Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: GraceZ who wrote (25732)	12/8/2004 7:10:32 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

From 1880 to the mid-1920s Argentina benefited from strong exports, primarily beef and wheat. During this period of extreme prosperity Argentina borrowed heavily overseas to give them tomorrow's benefits today. When export prices declined from 1926 until 1940 or so, they continued to borrow and spend. Argentina was viewed as one of the few quality credits during the Great Depression. Argentina's period of "endemic inflation" you refer to was an attempt by the right-wing government of Juan Perón to continue providing a false prosperity with an increased money supply when foreign lenders became reluctant to extend additional credits at the same pace. Today, Argentina's economy continues to decline as they are unable to provide the investment neccessary to grow. It's hard to escape from the implosion of too much indebtedness. New Zealand, and to a lessor extent Australia, experienced the same period of prosperity from agricultural exports as did Argentina. But neither New Zealand or Australia indulged in Argentina's orgy of borrowing, so only Argentina lies in economic ruin. Argentina exists as a warning for those who believe in the magic of debt and it's supposed power to build a brighter future. High debt levels normally leads to future generations celebrating their glorious past as they suffer through the deprivation of today. .

To: GraceZ who wrote (25732)	12/8/2004 8:40:31 PM
From: Amy J	Read Replies (2) \| Respond to of 306849

If their debt was so low, why did they spiral into inflation? I thought inflation was a govt's "cure" for out of control deficits. But if they didn't have deficits, what was the issue causing inflation? Regards, Amy J

To: GraceZ who wrote (25732)	12/8/2004 9:27:18 PM
From: Spekulatius	Read Replies (1) \| Respond to of 306849

re Debt implosions - I don't know if this applies to Argentina, but in many developing countries have many restrictions on what foreign investors can buy. Even now, Foreigners in Thailand and many other countries cannot own land or and there are restrictions to ownership to national companies as well. So if a country borrows from foreign debtors and a crisis were to develop, foreign debtholders are restricted from converting their debt into ownership of many assets, which could stop the death spiral. This is a very different situation from the US, where very few restrictions exist for foreign investors. If ever a death spiral would start to develop, I think foreigns would scoop up US assets in exchange for their debt. I believe for this reason, if nothing else,a death spiral with foreign debt is much more unlikely if it is going to happen, it will not be as severe as with many developing countries.