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Home Publications Blogs Beat the Press The Good News About Argentina's Economy Is That It Is Nowhere Near As Bad As Reuters Wants You to Believe

The Good News About Argentina's Economy Is That It Is Nowhere Near As Bad As Reuters Wants You to Believe

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Wednesday, 18 June 2014 16:17

Reuters wants its readers to believe that "analysis-wary Argentines" are disgusted with their government's economic policies as "jobs [are] becoming harder to find." While there is little doubt that Argentina is experiencing difficult economic times, it certainly is doing much better than countries that have followed an austerity path, like Greece, Spain, and Portugal, all of which are experiencing double-digit unemployment rates.

In fact, Argentina's 7.6 percent unemployment rate is less than half of its own double-digit rates in the mid-1990s. Back then we were told that Carlos Menem was re-elected based on the success of his economic reforms.

Comments (9)Add Comment
huh?
written by Dave, June 19, 2014 6:44
Did you even read the article?
...
written by dax, June 19, 2014 6:57
So the American hedge funds are making bundles off a country's default and causing untold misery, and Dean's take from this is, But Argentina is doing better than Greece! My take from this is that the default that Anglo-Saxons seemed to want from Greece would have done little to help the Greek people but done much to line the coffers of American hedge funds. I guess you have to decide which master you serve.
...
written by Kat, June 19, 2014 8:04
So the American hedge funds are making bundles off a country's default and causing untold misery,

Could you clarify for me-- how would the hedge funds make a bundle off default? From what I read it appears US court rulings have caused the misery.
...
written by dax, June 19, 2014 9:14
The hedge funds bought Argentina's bonds at well below par, sued in court, and, because of the judge's ruling, are now supposed to be reimbursed at par.
Who owned Greece's debts
written by Squeezed Turnip, June 19, 2014 11:00
Dax, it wasn't so much American hedge funds, more so French banks
Huh??
written by Squeezed Turnip, June 19, 2014 11:13
Dave, did you read the article? Up to the end, the reporter decries the economic cost of default, yet fails to point out that if Argentina had done what Greece et al. did they would be looking at far deeper and longer lasting damage to the Argentine economy and people.

An even bigger point is the trend that the finance folks now feels its the role of the US government to guarantee returns to the owners of capital? They are playing right into Marx's critique. Marx understood capital far more than Dimon, Blankfein, et alia do.
...
written by Kat, June 19, 2014 11:27
sued in court, and, because of the judge's ruling, are now supposed to be reimbursed at par.

That was my point. It was the ruling, not the fact that they defaulted. It did not have to be this way.
Argentina Pushed to Artificial Default By US Crony Capitalism
written by Jesse, June 19, 2014 11:50
The two minute version is this. Argentina settled with almost all of its debt holders years ago and issued new bonds. Two US hedge funds bought up a lot of the cheap defaulted debt on the cheap, and then sued in NY courts to prevent Argentina from making ANY payments to any creditors unless they gave into the hedge funds demands of paying 100% of the old debt bonds. The Courts endorsed a twisted version of pari passu equality by saying a 100% payment on the new bonds with their haircuts demands a 100% payment on the old defaulted bonds. The US DoJ filed a brief in favor of Argentina with the Supremes, opposing an odious ruling by Scalia that permitted a general and non-specific discovery for Argentine assets, a precedent that could come back to haunt the US Corporations overseas. The BRICs have a summit coming up on July 15, and this latest 'excess of financial empire' will be foremost in their minds.

Does that help? Yes what was done was 'legal.' Lots of things in a crony capital economy are 'legal.'

Floyd Norris has a column in June 20 Times discussing how the US ruling on Argentine debt could backfire
written by John Wright, June 20, 2014 10:22
http://www.nytimes.com/2014/06...-hand.html

Per Norris's writeup, the unintended consequence of this ruling could be to drive foreign countries to other debt markets diminishing the role of New York as a world financial center.

So the NY hedge funds, who pushed for this ruling, might succeed in harming their friends/associates in the NY financial community in the longer term.

People/nations usually compensate for new rules.

It will be interesting to observe if US financial markets pay a price for this ruling.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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