Is the Argentine Economy Going to Collapse?

[RWS]

. . . . Currently the Argentine government has being working on reforming the IMF. It's brillant plan consist on a new IMF the gives loans . . . .
PD: Is it "being" or "been"?

"Been": "Currently, the Argentine government has been working on reforming the IMF. Its brillant plan consists of a new IMF, that lends . . . ."

 

[bigbadwolf]

I've heard lots of thing about the IMF, but that it was some sort of international assasination squad, that's the first time.

Why is it so hard to believe? What happened to poor Allende in Chile in 1973? What happened to Nicaragua after Somoza got the boot? Guatemala? Panama? In the case of certain large countries like Brazil and even a thoroughly second-rate power like Argentina, the bad guys don't intervene, or at least not directly.

Argentina declared the bigest default ever and the IMF did nothing, no coup, no assasination. Argentina broke dependency witht the IMF and still it did nothing to prevent this. It's must be getting sloppy.

You should be knowing at least the mechanics of the system. The money was owed to private bankers who used their links with the Western governments to exert pressure. The IMF would come in if Argentina asked for a loan -- and then various austerity programs would kick in.

n my opinion, this hole argument is quite outdated. The Dependency Theory was huge in the 60s and 70s in latin america and it was the battle cry for many revolutionary movements. In a nutshell, the theory said that the rich countries worked to keep poor countries poor and keept them producing raw material, etc... And since the world was so unfair, the theory encouraged islationism and proteccionism., the periphery was supposed to "build it's own destiny...".

The few countries that have developed in any real fashion over the last forty years (i.e., not just becoming manufacturing hubs for Western MNCs) have either not taken any World Bank or IMF loans or have taken a few for specific purposes and promptly repaid them. Everyone else is mired in the same old rut.

Anyway, the theory was long discarded even by some of it's former creator that later became "neoliberal" (Brasi's president Henrique Cardoso), mostly because it's main argument can't actually be empiricaly proved and because it has been evident that no country can develope itslef on it's own, so rejecting foreign relations with the rich countries is ridiculous.

This is not a logical argument. Western capital is going to come in for Western needs: repatriation of profits, looser environmental regulatioons, labor to exploit, cheat, and deceive and so on. So development for whom? Better would be a slower, more sustainable development more attuned to the needs of the inhabitants. Provided you can keep the Westerners and their hit squads, armies, and aircraft carriers at bay.

I'm not saying "isolation." I'm saying the developing country should have some say in the terms on which it deals with the rich West. it shouldn't just be a client or vassal state -- which is what the US and it's junior European and Japanese partners ideally want

For example, there is no causal relation between dependency and underdevelopment (Canada is a good example, fully dependant of the US and yet quite rich and developed). Economy is not a cero sum game.
This kind of thinking is circular, you are poor becasue you are dependant, and you are dependant becasue you are poor.

Yet this circular loop does hold and it's difficult for poor countries to break out of it when the rules are designed (and enforced) by someone else with his own ulterior motives.

Basically, dependency failed to fully explain underdelopment in poor countries.

It is not a complete explanation, no. We sometimes call it "neo-colonialism." But it does have a ring of plausibility.

The IMF can be blamed for inadequate economic programs, and giving loans to irresponsable governments,

It does not do so. It makes sure it gets its pound of flesh.

 

[fedecc]

Why is it so hard to believe? What happened to poor Allende in Chile in 1973? What happened to Nicaragua after Somoza got the boot? Guatemala? Panama? In the case of certain large countries like Brazil and even a thoroughly second-rate power like Argentina, the bad guys don't intervene, or at least not directly.

The IMF overthrew Allende? I though Pinochet and the military did. Oh, i bet they were on the IMF payroll.

Seriously, your reductionism of Latin America history is borderland offensive, your western-centrism makes you think that all that happens here is because we are constantly played like puppets by the rich countries. We have our own history, our issues and our reasons to do the things we do. The US intervenes according to its own interests and like you said the intervention can be more evident in smaller countries, but this does not mean that the US is the main cause of what happens in Latin America. Allende was not overthrown because the US said so.

The IMF would come in if Argentina asked for a loan -- and then various austerity programs would kick in.

