Comments on GoodAirs: More than a bad translation of "Buenos Aires": Argentine Economics

I suppose you haven't been reading only La Nación....

2005-12-01T07:53:00.000-03:00

I suppose you haven't been reading only La Nación. Not if you want all the news in perspective... Morales Solá, in particular, has made it his personal goal to show the world that Kirchner is a dangerous, Chávez-loving extremist out of the farthest leftist populism.

As a citizen, I'm a bit worried about K's ideas on dissent, and regretted Lavagna's removal, but I'll follow the U.S. "wait and see" tactic. Miceli is a former student of Lavagna's and she ran a bank, so I'll give her some credit.

Back in the 1990s, we Argies were told with a straight face (by everyone inside and outside the country) that what is good for foreign investment and big business is also good for the people at large. We all know what happened after that. Maybe trying something that bothers investors and businessmen a bit is not necessarily bad. Never mind the stock market; in Argentina it doesn't mean anything.

Hola Senor(a) anonymous,I'm in agreement there--th...

2005-11-30T22:29:00.000-03:00

Hola Senor(a) anonymous,

I'm in agreement there--the Times headline oversimplifies the situation with characteristic zeal. No one man turned the economy around, and a lot of Lavagna's success can be attributed to his taking the helm when the economy was at the bottom (which is also why CEOs who take over companies when they've bottomed out tend to look good--there's nowhere to go but up). My main issue is with the appearance that President Penguin seems to be unwilling to keep on someone who might be willing to take the next steps, which are likely to be painful, and seems to value party-line discipline over dealing with the reality of the situation. I could be wrong--and the new minister may be brilliant--but the direction right now isn't entirely a hopeful one.

Ian: that NYTimes headline is horribly misleading....

2005-11-30T18:10:00.000-03:00

Ian: that NYTimes headline is horribly misleading. Yes, Lavagna did play a role in Argentina's reemergence (mainly the debt restructure), but the facts dictated results:
1. Argentina pushed back against creditors because it had (has?) little capacity to pay what is owed.

2. Argentina's economy grew quickly, because that is what usually happens after a crash. Just look at US GDP growth in 1934, '35, and '36. Barely out of depression mode (and millions still struggling), but the growth rate was something like 11% y/y.

3. Argentina's dollar peg held back export (industrial and agricultural) growth. Moving to a float was certainly painful, but eliminated a strong and unsustainable drag on the economy - an overvalued exchange rate.

If you want more technical talk, google "Brad Setser." He has an excellent blog post today on this topic...