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Sean: Argentine´s expo are about 10% of its PIB but they also
import about another 10%, and they pay in debt interest about 40% of the public
budget
Federico
----- Original Message -----
Sent: Wednesday, January 02, 2002 6:29
PM
Subject: Re: Keynesian Christmas!-- and
the collapsing international
I do not think that we in the US will feel as
much impact as you suggest from the Argentine Crisis. Their economy is
to a large extent closed. Correct me if I am wrong, but only ten
percent of their GDP is the result of trade.
----- Original Message -----
Sent: Wednesday, January 02, 2002 12:11
AM
Subject: Re: Keynesian Christmas!-- and
the collapsing international
Gunnar,
This is like saying that, when governments
cause you to catch a cold, the only remedy is suicide.
The IMF was
supposed to help in crisis situations, not cause - make inevitable - violent
and chaotic revolutions.
What has been and is being done in Argentina is
simply unacceptable. To say that there is "no alternative" is equally
unacceptable.
There has to be an alternative.
Of course the
post-Bretton-Woods arrangements - that is, after the events of 1969 to
1971 - are "flawed."
We've known that for thirty years.
What we need
is the capacity to define the "flaws" and the will to correct them.
We
are, I believe, headed for one of the greatest economic disasters of all
time - with social and political consequences - unless we do something
urgent and quite revolutionary to turn the situation around.
We may
already be too late to turn it around without gpoing through an extremely
painful and prolonged experience; but we should try.
Argentina is a good
place to start - a necessary place to
start.
James
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From: Gunnar Tómasson
<gunnar.tomasson@xxxxxxxxxxx>
To:
<pkt@xxxxxxxxxxxxxxxx>
Subject: Re: Keynesian Christmas!-- and the
collapsing international
Date: Tue, Jan 1, 2002, 7:26 pm
John:
Re. the following:
The IMF has been and is still
calling for more "austerity", meaning sacking school teachers and public
health workers, abandoning public infrastructure maintenance and shredding
the social security net. They have got unemployment up to 20 per
cent - full Depression levels - and they aren't yet satisfied. This
is full-on 1930s stuff, as if Keynes had never lived nor
written.
In a recent off-list exchange,
I commented on related issues as follows:
The
problem with the IMF's "crippling programs" is that they kick in only
after governments have made a mess of things - and, once that situation
has arisen, there is no alternative to cutting back on domestic
money supply growth (increase taxes and cut government expenditures, on
the one hand, and attack the non-government sector contribution to money
supply growth through higher interest rates to encourage monetary savings
and discourage new credit demand).
Thus the
real problem is the mind-set which gets governments into the mess in the
first place - that is where we should look for the culprit in the
piece and, once we do so, we find mainstream orthodoxy as taught in
all the 'best' universities and remains the point of departure for the
graduates of these 'best' universities at the IMF and the World Bank.
And, digging deeper still, monetary
economics is the one specific area where mainstream orthodoxy is
dangerously mistaken - hence my long-standing conviction that post-Bretton
Woods world monetary arrangements are fundamentally flawed and that,
somewhere down the road, monetary reform at national and
international levels will prove inescapable for both the U.S. and other
major world economies.
Gunnar
----- Original Message -----
From: John M. Legge
<mailto:jlegge@xxxxxxxxxxxxxx>
To: pkt@xxxxxxxxxxxxxxxx <mailto:pkt@xxxxxxxxxxxxxxxx>
Sent: Monday, December 31, 2001 9:01
PM
Subject: Re: Keynesian Christmas!-- and the collapsing
international
Sean,
Neither public service
workers nor SMEs in Argentina have a choice between pesos and secondary
currencies: it is secondary currencies or nothing. By pegging the
peso to the dollar and allowing full convertibility the previous regime,
backed by the IMF, provided a conveyor belt for capital flight; the
currency board system ensures that each tranche of capital flight
reduces the circulating currency, while Argentine banks, without access
to the Federal Reserve discount window or FDIC insurance can't provide
sufficient offsetting liquidity to either governments or
SMEs.
The IMF has been and is still calling for more
"austerity", meaning sacking school teachers and public health workers,
abandoning public infrastructure maintenance and shredding the social
security net. They have got unemployment up to 20 per cent - full
Depression levels - and they aren't yet satisfied. This is full-on
1930s stuff, as if Keynes had never lived nor
written.
I note that some on the list seem to think that
convertibility is important for a currency. I point out that, from
the start of WWII until 1979 the UK had two currencies, "internal" and
"external" pounds. Only external pounds were fully convertible;
ordinary pounds were legal currency in the UK, but could only be
converted at official rates and subject to volume limitations. By
1979 the restrictions were soft enough to allow most UK citizens to
enjoy overseas holidays, but not so lax as to allow massive capital
flight.
Mrs Thatcher abolished the distinction, but did
so at a time when the export of oil from the North Sea was pushing the
UK into surplus on the current account. She floated the pound, but
still intervened when when she and the UK Treasury didn't like the
direction that the market was
headed.
Argentina can have pesos, convertibility at one
to the dollar, and a continuing and deepening depression, or a less
convertible currency and eventual prosperity.
JML
-----Original Message-----
From:
pkt-owner@xxxxxxxxxxxxxxxx [mailto:pkt-owner@xxxxxxxxxxxxxxxx]On
Behalf Of Sean Reilly
Subject: Re: Keynesian
Christmas!-- and the collapsing international
The point is that when given the choice in terms of which
currency a firm may or may not accept, the rational being is more
likely to accept the higher valued currency than they would of the
lesser valued currency. Thus diminishing the purchasing power of
the lesser valued currency.
I don't think that anybody is stating that the
Public Sector workers in Argentina do not deserve to be paid.
They don't deserve Argentinos. They deserve Pesos, because
that is the currency that they were being paid with before. In a
sense, if they are now paid with Argentinos, then they have just taken
a pay cut.
Respectfully,
Sean
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