This was faster than even I expected (for my views on what Macri meant as soon as he was elected see this and for a more recent assessment go to this post). Let me first say that I don't think is quite like the 2001/02 crisis. It is unlikely that there will be a default anytime soon. The level of reserves is at about US$ 56 billion, and the IMF is happy to finance the very Neoliberal government of Macri (because the IMF has changed a lot, remember?).
The economy with Macri has not performed very well, as expected....Macri ran on fixing the economy.
Naked Keynesianism
A brief comment on the Argentinian Crisis
Matias Vernengo | Associate Professor of Economics, Bucknell University
In late 2010 Argentina fell into a trade deficit that has continued to worsen since then. Therefore Argentina has had to buy more and more imports from abroad. Since Argentine pesos are not widely accepted outside Argentina’s borders, Argentina has had to burn through whatever foreign currency reserves the Argentina had built up before late 2010. When those reserves are gone, Argentina will be forced to borrow foreign currencies in order to keep buying imports. The result will be an ever-expanding mountain of external debt.
ReplyDeleteIn order to make payments on its foreign debt, Argentina’s government will privatize public assets, and impose severe austerity in the masses. The purpose of austerity is to impoverish the masses so that they demand fewer imports of consumer goods (since the masses have no money to buy consumer goods). This helps ease the foreign debt crisis, and also helps ease inflation.
(In the UK and USA, austerity is 100% unnecessary and gratuitous.)
Argentina’s government has depreciated the peso in order to make Argentinian exports cheaper for foreigners to buy. But this also makes imports more expansive to buy.
THE SOLUTION TO ARGENTINA’S FOREIGN DEBT PROBLEMS is a national campaign to boost exports and self-sufficiency. But since President Mauricio Macri is a neoliberal, his solution is to grind the masses into the dirt, so that the masses buy less. In this way, neoliberal oligarchs can rule over the masses like gods.
A third of the way down in the article you see a graph that shows Argentina’s current account (i.e. balance of trade). In 2002 Argentina reached a peak in exports under President Eduardo Duhalde. This peak was caused by the rising demand from emerging markets such as the BRIC countries, particularly China.
Under Duhalde’s successor, Néstor Kirchner, Argentina’s exports started to fall, but the economy remained strong. Therefore Néstor Kirchner was popular, and when he suddenly died in Oct 2010, his wife Cristina Fernández de Kirchner became president. Cristina was also popular, but Argentina’s economy continued to weaken. By late 2010 Argentina fell from a trade surplus to a trade deficit. The economy was in severe trouble. Cristina Fernández became unpopular and embattled, so in December 2015 the Argentine masses decided to try Mauricio Macri.
Macri, however, is a neoliberal, which means that his solution to every problem is more austerity, more poverty, more inequality, and more privatization.
Adios Argentina. Fue linda conociéndote.
In late 2010 Argentina fell into a trade deficit that has continued to worsen since then. Therefore Argentina has had to buy more and more imports from abroad. Since Argentine pesos are not widely accepted outside Argentina’s borders, Argentina has had to buy imports by burning through whatever foreign currency reserves that Argentina had built up before late 2010. When those reserves are gone, Argentina will be forced to borrow foreign currencies in order to keep buying imports. The result will be an ever-expanding mountain of external debt.
ReplyDeleteIn order to make payments on its foreign debt, Argentina’s government will privatize public assets, and impose severe austerity in the masses. The purpose of austerity is to impoverish the masses so that they demand fewer imports of consumer goods (since the masses have no money to buy consumer goods). This helps ease the foreign debt crisis, and also helps ease inflation.
(In the UK and USA, austerity is 100% unnecessary and gratuitous.)
Argentina’s government has depreciated the peso in order to make Argentinian exports cheaper for foreigners to buy. But this also makes imports more expansive to buy.
THE SOLUTION TO ARGENTINA’S FOREIGN DEBT PROBLEMS is a national campaign to boost exports and self-sufficiency. But since President Mauricio Macri is a neoliberal, his solution is to grind the masses into the dirt, so that the masses buy less. In this way, neoliberal oligarchs can rule over the masses like gods.
A third of the way down in the article you see a graph that shows Argentina’s current account (i.e. balance of trade). In 2002 Argentina reached a peak in exports under President Eduardo Duhalde. This peak was caused by the rising demand from emerging markets such as the BRIC countries, particularly China.
Under Duhalde’s successor, Néstor Kirchner, Argentina’s exports started to fall, but the economy remained strong. Therefore Néstor Kirchner remained popular, and when he suddenly died in Oct 2010, his wife Cristina Fernández de Kirchner became president. Cristina was also popular, but Argentina’s economy continued to weaken. By late 2010 Argentina fell from a trade surplus to a trade deficit. The economy was in severe trouble. Cristina Fernández became unpopular and embattled, so in December 2015 the Argentine masses decided to try Mauricio Macri.
Macri, however, is a neoliberal, which means that his solution to every problem is more austerity, more poverty, more inequality, and more privatization.
Adios Argentina. Fue linda conociéndote.
I don't know why my comment was printed twice.
ReplyDeleteUSD zombies...
ReplyDelete