Sunday, July 10, 2011

Why not go for broke? It will happen soon, anyway

Defaulting rescued Argentina. It could work for Athens too

"Struggling under an impossible burden after its IMF bailouts, Buenos Aires knew its one hope was to stop paying its debts and become a pariah – and so it proved". Argentina, stuck in a recession since 1998, had done everything the IMF had told it to do. After several bailouts, the government imposed wave after wave of eye-watering austerity measures, as prescribed by the "Washington consensus", and sought a voluntary restructuring with its private sector creditors, all of which will sound familiar to the Greeks. Like Greece, Buenos Aires had swallowed the textbook analysis – backed by the IMF and the consensus of academic economists and domestic politicians – which said its problem was not an overvalued currency and unsustainable debts, but too much public spending...

Posted by alan @ 03:20 PM (1692 views)
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9 thoughts on “Why not go for broke? It will happen soon, anyway

  • general congreve says:

    DO IT!!! DO IT!!! DO IT!!!

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  • Look at the timeline for Argentina at the bottom of this piece – consider how much better it would have been had they acted sooner.

    For the Greeks, there is nothing to gain from further delay now.

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  • clockslinger says:

    We certainly have devaluation too but, unlike the disobedient Argies, we will obey the rules of the game that our masters chose to play and pay their gambling debts for them without complaint. How lucky we are to have sterling and the devaluation option. Thank you Mervyn. Thank you Eaton.

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  • little professor says:

    Greece should definitely default. Vested interests want Greece to sell off all its national assets to private corporations and tax the hell out of the ordinary working class for generations to come, just so that they don’t lost any of the money they speculated. Screw them, Greece should tell the IMF to go to hell and follow Argentina’s example – their economy has been booming since the default, despite the IMF’s doom-mongering about it leading to chaos and economic meltdown for the country.

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  • Argentina could legitimately void a lot of debt because much of it was Odious Debt, some Greeks are looking to do an audit too, to identify their Odious Debt, so that they can tell the ‘creditors’ that their claims are void.

    IMHO much of the US private housing debt is Odious Debt, much of the IMF and World Bank loans are too, and probably a lot of the UK debt is too!

    The US government and bankers really don’t like the term “Odious Debt”, so try very hard to keep it out of the media, even to the extent of blantantly lying as to why some debt was written off!

    See:
    https://secure.wikimedia.org/wikipedia/en/wiki/Odious_debt

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  • I think there’s a big difference between Argentina, a second-world country with rapid growth and ample natural resources defaulting and Greece, a supposedly first world country with high unionisation, slow growth defaulting. Argentina knew that it would have another bite at the cherry. For Greece, it was as good as it is ever going to get on 1 Jan 2002.

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  • 5.3% for Italy and 5.7% for Spain, and following where Greece led within a few weeks. They are well and truly f***ed, and with them the Euro as it currently stands because the centre can’t afford to bail them out. While our media were obsessed with the closure of The News of the World, the real news was here.

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  • Sorry, wrong thread.

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  • orcusmaximus says:

    @5 – interesting. Under the Wikipedia definition, much of the UK’s debt was down to the Labour Party buying votes, and not for the good of the nation. Hence it too becomes Odious Debt.

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