Sunday April 20, 2014 Search
Weather | Athens
17o C
11o 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 regionís 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 Argentinaís 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 Argentinaís 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. Argentinaís 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 firmís 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, Argentinaís governments have not implemented reforms and now find it difficult to meet their nationís demands.

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

ekathimerini.com , Friday June 1, 2012 (16:45)  
The placebo effect and the economy
Ukraine is a crisisóbut not a Cold War
Transparency of political party funding
Historical baggage
Greek Christians mark rare Good Friday in north Cyprus
Hundreds of Greek Orthodox pilgrims, some coming home after 40 years of forced exile, commemorated the crucifixion of Jesus in a rare Good Friday service in northern Cyprus. Held in this med...
Greece offers to help find Turkish F-16 lost in 1996
Greece officially offered on Thursday to assist Turkey in its efforts to locate and salvage a Turkish Air Force fighter jet which crashed in the Aegean almost 20 years ago. Greek Defense Min...
Inside News
Eurobank share offering on April 25-29
Greece's third largest lender Eurobank, which is issuing new shares to help plug a capital shortfall, said on Friday that the cash call will take place from April 25 to 29. The transaction o...
PPC to issue corporate bond of 500 mln
Public Power Corporation is planning to tap the markets after Easter with the issue of a corporate bond to draw 500 million euros. The Energy Ministry is also eagerly awaiting the issue, as ...
Inside Business
BASKETBALL
Greens lose badly as CSKA Moscow
Panathinaikos has a mountain to climb in order to reach the Final Four of the Euroleague after losing at CSKA Moscow on Friday for a second time in two days, only this time it was comprehens...
BASKETBALL
Former Red Bourousis wrecks Olympiakosīs hopes for a break
Olympiakos tried harder in Game 2 of the Euroleague play-offs in Spain, and Real Madrid was not as good on Thursday as in Game 1, but the Spaniards still emerged victorious on the night with...
Inside Sports
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
†RECENT NEWS
1. Greek Christians mark rare Good Friday in north Cyprus
2. Eurobank share offering on April 25-29
3. Greens lose badly as CSKA Moscow
4. Former Red Bourousis wrecks Olympiakosīs hopes for a break
5. PPC to issue corporate bond of 500 mln
6. Greece offers to help find Turkish F-16 lost in 1996
more news
Today
This Week
1. Greek Christians mark rare Good Friday in north Cyprus
2. Eurobank share offering on April 25-29
Today
This Week
1. Greece's market return mirrors return of tourists
2. Parties start announcing candidates for European Parliament elections
3. Samaras sees no need for third bailout
4. Greece startup leaders say they canít break jobless cycle alone
5. Ground-breaking Good Friday mass signals thaw in Cyprus
6. IMF's Thomsen says Greece not fully financed to 2016
†††Find us ...
††... on
Twitter
†† ††... on Facebook ††
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.