4 ms·

Do you think what happened was Argentina's worst-case scenario, given the magnitude of its crisis? Plenty of knowledgeble people [1] think crag's comment is not

by ez77 15y ago

Do you think what happened was Argentina's worst-case scenario, given the magnitude of its crisis? Plenty of knowledgeble people [1] think crag's comment is not a stupid thing to say. [1] http://www.nytimes.com/2011/09/02/opinion/argentinas-turnaround-tango.html http://www.nytimes.com/2011/09/02/opinion/argentinas-turnaro...

jessedhillon 15y ago
Why did you post that? Did you even read it? That opinion piece talks about how Argentina recovered from the crisis, and it definitely does not say that defaulting on their debt was the right step. If anything, it is a resounding endorsement for the Obama plan and a rebuke of austerity in times of crisis. Argentina has regained its prosperity partly out of dumb luck: a commodity price boom has vastly benefitted this soy, corn and wheat producer. The government intervened to keep the value of its currency low, which boosts local industry by making Argentina’s exports cheaper abroad while keeping foreign imports expensive. It then taxed those imports and exports, using the money to pay for a New Deal-like public works binge, increasing government spending to 25 percent of G.D.P. today from 14 percent in 2003. Why have Argentines embraced bigger government? In part because the preceding era showed how poorly austerity measures — the sort now being pushed by conservatives in the United States — promote growth. In the late 1990s, Argentina cut government spending drastically on the order of its lenders at the International Monetary Fund. For one thing, extreme cost-cutting during a stagnant economic period will only inhibit growth. And government spending to promote local industry, pro-job infrastructure programs and unemployment benefits does not turn a country into a kind of Soviet parody. It puts money in the pockets of average citizens, who then spend it and spur the economy.
- ez77 15y ago
  Are you going to answer my point, or just the degree of relevance of my citation? You presented Argentina's dire situation as a consequence of its currency crisis, when in fact devaluation (i.e., the "currency crisis") was a great relief. One, by the way, Greece is unable to do unless it abandons the Euro. One, by the way, Argentina was unable to do by law during nine years [1]. Did you read craig's short comment? It talks about devaluation, not default. Now, it so happens that Argentina chose to pay just what it owed the IMF and effectively get out of "the world credit establishment" with a big, unpaid debt. Guess what? No Argentinean government could have set in motion state intervention/"stimuli" of any kind had most of its resources been devoted to pay an unbearable foreign debt. (Debt interests, in fact.) As you surely know, even though Argentina's debt is proportionally [2] smaller than the that of the US, the payback rates it gets are prohibitive, unlike America's 3%. Just for clarity, what was your point? That Argentina would have been better off without default? Without devaluation? Both? Let me reiterate, there is nothing stupid about thinking otherwise... [1] http://en.wikipedia.org/wiki/Argentine_peso#Peso_convertible.2C_from_1992 http://en.wikipedia.org/wiki/Argentine_peso#Peso_convertible... [2] https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html https://www.cia.gov/library/publications/the-world-factbook/...
  - jessedhillon 15y ago
    My point is that default, or any other sort of fuck-the-system type of approach (e.g. let the largest banks become insolvent) is not a serious option. First, the time for such a thing has passed; second, even if it were now the time for it, give me expensive stimulus and bailout every day of the week. Sovereign debt and deficit spending are not what's killing us -- 70% of GDP is half what Argentina's debt was and it's well within acceptable limits. I believe that calls for austerity are foolishly, and derived from free market dogma. crag suggested that the mere fact that Argentina recovered from such a staggering blow to its economy was indicative of something -- the implication, it seems, is that the fact of recovery is enough to warrant severe measures such as default. That's stupid, for the reasons I laid out above. You, however, seem to be supporting the original reasoning by employing an appeal to authority and suggesting that certain credible thinkers agree with crag's premise. However the one example you provided did not bear evidence of that. I don't know what else your point is -- I don't care to debate Argentina except that you seem to be using it as an example of something. I don't know about "what if" and the hypothetical situation in which Argentina did not default. I know what did happen --default, followed by an IMF-imposed austerity program, led to 50% poverty. It's only when people got behind so-called "big government" measures that they actually started to see real recovery.
    - ez77 15y ago
      I can't believe you don't look for a long-trend indicators, let alone (again) when you feel entitled to throw around terms like "stupid". Default didn't yield social chaos; rather, it was seen by most political factions as the only way to end it. You see, Argentina's unemployment [1] and poverty [2] rates soared during Menem's worship-the-system 90's. These rates happened to peak, respectively, in 2001 and 2002, basically around the time Argentina defaulted, among many other measures. Now, with a discipline as complex as economics, given all the variables floating around, it is hard to conclude rigorously that defaulting contributed to reversing this trend, but it sure is harder to claim the opposite! [1] http://www.wolframalpha.com/input/?i=argentina+unemployment+1980-2011 http://www.wolframalpha.com/input/?i=argentina+unemployment+... [2] http://www.wolframalpha.com/input/?i=argentina+poverty+rate+1980-2011 http://www.wolframalpha.com/input/?i=argentina+poverty+rate+...

