidity. Convertibility prohibits the issue of new money, which has led to grave problems of liquidity in the financial system and prompted some provinces to print pseudo currencies to pay their bills. siliconinvestor.com

To: unclewest who wrote (14344)	12/21/2001 9:55:55 AM
From: Hawkmoon	Respond to of 281500

the IMF has already bailed out argentina several times...eating $132 billion may just be too much. Well, it's been expected for at least 6 months that Argentina would come to this state... They've built such a huge welfare state on the back of that foreign debt that they can't meet their budget liabilities. And no one wants to be the one to tell the people that they can't retire with the pension they thought they had been promised by the government. So in effect, Argentina was destined to return to some form of authoritarian rule. A rule that could initiate and implement the hard decisions necessary for them to straighten out their economic structure. And that appears to be the Peronists. The IMF folks KNEW the consequences of not restructuring Argentina's debt. In fact, I'm sure there have been communications with the opposition to see what reforms they would implement in exchange for the IMF not bailing out De La Rua's government. As for the Peronists being Fascists? Certainly Peron himself certainly was. But does that mean the "new" Peronists will create a wave of terror throughout the continent?? I'm not so sure. They will be facing enough domestic pressure as it is, without meddling in the affairs of other nations. But there is always that potential.. And judging from the response of this morning's market action, it would seem the US has relatively little exposure to Argentina's debt. Hawk