Posted on 08/06/2014 10:12:04 AM PDT by Lorianne
It's not every day that Argentina defaults on its debt. It just seems that way.
Okay, that's not entirely fair. After all, it's been 13 years since the last time it did. That's not bad for Argentina, which has now defaulted eight times in its 200-year history. But this latest one was certainly its strangest. Argentina didn't default because it couldn't pay its bondholders. It defaulted because a New York judge wouldn't let it pay its bondholders—not unless it also paid the hedge funds that were holding out for a better deal on its old defaulted debt.
Yes: Argentina was forced to default now, because it wouldn't pay the bonds it had defaulted on in 2001. Confused? Well, here's what you need to know.
1. Once upon a time—100 years ago, to be exact—Argentina had the fifth-largest economy in the world. But decades of bad policies, worse governments and general incompetence turned this one-time powerhouse into a cautionary tale of default and devaluation. By the 1990s, though, Argentina thought it had finally found the cure for its congenital inflation: outsourcing its monetary policy to Alan Greenspan by pegging the peso to the dollar.
It worked, until it didn't. Inflation came down and foreign capital came in, but at the cost of making countercyclical policy impossible. So if a big shock hit Argentina's economy, it wouldn't be able to cut interest rates to cushion the blow, because its currency peg meant it could only do that when the Fed did. And that, of course, is exactly what happened when Europe's and Brazil's currencies fell so much that Argentina's exports suddenly became seriously overpriced in 1998.
(Excerpt) Read more at washingtonpost.com ...
Time for “Los Malvinas” again? After all, they lost the World Cup on (almost) home soil as well. Cristina Kirchner is starting to hum “Don’t Cry for Me ...”
Socialism is the problem but the WAPO ain’t going to say that
Keep quiet about international financial elites; they were not involved, they were home, in bed, asleep.
They’re just boring bankers.
America, look at Argentina and contemplate your future.
Before 1950s Argentina was one of the top global nations, ahead of USA in terms of GDP per capita by far.
Exactly correct, though the brand of socialism was sold by different names-- Peronism, fascism, crony capitalism, etc.
I knew it was one of the ten richest countries in the world a mere century ago. I had no idea it was the world's fifth largest economy.
According to that impeccable source Wikipedia, it was still one of the 15 wealthiest counties in the world until the mid-1950s, when Peron was run out of town.
So the crap they've been practicing since can only be described as a more refined brand of socialism or Peronism on steriods.
Defaulting on international debt has become a badge of honor in that country. It earns a politician more brownie points with the voters than anything else you could do.
Source? I've always heard that during their good times before socialism that they were getting up to the range of European countries, but never ahead of the US. Wikipedia (yes, I know the warnings) cites that "[Argentine] GDP per capita rose from 35% of the United States average in 1880 to about 80% in 1905, similar to that of France, Germany and Canada." But "By 1950, Argentina's GDP per capita accounted just nearly half of the United States."
And Detroit was the Paris of North America.
Heckuva job, socialists/democrats!
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.