Bankruptcy - Why Not? Argentina defaulted on their loans and is doing better today . . . why not Greece too?
Declare bankruptcy and wipe your debts clean. It is done every day by multi-national corporations, mom and pop businesses and individuals. Eliminate you debt and start over for a new and better life.
Unless you are Greece. Then for some strange reason bankruptcy is bad.
Eurozone governments and international bankers say an “Argentine scenario” for Greece is out of the question. French European Affairs Minister Jean Leonetti said that Greece should “avoid default because it is in the interests of both the Greek state and the Greek people.”
But the French government says bankruptcy is bad because French bankers are on the hook for making stupid loans to nations like Greece that cannot afford to pay them back. If there is a default then French taxpayers would be raped to cover the bad loans made by French banks.
The power Elites of Europe say the "cure" for Greece and other nations is to be ground into poverty in order to pay the moronic loans made by bankers. Sounds a little one sided to me.
Greek Bankruptcy - a bad deal for France and international bankers.
Greek Bankruptcy - a good deal for Greece.
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| Government bailouts for international bankers and thug political tactics against debtor nations in order to cover bad loans made by banks. |
The Argentina Default
In late 2001, faced with an astronomical public debt, Argentina announced that it would default. Standing at a similar crossroads, can Athens follow in the footsteps of Buenos Aires?
In December 2001, Argentina announced that it could no longer honor its debts and the country went into default.
But going into default, as the Argentinian case shows, is not necessarily a killer blow. In fact, the Argentinian economy rebounded after refusal to pay its creditors, reports France 24.
The decision “was probably the best thing the country could have done at the time,” said Christine Rifflart, an expert on Latin American economics at the Paris-based OFCE think tank.
Back in 2001, Argentina was staring into much the same abyss as Athens is now, having accrued a colossal debt of some $132 billion. The country was surviving a hand-to-mouth existence on a drip feed from the International Monetary Fund.
And like in Greece, Argentina was forced to instigate severe austerity measures in order to continue to receive international aid.
Buenos Aires could not support its economy by printing more money, and ready cash was becoming more scarce because of capital flight resulting from the fact that the Peso was pegged at the time to the US dollar.
The crisis sparked violent social unrest as well as growing poverty.
Argentina’s economy went into meltdown. Watching the value of their currency collapse, Argentinians sought desperately to change their pesos for dollars.
The GDP was down 5% in a year, unemployment rose from 15% in early 2001 to 24% at the end of 2002, with inflation running at 40% by the end of the same year.
“The country’s middle class had been effectively destroyed,” said Rifflart.
But after a year of increasingly precarious economic situation, the Argentinian economy started to pick up. “From 2003 unemployment started to go down [reaching a level of 10% in 2005],” she said. “The default had allowed the Argentinian government to create significant room for maneuver in the country's budget.”
Exports started going up. Rifflart explained: “The devaluation of the peso made Argentinian companies much more competitive on the international scene.”
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