Re: Imposing the US Dollar on Canada

["eperez" <eperez@xxxxxxxxx>]

The main problem with Argentina is wether it will
default on its external debt. If the Euro
reaches a hypothetical 1 to 1 parity to the dollar it does not mean that that it
will stay at that level. Argentina may de facto devalue (the euro may again
depreciate relative to the dollar).

Date sent:      	Sun, 22 Apr 2001 22:28:17 -0300
From:           	Juan Jose Barrios <jota@xxxxxxxxxxxxxx>
To:             	pkt@xxxxxxxxxxxxxxxx
Subject:        	Re: Imposing the US Dollar on Canada
Send reply to:  	pkt@xxxxxxxxxxxxxxxx



"J. Barkley Rosser, Jr." wrote:

>       In the Washington Post two days ago it was
> reported that Cavallo, the new "super economics
> minister" in Argentina, has pulled Argentina back
> from dollarization.  Apparently the peso will now
> be pegged 50-50 to the US dollar and the euro.
> I do not know if they are still maintaining some kind
> of currency board arrangement or not.

Congress will approve a project that makes the peso convertible to a basket
of two currencies: dollar and euro BUT NOT UNTIL THE EURO IS WORTH ONE
DOLLAR. If this never happens, Argentina will still maintain the one
peso=one dollar exchange rate and the current convertibility. The currency
board will still be in place, but there are operational questions to be
asked.


>       There are some in Argentina who are upset at
> this move, fearful that it signals a return of hyperinflation,
> the defeat of which the currency board with the dollar
> was associated with.

hyperinflation? how could that be possible? you mean devaluation? the peso
will fluctuate less than the dollar or the euro, and can go down or up
depending on what happens with the two currencies.


>  Certainly this is a defeat for
> those who wanted full dollarization, which a major
> faction did, probably including the "comprador" elements,
> but probably not consisting only of them.

yeap. It seems it is.

>
>       BTW, I think that Argentina is making a wise move
> in this regard.  Clearly the currency board has not worked
> out well for them.  I wish to make it clear, since I see below
> that I am getting bashed on this issue, that I do not in
> general support dollarization in most countries.

As we are witness of a world recession (depression), Argentina and Brazil
have decided to "temporarily" increase tariffs to imports of consumption
goods and some other measures to boost domestic demand (argentine and
brazilian) because the political and social chaos. Example: former
President Menem seems to be involved in the selling of arms to Yugoslavia
during the past war, only that those arms were supposed to go to Ecuador
and Venezuela. As a consequence he went out to the press yesterday and
suggested that citizens should buy as many dollars as they could because
Cavallo only wants to devalue the peso to gain competitiveness.....Only in
Argentina.



Juan



>
> Barkley Rosser
> ----- Original Message -----
> From: "J. Barkley Rosser, Jr." <rosserjb@xxxxxxx>
> To: <phillp2@xxxxxxxxxxxxxxx>
> Cc: "Post Keynesian Thought" <pkt@xxxxxxxxxxxxxxxx>
> Sent: Friday, April 20, 2001 5:52 PM
> Subject: Re: Imposing the US Dollar on Canada
>
> > Paul,
> >       Well, it is not at all clear that the US gains
> > very much from having other countries get
> > dollarized.  Thus, although it has not fully
> > dollarized, Argentina has a currency board,
> > the next "best" thing to it.  Right now Argentina
> > is in about its third year of recession, clearly
> > not good for Argentina.  Is it good for any group
> > in the US?
> >      Well, there was a column in the
> > Washington Post a few days ago by Robert
> > Samuelson forecasting that Argentina is on
> > the verge of having a full blown foreign exchange
> > and debt crisis given its inability to service its
> > $140 billion foreign debt.  Samuelson predicted
> > that a bellyup by Argentina could trigger a full
> > scale global financial collapse.  This is in the
> > interests of US capitalists or anybody else?
> > Even without a full-blown crash, recession in
> > Argentina is not good for US capitalists because
> > their companies there are losing money and it is
> > difficult to export anything to them.
> > Barkley Rosser
> > ----- Original Message -----
> > From: <phillp2@xxxxxxxxxxxxxxx>
> > To: <pkt@xxxxxxxxxxxxxxxx>
> > Sent: Thursday, April 19, 2001 11:43 PM
> > Subject: Re: Imposing the US Dollar on Canada
> >
> >
> > > I am quite amazed at the discussion of this topic.  It could only
> > > occur on list that was dominated by  Americans who don't have the
> > > slightest knowledge of, or appreciation of, dependent economies.
> > > Poor Keynes must be rolling over in his grave in the utmost pain of
> > > despair.  Alan's post was unbelievable.  Henry did something to
> > > redress the balance but if this is the level of understanding of
> > > monetary and macro economics, we must all weep and wail.
> > >
> > > Is this really the level of economic analysis and understanding of
> > > PKT?  God!, I hope not.
> > >
> > > Paul Phillips,
> > > Economics,
> > > University of Manitoba
> > >
> >
> >
--------------------------------------------------------------------------------------------------------------------
Esteban Pérez
Economic Affairs Officer
Economic Commission for Latin America and the Caribbean
United Nations
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