No, Argentina has been looking to get a new loan from the IMF for some time now. Argentina was left out (after a negotiation) of a recent loan program for developing nations to stand against the crisis. A few months ago an IMF crew flew here to analyze the situation but nothing was settled. The problem is the government wants a loan without any sort of controll, while the IMF wants some control and asks for some issues to be solved, like the intervention of the INDEC.

The few countries that have developed in any real fashion over the last forty years (i.e., not just becoming manufacturing hubs for Western MNCs) have either not taken any World Bank or IMF loans or have taken a few for specific purposes and promptly repaid them. Everyone else is mired in the same old rut.

Im going to need to ask for a source on this statement, or at least a few names of this countries you mention.

This is not a logical argument. Western capital is going to come in for Western needs: repatriation of profits, looser environmental regulatioons, labor to exploit, cheat, and deceive and so on. So development for whom? Better would be a slower, more sustainable development more attuned to the needs of the inhabitants. Provided you can keep the Westerners and their hit squads, armies, and aircraft carriers at bay.

Western needs and non western needs are not mutualy exclusive. like i said, economy is not a cero sum game. Its not i win = you loose.
And if your characteristics of what capital needs to set foot in a place were to be true, then all the manufacturing companies, all the capital in the world would be currently set in Somalia. What is best for foreign investments and genuine development for the long term is stability, economical, political and juridical. Most companies are willing to pay higher wages and have higher regulations if they are provided with a stable context in which their business can grow.

I'm not saying "isolation." I'm saying the developing country should have some say in the terms on which it deals with the rich West. it shouldn't just be a client or vassal state -- which is what the US and it's junior European and Japanese partners ideally want

I agree.

PS: oh and about me being (?) from the school of Chicago and having a bad english, i saw that. Im from the UBA and my english is almost perfect.

 

[davejohnson333]

The IMF and World Bank are both instruments of US policy, and the main objective of both is to keep the Third World subjugated so that its resources can be siphoned off and so that it serves as a market for both cheap labour and for the finished goods of multinationals.

Those who believe in a shadow government that is behind the scenes and even behind both political parties in the U.S. would say that the IMF, the World Bank, and the U.S. government are all instruments of the globalists who want to bring about a New World Order and their objective is to bring all countries into loan slavery and engineer an economic collapse to bring about a levelization of world economies so that it is easier to merge everything together eventually into one economy with a one world gov. Do not cry conspiracy theorist until you have done the research and examined
all the evidence. Do not be gullible either and believe everything that you hear.

HENRY KISSINGER USED TO BE HEAVILY INVOLVED IN THE SHADOW
GROUPS THAT WERE WORKING BEHIND THE SCENES TO BRING ABOUT A ONE WORLD GOVERNMENT WHEN HE WORKED IN THE U.S.
GOVERNMENT

Henry Kissinger says Obama is primed to create the New World Order
http://www.worldnetdaily.com/index.php?pageId=85442

 

[harpo]

Argentina and The US have plenty in common - lots of land, raw materials, great for agriculture, immigrant populations from all over the old world, well-educated middle class. Why is one the richest and most powerful nation on Earth, while the other staggers from one crisis to the next?

Personally I think political corruption has a lot to do with it - and the fact Argentinians don't get angry about it. It infects everyone and everything in the country.

 

[perry]

Argentina and The US have plenty in common - lots of land, raw materials, great for agriculture, immigrant populations from all over the old world, well-educated middle class. Why is one the richest and most powerful nation on Earth, while the other staggers from one crisis to the next?

Personally I think political corruption has a lot to do with it - and the fact Argentinians don't get angry about it. It infects everyone and everything in the country.

What a terribly simplistic argument being made here. The reason that the USA has not collapsed is because it has printed trillions of dollars which are still being accepted as legal tender by the rest of the world.

The average american citizen is 20 times more in debt than the Argentine citizen. Does that not tell you something is rotten to the core.

Im suprised that the USA citizens do not get angry about all the corruption in their own country ie BERNARD MADDOF WHERE IS THE 50 BILLION DOLLARS AND WHY IS THERE NO CONSPIRACY CASE . PLEASE AS IF HE DID THIS HIMSELF?

 

[harpo]

What a terribly simplistic argument being made here. The reason that the USA has not collapsed is because it has printed trillions of dollars which are still being accepted as legal tender by the rest of the world.

