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The Argentine default isn’t just something to put down into history books and write off so easily. From week long blackouts to looting of businesses; Argentinians have frayed nerves and are scared for their livelihoods. According to Bloomberg, police were on strike for more money, leaving the streets unguarded for looters to take advantage of the worst of situations. Back in 2001, there was a $95 Billion dollar default and at that time there was looting destruction and chaos. “Thirteen years after that collapse, President Cristina Fernandez de Kirchner is running out of time to avert another crisis. The policy mix that Fernandez and her late husband and predecessor, Nestor Kirchner, used to usher in 7 percent average annual growth over the past decade — higher government spending financed by printing money — is unraveling.”
By government calculations, inflation was at or less than 11%, yet by analysts estimates, true inflation was at 30%.The Argentine peso devalued by more than 13%. There is a concern that Argentina will default on its debt. The International Monetary Fund last year “censured Argentina last year for misreporting inflation, predicts economic growth will slow to 2.8 percent this year, about half the 5.1 percent average across developing nations.” Compared to modest growth in the United States, 5.1 percent is amazing, yet compared to China’s growth, just shy of 8%, the Latin American emerging markets are under-performing. Yet at this time Argentine’s carry on in fear as looting continues and protesters burn tires in town squares.
Image Credit: stratrisks.com
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