In 2001, Argentina’s government made the courageous decision to default on its foreign debt, and end its peg to the US Dollar, against the demands of the IMF and other political and financial elites. The facts show that after a brief recession, the Argentinian economy, freed from unsustainable and unrealistic debt obligations, focused on growth, unemployment, and social equality, and they’ve achieved tremendous results in all major indicators.
Their foreign creditors have mostly (Paris Club aside) restructured their agreements with Argentina and written down much of the outstanding debt.
Argentina’s experience calls into question the popular myth, as noted above, that recessions caused by financial crises must involve a slow and painful recovery.
…because the default freed the country from having to be continually hamstrung by a crippling debt burden and by pro-cyclical policies imposed by creditors.
Terrific report from Mark Weisbrot and the Center for Economic Policy and Research.
Is there a need to keep the Ireland, Portugal, Greece, Spain, and Italy on their current path to depression and mass emigration, when Argentina has shown there’s a different way forward?