The average american citizen is 20 times more in debt than the Argentine citizen. Does that not tell you something is rotten to the core.

Im suprised that the USA citizens do not get angry about all the corruption in their own country ie BERNARD MADDOF WHERE IS THE 50 BILLION DOLLARS AND WHY IS THERE NO CONSPIRACY CASE . PLEASE AS IF HE DID THIS HIMSELF?

So you believe Argentinians have a standard of living equivalent to the US - take a look around you.

I'm no apologist for the US; I'm not even American, but to suggest the country is in thrall to some sort of spooky conspiracy is frankly fanciful.

 

[perry]

I have never said that Argentina has a standard of living equivalent to Western countries so please do not put words in my mouth.

Yes there is poverty and terrible villas miserias in Argentina and growing crime problems but to make out that we have more chances of collapse than other countries is unrealistic.

Credit and social security is the two main growth engines of western economies and now that that credit is being taken away and maybe in the near future social security most countries in the world will be exactly like Argentina with a wealthy class and a huge underpriveledged class.

The truth is there is more money in Argentina hands that is real cash not credit and combined with the worlds best farming land will guarantee our future.
The risk of default is low and most economists have recognised this of late.
The biggest risk is the US dollar fullstop.....................................................

 

[harpo]

I really hope that Argentina will live up to its undoubted potential - and not having the US's terrifying levels of debt should help.

But the potential has always been there and never seems to come to fruition - I was just wondering why that should be.

 

[preuben]

It's funny to me how the context of the orginal message has been lost with the mention of Nacha.

I'm an avid reader of the Economist as well as other reliable sources of news worthy outlets. Most economists say that Argentina is listed as one of the countries most "likey" to fail because of the debt that it carries and it's current political party policies. There are are a few aspects to take into consideration. On a global level Argentina isn't vested in the rich world sub prime mortgage mess ( a very good thing ). Argentina does however have mounting debt that has installment payments due - which is why the Argentine Govt seized millions of peses / dollars of pensioners funds from the banks - This may satisfy the Govt's immediate need for cash but puts long term cash supply for penioners and state funded projects at risk. Argentina already has a long a rich history of taking money and not paying it back - so much is pivoting on the outcome of Govt borrowed funds from the people.

Argenitina like any other stock or comodity is rated based on it's debt ( and repayment) opposed to it's GDP. At this point with Argentina having a much higher debt with inflation issues running at ( what's to be belived by economists world wide) 30% this causes huge issues for domestic product and the ability to fund projects needed to support consumer confidence within the country. Currently Argentina is down graded and has lender issues which may bring them to the IMF should China or other rich world countries not explore more trade agreements with them.

Many compensating factors are at play here and of course, many theories are in place. The real fact of the matter is nobody knows and people are hedging their bets that Argentina (who by the way has heavy Chinese investment) will fall but not like the rich world. The orginal theory and judgment of Argentina was compared to other South American contries and their respective economies/GDP/currency value etc., NOT the USA or Europe.

What makes Argentina a less "likely" ( in my opinion) to fail ( economically) is mostly due to the fact that Argentine people are not indebted to the credit world and there is an overall sense of consumer confidence as long as the Govt doesn't make any mis haps with the pension funds and cause havick with raising the value of the peso.

Argentina also has just put into place social programs that are to boost the slumping real estate market with interest rates as low as 10pc for new construction properties. Although, 10 pc ins't low to most people who live in the rich world this is a huge savings considering most interest rates for home ownership in Argentina is 29.9% or higher in Argentina.

Property values overall have only come down approximately 10-15 pc because of the lack of debt and staying power Argentine's have. I would guestimate that these properties that have seen a price decline are from foreign investors that financed their properties through equity lines of credit and are subjugated to job loss and serious economic straights in the US or U.K.

There is an arguement that a large amount of Argentine people are sliding back into poverty from an emerging middle class but the mind thought, once again, is that the people of Argentina are better equipped to handle the slide ( back if you will) because for many years they have learned to live with less and pay for lifestyles they can afford.

In finality...your guess is as good as mine and I wouldn't get to caught up in lip service. Do your self a service and get a script for a financial magazine that is middle of the road politically, so you get the best of both worlds.

I hope this puts some perspective to your question and let's you draw your own conclusion.