Tuesday, June 21, 2005


After a record default on its sovereign debt in 2002, Argentina's economy recovered robustly without international financing.

Many argued that Argentina's unprecedented default on loans from the IMF and World Bank would render it a pariah state uncapable of tapping international financial markets to borrow for development.

Not so. Argentina's default, yesterday, set another precedent. Not only did default not lead to economic ruin, it did not shut Argentina out of international financial markets.

Developing country technocrats take heed.


At 12:40 AM, Anonymous Anonymous said...

I guess somebody has to blaze this lonely trail. Then when we go belly up, we can say, "well, they did it too!"

At 12:16 PM, Blogger Globalize This! said...

The great thing is we don't have to default. The Argentinians were (and many other countries are) trapped by debt because they had to borrow in foreign currencies, and thus must restructure their economies (and therefore their domestic social relations) in order to earn foreign currency to pay debt service obligations. Fortunately for the US, the government can borrow in its own currency. Ain't hegemony grand? Rather than default, the government can just inflate away the debt.


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