Argentina blames IMF for crisis | BBC

[Ediacara]

Argentina blames IMF for crisis


Debt default triggered an
economic crisis
International Monetary Fund policies are to blame for impoverishing 15 million people in Argentina, the country's president has said.

Nestor Kirchner's comments came after an internal IMF report criticised the fund's relationship with the country over the past decade.

The report said the IMF had exacerbated the country's economic crisis, which struck in December 2001.

But Mr Kirchner said the self-criticism was simply too little, too late.

The IMF report also blamed the government for its 2001 debt default which triggered the crisis, pushing half the population into poverty.

"Obviously we can't ignore the responsibility of the ruling class in Argentina," Mr Kirchner told BBC correspondent Elliott Gotkine in Buenos Aires.

More at the BBC

[4morewars]

1. IMF =...

International Mother Fuckers

[oscar111]

2. Default->Poverty:Pls,steps in the chain of action?

Pls tell seminewbie exactly what links in the chain of events led from default to mass poverty?

Not dubious, just ignorant me.

thanks, you experts!

PS is the gov now LW or RW?

[Ediacara]

3. Before the default

The Argentine Peso was linked to the US dollar at a 1:1 ratio. This could be done because the government had as much US cash physically on hand as it had in pesos printed. When the Argentines defaulted, they had to spend some of the US cash they had (which remember is backing the peso's value), and decided to let the peso float since they could no longer back it with the US cash. The peso lost between 60 and 70% of it's value within two weeks, which means everyone is suddenly super poor and everything imported is super expensive to buy.

I am not sure which way the current government leans, but I do know there was a period in 2001 or 2002 where they went through 6 presidents in 2 months, and IIRC they have been going through governments at a rather fast pace since then.

[Barrett808]

4. Palast: Who Shot Argentina?

Who Shot Argentina? The Finger Prints On the Smoking Gun Read ‘I.M.F.'
Inside Corporate America
Guardian (London)
Sunday, August 12, 2001
by Greg Palast

And news this week in South America is that Argentina died, or at least its economy. One in six workers were unemployed even before the beginning of this grim austral winter. Millions more have lost work as industrial production, already down 25% for the year, fell into a coma induced by interest rates which, by one measure, have jumped to over 90% on dollar-denominated borrowings.

This is an easy case to crack. Next to the still warm corpse of Argentina's economy, the killer had left a smoking gun with his fingerprints all over it.

The murder weapon is called, "Technical Memorandum of Understanding," dated September 5, 2000. It signed by Pedro Pou, President of the Central Bank of Argentina for transmission to Horst Kohler, Managing Director of the International Monetary Fund.

'Inside Corporate America' received a complete copy of the 'Understanding' along with attachments and a companion letter from the Argentine Economics Ministry to the IMF from ... well, let's just say the envelope had no return address.

Close inspection leaves no doubt that this 'Understanding' fired fatal bullets into Argentina's defenseless body.

(more)

http://www.gregpalast.com/detail.cfm?artid=96&row=1

[oscar111]

5. Dino tks, and pls simplify

I'll figure out what you said in a while. But how would you simplify it all for folks with less ability than we here all have? Something that preserves the truth, yet is less full of complex detail?

PS was Argentina following M Friedman till default, and what was the reason for defaulting?
I despise Friedman.

[Ediacara]

7. The Argentines didn't have enough money to payback an IMF loan

So they decided to pay it back with the US cash that was propping up the peso. Doing so forced them to have the value of the peso decided by currency markets rather than having its value linked with the US dollar. As soon as it was "floated" currency markets dropped it like a hot potato, and it lost 60-70% of its value in a very short time.

Currency markets are controlled by traders and investors in a way that's very similar to the stock market, and when the currency investors heard that Argentina was defaulting in its IMF loan, they wanted nothing to do with the Argentine peso.

Prior to the default, Argentina had one of the best standards of living and strongest economies in South America, but now everyone is poor and unemployment is through the roof.

OH, and add to that the fact that Argentines in the past could have had peso bank accounts and dollar bank accounts, and during the currency crisis people were not only not allowed to withdraw pesos, but IIRC, all the dollar accounts were converted to pesos and everyone who was saving dollars lost them.

[The Backlash Cometh]

6. The Libertarians blamed IMF for being too soft on Argentina,

and now Argentina is claiming they were too tough?

Is that the gist?

[HysteryDiagnosis]

8. "Obviously we can't ignore the responsibility

of the ruling class in Argentina,"<<

And here? Can we put any responsibility on the ruling class here? One would think so... since they are part and parcel of what is happening in Argentina.

[HysteryDiagnosis]

9. Simply put

The best explanation of just what the World Bank and the IMF have done to the economies of many nations can be found here... as well as in Palast's book... The Best Democracy Money Can Buy


http://www.gregpalast.com/detail.cfm?artid=78&row=1
>>A version of this was first published as "The IMF’s Four Steps to Damnation" in The Observer (London) in April and another version in The Big Issue - that’s the magazine that the homeless flog on platforms in the London Underground. Big Issue offered equal space to the IMF, whose "deputy chief media officer" wrote:

"... I find it impossible to respond given the depth and breadth of hearsay and misinformation in report."


Of course it was difficult for the Deputy Chief to respond. The information (and documents) came from the unhappy lot inside his agency and the World Bank.<<