Saturday, December 25, 2004


Argentina Defies the IMF -- And Prospers

As the electronic media dutifully promotes the conservative movement's latest regurgitation of the blatantly anti-Semitic "Let's Protect Christmas from the Jews" campaign, actual bits of news, like this New York Times story, just seem never to make it onto prime time or even onto NPR:

When the Argentine economy collapsed in December 2001, doomsday predictions abounded. Unless it adopted orthodox economic policies and quickly cut a deal with its foreign creditors, hyperinflation would surely follow, the peso would become worthless, investment and foreign reserves would vanish and any prospect of growth would be strangled. But three years after Argentina declared a record debt default of more than $100 billion, the largest in history, the apocalypse has not arrived. Instead, the economy has grown by 8 percent for two consecutive years, exports have zoomed, the currency is stable, investors are gradually returning and unemployment has eased from record highs - all without a debt settlement or the standard measures required by the International Monetary Fund for its approval. Argentina's recovery has been undeniable, and it has been achieved at least in part by ignoring and even defying economic and political orthodoxy. Rather than moving to immediately satisfy bondholders, private banks and the I.M.F., as other developing countries have done in less severe crises, the Peronist-led government chose to stimulate internal consumption first and told creditors to get in line with everyone else.
In other words, they put their own people ahead of the IMF's loan sharks. Amazing.
"This is a remarkable historical event, one that challenges 25 years of failed policies," said Mark Weisbrot, an economist at the Center for Economic and Policy Research, a liberal research group in Washington. "While other countries are just limping along, Argentina is experiencing very healthy growth with no sign that it is unsustainable, and they've done it without having to make any concessions to get foreign capital inflows." The consequences of that decision can be seen in government statistics and in stores, where consumers once again were spending robustly before Christmas. More than two million jobs have been created since the depths of the crisis early in 2002, and according to official figures, inflation-adjusted income has also bounced back, returning almost to the level of the late 1990's. That is when the crisis emerged, as Argentina sought to tighten its belt according to I.M.F. prescriptions, only to collapse into the worst depression in its history, which also set off a political crisis.
Two million jobs, eh? That's better than America's done since Bush first stole the White House four years ago.
Some of the new jobs are from a low-paying government make-work program, but nearly half are in the private sector. As a result, unemployment has declined from more than 20 percent to about 13 percent, and the number of Argentines living below the poverty line has fallen by nearly 10 points from the record high of 53.4 percent early in 2002. "Things are by no means back to normal, but we've got the feeling we're back on the right track," said Mario Alberto Ortiz, a refrigeration repairman. "For the first time since things fell apart, I can actually afford to spend a little money."
If you go on to read the rest of the article, you find that the IMF tries to claim that Argentina's just doing what the IMF had recommended all along, which is bullshit. You also find the conservative ding-dongs trying to claim that the economy is showing signs of slowing down. Well, gee, I should certainly hope so -- 8% growth rates are not generally sustainable, and too much growth too soon is thought to have its own problems (which is why Allen Greenspan spent most of Clinton's second term using his Federal Reserve chair to apply the brakes with both feet on America's wild growth during that time; he wanted a soft landing). But anyway: Argentina defies the IMF in favor of helping its own people -- and guess what? It's doing a hell of a lot better because it did so. And if you're wondering why you're not hearing about this story anywhere else but the New York Times and this blog, consider that according to a June 1998 study by, American journalists are both wealthier and more conservative than the rest of America. That might be a subtle hint.
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