IMF's plan for Greece has already failed in Argentina
The International Monetary Fund (IMF) imposed in Greece, through a rescue plan concocted with the European Union (EU), the same old recipes austerity did not prevent Argentina from running in 2001, according to analysts.
The IMF and EU countries have agreed on the establishment of a historic rescue plan of up to 750 billion euros to help countries in the euro area and stem the financial crisis Greek threat to win the whole planet.
"It's an enormous figure, but it does not guarantee one thing: for three years in Greece to pay his debt," said Jorge Remes Lenicov, Minister of Economy of Argentina in 2002 during the worst crisis economic history.
"This solves the problem of debt, not that of competitiveness," he argues.
The similarities between the Greek crisis of 2001 and Argentina are striking at first sight: even indebtedness, even impossible to avoid bankruptcy by devaluing .
Argentina had could resume growth in pain after a 65% devaluation of its currency and the explosion of parity peso / dollar. Meanwhile, the safety net prevents the euro area in Greece to declare bankruptcy, but also devalue the appeal with austerity.
We increasingly hear that speech that Greece can not devalue its currency, which would be even a cause of these problems.
Here, we are told that if this country could devalue its currency, it would not condemned to the austerity and facing a competitiveness problem.
For those who are not too concerned about the economy, the idea of a currency devaluation does not seem a great evil: every day, world currencies fluctuate against one other without much impact for the citizen.
But these people to further devaluation of the currency are people who favor the hypocritical face of the whole world, not surprising that they use words without fully explaining them ...
What devalue its currency here? It is very simple: it is printing money to pay his debts ... Greece can not do this because it has no control over the Euro. The United States can and do plenty for 2 years.
Is that Greece is at a disadvantage as this?
Printing money to pay its debt if it were that easy, everyone would do it and we'd all be rich.
devalue a currency is to have recourse to the inflation of money supply, which has the effect of increasing prices by decreasing the value of money.
Yes, this can allow the illusion of not having recourse to an austerity plan. But this is also the in the most dishonest, most hypocritical to pay a debt. Dishonest
for creditors who are being shortchanged by being reimbursed with a currency that lost value. (With an annual inflation of 10% for a debt of 5 years is 50% loss. Obviously that future creditors will adjust their interest rates as a result of this expected loss: hello, rising interest rates!)
For ordinary citizens, inflation, the loss is insured. Wages do not adjust as fast as inflation. Anyone with cash or savings in numbers (ie: amount of such bank ) Is a loser.
For the economy, the price system is short-circuited, the confidence is gone and can not grow. The money must be consumed quickly in order not to lose too. This promotes consumption to the detriment of the economy ...
But the worst part of this solution is that in a highly inflationary economy, not the trust and honesty that installs but corruption. Instead of putting efforts to produce, people are making efforts to hold their own games as best they can.
What is better for a country bankrupted then?
Taking Charge, live within those means.
Or take the path of hypocrisy to continue as before but its debts by printing without explaining the consequences for citizens.
One has a real chance once the worst is over, to continue in the right way to live within its means and thus increase its medium (ie, growth / competitiveness).
The other closes its eyes, business as usual, but at the expense of the wealth of all citizens. He has before him that the economic decline and eventually collapse of its currency.
And for those who say that a little inflation to get out of the hole is a good compromise, as I answer this: those people who have led the economy into the hole without having been able to demonstrate to some wisdom for the debts of the country, would you now trust them to wisely use inflation?
Once a government has tasted inflation to solve its problems and paying party, it is unable to stop.
And the best example of this are the United States now. This country is going to literally print its loss and its claims and its social-democratic party. He believes in the above reality, but it's waiting around the next corner! And the more time passes, the shock will be great.
Francis.
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