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The Angry Economist
Shocking! Outrageous! ... okay, maybe not so shocking:
Argentina has defaulted on a $2.9 billion loan from the IMF.
Argentina's in serious trouble. It's been having economic crises at an almost regular pace in the past few years. Look at the unemployment rate, inflation rates, and rate of change in its money supply. It's all very severe.
Argentina's total external debt is over $130 billion with a GDP of only about $400 billion. (For comparison, the U.S. external debt is about $1.4 trillion vs. a GDP of about $10 trillion.) Argentina's debt is particularly hard to pay off because it's primarily dollar-denominated, which means the government can't simply inflate its way out of debt, which the U.S. is doingcould theoretically do.
Argentina's primary problem has been its government. Unwilling to balance the budget, they devalued the peso to pay for their spending, precipitating a run on the currency, prompting limitations on bank withdrawals and the seizing of dollar assets (replaced with pesos — what a bargain!), and in short causing an economic disaster. And now they've proven that they still haven't learned their lesson. (Note to self: Don't throw away old links just because they're a year old; you'll eventually write about it and wish you kept them...)
Is there any wonder I have a strong personal aversion to debt?