Saturday August 23, 2014 Search
Weather | Athens
32o C
25o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Argentina's way

Argentinians lining up to buy US dollars with devalued pesos at the headquarters of the Banco de la Nacion in Buenos Aires in 2002.

By Nikos Konstandaras

When a nation is at a dead end, it wants to hear things are not so bad, it wants promises of a painless escape through a secret passage. In Greece today, where everyone is experiencing their own personal truth and believes that everybody else is conspiring against them, we often hear (from both left and right) that we should declare bankruptcy like Argentina in 2001 and go our own way. As unshakable proof of their wisdom, the proponents of this argument point out that the rich South American country had the region’s fastest growth rate after 2003.

However, Argentina is not out of the woods and it is fighting alone in a difficult international climate. Before making other comparisons, it is useful to remember where Greece is today. A great part of the difficulty we face in reducing our debt and becoming more competitive stems from the fact Greece does not have its own currency to devalue. But this is also our greatest strength: Our place in the eurozone forces us to introduce reforms that will make our economy viable while, at the same time, it ensures the active support of our partners (as long as it lasts).

If we abandon this unequal battle, the return to the drachma will grant us the freedom to try Argentina’s way. When the peso was unpegged from the US dollar in 2001, its value dropped from an exchange rate of 1:1 to 4 pesos for each dollar. Savings were wiped out. But the international economy was booming and Argentina’s many products and commodities found growing markets and achieved good prices. In 2003-11, GDP grew by an annual average of 7.7 percent, thanks to bumper harvests, a hunger for commodities in China and increased sales of cars to Brazil.

Last month, however, industrial output was down for the first time since 2009; drought has hit crops and demand for its exports has slowed. Argentina’s benchmark dollar bonds due in 2017 have a bond yield 1,339 basis points higher than the equivalent US bonds. Measures to stem capital outflows have been enforced as an estimated $200 billion was spirited abroad in recent years. Inflation is seen at 23 percent in 2012. Argentina is shut out of capital markets and foreign investors are avoiding it (more so after it nationalized a Spanish oil firm’s subsidiary).

Worst of all, as a European diplomat with years of experience in Argentina notes, is that the public administration is overstaffed and inefficient and corruption is rampant. With their own currency, Argentina’s governments have not implemented reforms and now find it difficult to meet their nation’s demands.

Argentina’s lessons are indeed valuable, as long as we understand them before it is too late.

ekathimerini.com , Friday June 1, 2012 (16:45)  
Purification rituals
Building a solid state apparatus
On steroids
Time to kick a stupid habit
Baltakos rejects reports of plans to form own party
Ex-cabinet secretary and prime-ministerial adviser Panayiotis Baltakos says he is not poised to form his own party but believes New Democracy should be doing more to attract right-wing voter...
Athens finalizes Paris talks goals
The Greek government has begun finalizing its negotiating strategy for the imminent talks with troika officials in Paris, setting four clear priorities for the September meeting. Kathimerini...
Inside News
ANALYSIS
Perceptions and praying for our peers
The performance of the eurozone’s other economies over the next few quarters will be much more important to Greece’s than the seemingly meager impact from the geopolitical crisis in Ukraine,...
New banking measures aimed at tackling nonperforming loans
The Bank of Greece is expected to deliver its latest code of ethics for the sector within the current week, possibly even today, as commercial banks scramble to deal with a mass of nonperfor...
Inside Business
Soccer refereeing investigation goes into final stage
A judicial probe into alleged corruption in Greek soccer is entering its final phase, with 11 top officials due to give depositions to Court of First Instance deputy prosecutor Aristidis Kor...
West Brom sign Greek international striker Samaras
West Bromwich Albion have signed Greece striker Georgios Samaras on a two-year contract following his release from Scottish champions Celtic, the English Premier League club said on Friday. ...
Inside Sports
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Perceptions and praying for our peers
2. New banking measures aimed at tackling nonperforming loans
3. Smaller firms wiped out by the crisis
4. Bank shares on wild ride amid test fears
5. Baltakos rejects reports of plans to form own party
6. Soccer refereeing investigation goes into final stage
more news
Today
This Week
1. Purification rituals
2. Greek police in easiest drug arrest ever
3. Athens police seek hit-and-run driver after pedestrian dies
4. Kavala man left 6 dogs at home without food or water for 2 weeks
5. Athens finalizes Paris talks goals
6. Public officials expect Thessaloniki metro project to finish in 2018
Today
This Week
1. Carved sphinxes at Ancient Amphipolis tomb will not be removed
2. The magical mountain
3. Merkel cites euro’s ‘construction flaws’ as economy sputters
4. Brussels warns Greece over plans to allow construction near Korinos beach
5. Greek stock recovery fading away as ASE falls 21 pct on valuations
6. Second man held over double murder in Mani
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.