5 ms·

> The only other countries in the Americas with such a problematic currency situation are the ones facing economic sanctions. Argentina is not receiving econom

> The only other countries in the Americas with such a problematic currency situation are the ones facing economic sanctions. Argentina is not receiving economic sanctions but it's pretty much cut out from international credit. Last time the country had access to good credit mostly from other Latin American countries it was not doing that bad. That stopped when Venezuela and Brazil crashed. Maybe the huge interest rates and being cut out makes sense because "we don't pay", maybe it doesn't because some of that credit was taken by a dictatorship or by wildly unpopular and corrupt governments, but it does work pretty much as an economic sanction. Honestly I used to think this was unfair in the later 90s early 2000 when most of that debt came from lending by a US backed dictatorship or from a corrupt government that was basically in the pocket of big corporations. But it's true that as Argentinians there was not much we did against the former dictators, who most got pardoned or only saw consequences in the last years of their lives. Oh and the president from the corrupt government died a senator and only saw some years of house arrest from selling weapons to Ecuador when they were sanctioned. It's not clear for me if "the Argentinian people" are really ok with that or not anymore.

marcosdumay 5y ago
Being cut from international credit isn't something that creates inflation anyway. The situation is actually that Argentina is cut because of the same bad administration that got you the inflation. Getting access to international credit also will not stop the inflation. It can help a competent administration to survive the change into low inflation, but credit by itself is not something good (it's actually a bit bad), it's only helpful when invested competently.
- wbsss4412 5y ago
  Without access to credit, the only way to run a budget deficit is to print money. It is false to assert that having access to reasonably priced credit would have no effect on inflation.
  - totalZero 5y ago
    Corruption is one major problem with foreign loans to Latin American nations. In theory, money that is borrowed gets put to use for programs that generate revenue. That revenue may result in taxes or may support the treasury directly in some cases, but either way the notion is that the loan generates a return that pays the debt service (or bridges the borrower over to a future cashflow that can pay the debt service of the new loan). That return can't be generated if the money is not put to good use. As a result, loans that come due are often either refunded further out, or forgiven/restructured with certain concessions. By "concessions" I mean the country makes domestic and foreign policy changes that benefit the lender in some way. Argentina tapped IMF funds during Macri's presidency despite the 2014 default. I see the 2020 default as a negotiation tactic. It's a little unreasonable to assert that a country that owes hundreds of billions of dollars lacks access to credit -- and if indeed we describe them as lacking access to credit, it's only because they have over-accessed credit in the recent past. Lending a country more money under such circumstances often compromises their ability to support self-beneficial foreign policy, and kicks the debt can further down the road. It trades a big problem today for a bigger problem tomorrow.
    - wbsss4412 5y ago
      By no means did I mean to imply that Argentina is credit worthy. Only that inflation is tied in with other financial problems, including the inability to access international credit.
    - pvarangot 5y ago
      I don't personally think Argentina should have access to credit. I was politically active while down there, never at the federal level but I think most of my mates agreed that renegotiation of Argentina's debt under the premise that it was not legitimate was a good thing, and also that the federal government to stop relying on international credit was also a good thing. What I'm saying is that the effect of not giving access to credit to a government that is already massively indebted internationally has a similar macro effect to economic sanctions. It's basically reducing the profit you can make from international trade.
  - 5y ago

marcosdumay 5y ago

Being cut from international credit isn't something that creates inflation anyway. The situation is actually that Argentina is cut because of the same bad administration that got you the inflation. Getting access to international credit also will not stop the inflation. It can help a competent administration to survive the change into low inflation, but credit by itself is not something good (it's actually a bit bad), it's only helpful when invested competently.

wbsss4412 5y ago
Without access to credit, the only way to run a budget deficit is to print money. It is false to assert that having access to reasonably priced credit would have no effect on inflation.
- totalZero 5y ago
  Corruption is one major problem with foreign loans to Latin American nations. In theory, money that is borrowed gets put to use for programs that generate revenue. That revenue may result in taxes or may support the treasury directly in some cases, but either way the notion is that the loan generates a return that pays the debt service (or bridges the borrower over to a future cashflow that can pay the debt service of the new loan). That return can't be generated if the money is not put to good use. As a result, loans that come due are often either refunded further out, or forgiven/restructured with certain concessions. By "concessions" I mean the country makes domestic and foreign policy changes that benefit the lender in some way. Argentina tapped IMF funds during Macri's presidency despite the 2014 default. I see the 2020 default as a negotiation tactic. It's a little unreasonable to assert that a country that owes hundreds of billions of dollars lacks access to credit -- and if indeed we describe them as lacking access to credit, it's only because they have over-accessed credit in the recent past. Lending a country more money under such circumstances often compromises their ability to support self-beneficial foreign policy, and kicks the debt can further down the road. It trades a big problem today for a bigger problem tomorrow.
  - wbsss4412 5y ago
    By no means did I mean to imply that Argentina is credit worthy. Only that inflation is tied in with other financial problems, including the inability to access international credit.
  - pvarangot 5y ago
    I don't personally think Argentina should have access to credit. I was politically active while down there, never at the federal level but I think most of my mates agreed that renegotiation of Argentina's debt under the premise that it was not legitimate was a good thing, and also that the federal government to stop relying on international credit was also a good thing. What I'm saying is that the effect of not giving access to credit to a government that is already massively indebted internationally has a similar macro effect to economic sanctions. It's basically reducing the profit you can make from international trade.
- 5y ago