by ez77 15y ago

jessedhillon 15y ago

Why did you post that? Did you even read it? That opinion piece talks about how Argentina recovered from the crisis, and it definitely does not say that defaulting on their debt was the right step. If anything, it is a resounding endorsement for the Obama plan and a rebuke of austerity in times of crisis. Argentina has regained its prosperity partly out of dumb luck: a commodity price boom has vastly benefitted this soy, corn and wheat producer. The government intervened to keep the value of its currency low, which boosts local industry by making Argentina’s exports cheaper abroad while keeping foreign imports expensive. It then taxed those imports and exports, using the money to pay for a New Deal-like public works binge, increasing government spending to 25 percent of G.D.P. today from 14 percent in 2003. Why have Argentines embraced bigger government? In part because the preceding era showed how poorly austerity measures — the sort now being pushed by conservatives in the United States — promote growth. In the late 1990s, Argentina cut government spending drastically on the order of its lenders at the International Monetary Fund. For one thing, extreme cost-cutting during a stagnant economic period will only inhibit growth. And government spending to promote local industry, pro-job infrastructure programs and unemployment benefits does not turn a country into a kind of Soviet parody. It puts money in the pockets of average citizens, who then spend it and spur the economy.

ez77 15y ago
Are you going to answer my point, or just the degree of relevance of my citation? You presented Argentina's dire situation as a consequence of its currency crisis, when in fact devaluation (i.e., the "currency crisis") was a great relief. One, by the way, Greece is unable to do unless it abandons the Euro. One, by the way, Argentina was unable to do by law during nine years [1]. Did you read craig's short comment? It talks about devaluation, not default. Now, it so happens that Argentina chose to pay just what it owed the IMF and effectively get out of "the world credit establishment" with a big, unpaid debt. Guess what? No Argentinean government could have set in motion state intervention/"stimuli" of any kind had most of its resources been devoted to pay an unbearable foreign debt. (Debt interests, in fact.) As you surely know, even though Argentina's debt is proportionally [2] smaller than the that of the US, the payback rates it gets are prohibitive, unlike America's 3%. Just for clarity, what was your point? That Argentina would have been better off without default? Without devaluation? Both? Let me reiterate, there is nothing stupid about thinking otherwise... [1] http://en.wikipedia.org/wiki/Argentine_peso#Peso_convertible.2C_from_1992 http://en.wikipedia.org/wiki/Argentine_peso#Peso_convertible... [2] https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html https://www.cia.gov/library/publications/the-world-factbook/...
- jessedhillon 15y ago
  My point is that default, or any other sort of fuck-the-system type of approach (e.g. let the largest banks become insolvent) is not a serious option. First, the time for such a thing has passed; second, even if it were now the time for it, give me expensive stimulus and bailout every day of the week. Sovereign debt and deficit spending are not what's killing us -- 70% of GDP is half what Argentina's debt was and it's well within acceptable limits. I believe that calls for austerity are foolishly, and derived from free market dogma. crag suggested that the mere fact that Argentina recovered from such a staggering blow to its economy was indicative of something -- the implication, it seems, is that the fact of recovery is enough to warrant severe measures such as default. That's stupid, for the reasons I laid out above. You, however, seem to be supporting the original reasoning by employing an appeal to authority and suggesting that certain credible thinkers agree with crag's premise. However the one example you provided did not bear evidence of that. I don't know what else your point is -- I don't care to debate Argentina except that you seem to be using it as an example of something. I don't know about "what if" and the hypothetical situation in which Argentina did not default. I know what did happen --default, followed by an IMF-imposed austerity program, led to 50% poverty. It's only when people got behind so-called "big government" measures that they actually started to see real recovery.
  - ez77 15y ago
    I can't believe you don't look for a long-trend indicators, let alone (again) when you feel entitled to throw around terms like "stupid". Default didn't yield social chaos; rather, it was seen by most political factions as the only way to end it. You see, Argentina's unemployment [1] and poverty [2] rates soared during Menem's worship-the-system 90's. These rates happened to peak, respectively, in 2001 and 2002, basically around the time Argentina defaulted, among many other measures. Now, with a discipline as complex as economics, given all the variables floating around, it is hard to conclude rigorously that defaulting contributed to reversing this trend, but it sure is harder to claim the opposite! [1] http://www.wolframalpha.com/input/?i=argentina+unemployment+1980-2011 http://www.wolframalpha.com/input/?i=argentina+unemployment+... [2] http://www.wolframalpha.com/input/?i=argentina+poverty+rate+1980-2011 http://www.wolframalpha.com/input/?i=argentina+poverty+rate+...