1/8
Thanks, Gerardo, but if domestic Argentine politics really are as hopeless as you say, then the only intelligent response would have been for investors to stop lending money. Instead, when the century bond was launched just four years ago, it was more than three times...
Thanks, Gerardo, but if domestic Argentine politics really are as hopeless as you say, then the only intelligent response would have been for investors to stop lending money. Instead, when the century bond was launched just four years ago, it was more than three times...
https://twitter.com/g_rodriguez_r/status/1454848509610446856
2/8
oversubscribed, even though much of the world found it astonishing (the WSJ called it "preposterous"). What is more, we know from history that the severe economic contraction associated with difficult debt restructurings tends to radicalize the population and...
oversubscribed, even though much of the world found it astonishing (the WSJ called it "preposterous"). What is more, we know from history that the severe economic contraction associated with difficult debt restructurings tends to radicalize the population and...
3/8
worsen political outcomes, and current events in Argentina do not seem to be an exception. That is why I'd argue that there is no reason to assume that another decade of debt restructuring and economic pain will result in anything useful.
worsen political outcomes, and current events in Argentina do not seem to be an exception. That is why I'd argue that there is no reason to assume that another decade of debt restructuring and economic pain will result in anything useful.
4/8
What history seems clearly to suggest instead is that Argentina will experience great economic suffering and disinvestment during the restructuring period, followed ultimately by significant debt forgiveness, only after which will the economy start to grow again.
What history seems clearly to suggest instead is that Argentina will experience great economic suffering and disinvestment during the restructuring period, followed ultimately by significant debt forgiveness, only after which will the economy start to grow again.
5/8
But even if Buenos Aires is as hopeless as you say, my main point is that Washington should stop subordinating the interests of American producers, workers and farmers to the interests of international creditors.
But even if Buenos Aires is as hopeless as you say, my main point is that Washington should stop subordinating the interests of American producers, workers and farmers to the interests of international creditors.
6/8
When a country cannot access international capital, its debt repayments ultimately represent transfers from foreign producers to international creditors (including on this case many rich Argentines). The country itself is just collateral damage.
When a country cannot access international capital, its debt repayments ultimately represent transfers from foreign producers to international creditors (including on this case many rich Argentines). The country itself is just collateral damage.
7/8
That's because an Argentina that spends the next decade with net debt-repayment outflows (almost certainly exacerbated by capital flight) is an Argentina that must by definition run large trade surpluses.
That's because an Argentina that spends the next decade with net debt-repayment outflows (almost certainly exacerbated by capital flight) is an Argentina that must by definition run large trade surpluses.
8/8
It can only do so by squeezing imports and increasing exports, which means that ultimately foreign manufacturers and farmers must fund the transfers. But it should be international investors who bear the cost of their high-yield lending, not American and global producers.
It can only do so by squeezing imports and increasing exports, which means that ultimately foreign manufacturers and farmers must fund the transfers. But it should be international investors who bear the cost of their high-yield lending, not American and global producers.
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