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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (25723)	12/8/2004 5:43:08 PM
From: microhoogle!	Read Replies (2) \| Respond to of 306849

However Argentina is not a world power to enforce it's might to get economic clout the way good old USA can :-). One can always sign deals in our favor with a damocles sword (or a nuke sword) over other leaders heads <vbg>. Argentina did not have that option.

To: Elroy Jetson who wrote (25723)	12/8/2004 6:37:20 PM
From: GraceZ	Read Replies (4) \| Respond to of 306849

It wasn't a rhetorical question, I thought maybe you knew. I had to look it up. I did after I asked that question. Now their external debt is around 128% of their GDP but their GDP has been contracting ever since the currency crisis/debt default in 1998. GDP has contracted 17% from the time of the crisis. At the time, their government deficits were a lower percentage of GDP than our own, around 3.4% to 4.7% of GDP. It seems they suffered, ever since WWII, from endemic inflation. Numerous fixes were applied through the various governments, but the "fix" of pegging their currency to the dollar, appears to be the thing that killed them because there was no way to devalue their currency in an orderly fashion without getting slapped with an emerging market premium on their debt. Also they became hostage to US monetary policy, they couldn't adjust their interest rates to their own internal economy (when you maintain a peg you lose the interest rate tool). The devaluation is what triggered the default and the complete loss in confidence in their currency, triggering bank runs and whatnot. The IMF came in just to make sure the patient had no chance of recovering.