ARGENTINA'S ECONOMIC COLLAPSE

 http://www.edu-irep.org/actu.htm
Romain Kroës

   Looks kooky. But, then some say I'm a kook!
(First few paragraphs...While euro coins were arriving in European banks,
European central bank was contributing to the promotion of that new
currency, by raising it to the level of 0$90 that seems to have become ECB's
parity reference (in the hope to reach one day 1 to 1). Though, Argentina's
example shows what is to be paid for seeking to maintain a stable parity
with the dollar. Even Japan does not manage to do it any more.

ECB's experts believe that European monetary history begins with the euro
currency. But euro is the merger between eleven currencies the history of
which, with respect to dollar, goes back to 1971. The graphic above shows
that euro sliding, since its creation, is nothing but the continuation of a
thirty-years mean trend (average weighted by GDP). It is not a matter of the
parity level, but of a trend resulting from the systematically negative sign
of US's balance of trade, while planetary debit is a dollar one. Stable
parities between currencies would be only possible if the USA took their
part of the stabilization of changes. But that woulf mean, then, that they
would pay their debt, what would considerably reduce their consumption and
their power.

Every time European central bank buys euro back, in order to try "defending"
it, ECB throws away a part of its dollar reserves and this way cancels a
quantum of American debt. The final result of such a process is
impoverishment of Europe. Argentina's example demonstrates it.)

M.Pugliese

12/20/01 12:13:25 PM
From:  MindAphid@aol.com
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>...here are a

couple other analyses of the recent argentinian crisis however.

keith


from world-systems theorist Romain Kroës
NAUFRAGE DE L'ARGENTINE (ARGENTINA'S ECONOMIC COLLAPSE)
03-11-2001
http://www.edu-irep.org/actu.htm#arg



Date: Sun, 16 Dec 2001 11:14:59 -0300
From: "Gorojovsky" <Gorojovsky@arnet.com.ar>
Subject: The Argentinean bust: one side of the polyhedron

The economic team, lead by the super-roguish Cavallo(1), is bent on either

shrink the 2002 national budget to a bacterian size and dedicate any monies

collected to payments of foreign creditors (thus, there would be no "defaul
t"
--
save for Argentineans themselves!) or directly elliminating the national
currency and substitute dollars for it. In fact, they are placing pressure
on
the Congress -who are the ones that have to give the OK to the 2002 budget-

by
menacing them with an immediate dollarisation.

Among the variegated and blood-dripping consequences of such a move, the mo
st
important one seems to be that Argentina will return to the mid-1800s, when

there was no national currency and different coins and notes circulated in
a
disjointed country. Because dollarisation would imply that the amount of
"hard"
- -true- currency within the country will depend solely on the ability of
Argentina to obtain specie (that is, dollars) from its foreign trade and
credit. The amount that can be obtained in this way is ridiculously small,
of
course, and a host of financial instruments will have to take its stead.

Another issue with dollarisation is that it can be done only if

(a) accounts in the banks are volatilized (or, conversely, transformed into
,
say, 30 or 50 year bonds or tenders by the State), or

(b) a massive and monstruous devaluation takes place BEFORE the dollarisati
on.

The reason is simple: while the dollar reserves of Argentina are still arou
nd
the 15-19 billion level, and currency in the market is about 15 billion
(which
would allow for a 1 to 1 dollarisation), deposits in the banks are around 6
0
billion, and there is no way to obtain the dollars that should pay for them
..

In the end, what has happened is that 25 years of looty are closing down wi
th
a
paralyzed, squalid, country where the last savings of the petty bourgeoisie

will pay for the drainage of money of all these decades.

I am lucky enough not to have anything with the banks but debts (but if the
y
dollarise my debts without dollarising my income -and of course we are alwa
ys
talking of 1 to 1 dollarisation of incomes- then I will be quite hard
pressed),
ah yes and a whole month's salaries that have not been paid to me as yet...

My case is a very common one in the petty bourgeoisie.

The essentials of the situation are that we have a government of the
murderers
that has to give some solution to a town that has been depopulated by the
same
murderers in charge. A solluble fish.


N O T E S

(1)who is also something of a psychopat with an obsessive will to save his

"convertibility" from the flames: I have seen him in person, recently, for

the
first time, and I could not escape that feeling

Néstor Miguel Gorojovsky
gorojovsky@arnet.com.ar


"[C]apital comes dripping from head to foot, from every pore, with blood an
d dirt."
--Marx, Capital, Vol. 1, Chapter 31

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