toongeorges said:
But only in Argentina. In Europe she would have had to resign a long time ago. Do you honestly think she is good for the Argentine economy? What I am concerned, Argentina currently is in a corralito, the difference with the previous one being that the previous one only lasted for a short while. They are trying to make this one last as long as possible, since self-delusion is a virtue in Argentina.
At least three of the BRICS countries currently are using exchange controls (South Africa, Russia and Brazil) Are they all self deluded?**
Incorrect to assume that having exchange controls = financial mismanagement
and certainly
not having exchange controls doesn't correlate well with financial probity!!! Look at the state of the UK economy at the moment and where the policy of "light touch" with UK Banks has ended up!
I maintain the test for the last two Argentine presidents (at least how the majority of Argentines seem to see it) is not how do they compare with Europe it is how do they compare with the alternative that was available - and the alternative was Menem!
Toongeorges sorry but a little imprecise and rather confusing to suggest the corralito exists at the moment let alone suggest it is here to stay. I don't see any banks refusing to provide legal Argentine currency and you do have access to your bank account subject only to exchange controls which isn't
unique to Argentina!
I certainly don't agree with all of the macro economic policies let alone political policies pursued under the K brand over the last 12 years or so but structural reform is clearly needed and there is little confusion here in the country that the Washington consensus as operated under Menem as good as bankrupted the country.
Squeezing out the USA $ from the Argentine economy is a sensible structural reform and a necessary but not sufficient condition for sustainable growth.
Incidentally as far as exchange controls in Uk concerned their removal by the incoming Conservative Government was based on supply-side neo-liberal orthodoxy in 1979 and linked to the subsequent "reform" (SIC!) of UK banking regulations on very liberal lines
but the benefits to the UK economy of having removed exchange controls is difficult to disentangle:
".....suggesting that the abolition of exchange control has very probably contributed to the internationalization of the UK stock market. While these effects seem clear and robust, Artis and Taylor find the immediate impacts of abolition on asset prices, interest and exchange rates and balance of payments flows difficult to isolate from the contemporaneous impacts of North Sea Oil, the second oil price shock and the `reputation' of the new government."*
The UK economic argument in favour of retention of £ sterling and not € is the ability to be able to control the national currency for monetary policy purposes including ability to use exchange rate mechanisms in a way that favours the management of the economy.
Seems to me that the economic argument for de-dolarisation in Argentina runs along similar lines.
*Discussion Paper No. 294, Research Fellows Michael Artis and Mark Centre for Economic Policy Research quoted from
http://www.cepr.org/pubs/bulletin/dps/dp294.htm
** and China has exchange controls too!!!
