The Argentinean bust: one side of the polyhedron

Gorojovsky Gorojovsky at
Sun Dec 16 07:14:59 MST 2001

The economic team, lead by the super-roguish Cavallo(1), is bent on either 
shrink the 2002 national budget to a bacterian size and dedicate any monies 
collected to payments of foreign creditors (thus, there would be no "default" --
save for Argentineans themselves!) or directly elliminating the national 
currency and substitute dollars for it. In fact, they are placing pressure on 
the Congress -who are the ones that have to give the OK to the 2002 budget- by 
menacing them with an immediate dollarisation.

Among the variegated and blood-dripping consequences of such a move, the most 
important one seems to be that Argentina will return to the mid-1800s, when 
there was no national currency and different coins and notes circulated in a 
disjointed country. Because dollarisation would imply that the amount of "hard" 
-true- currency within the country will depend solely on the ability of 
Argentina to obtain specie (that is, dollars) from its foreign trade and 
credit. The amount that can be obtained in this way is ridiculously small, of 
course, and a host of financial instruments will have to take its stead.

Another issue with dollarisation is that it can be done only if

(a) accounts in the banks are volatilized (or, conversely, transformed into, 
say, 30 or 50 year bonds or tenders by the State), or

(b) a massive and monstruous devaluation takes place BEFORE the dollarisation.

The reason is simple: while the dollar reserves of Argentina are still around 
the 15-19 billion level, and currency in the market is about 15 billion (which 
would allow for a 1 to 1 dollarisation), deposits in the banks are around 60 
billion, and there is no way to obtain the dollars that should pay for them.

In the end, what has happened is that 25 years of looty are closing down with a 
paralyzed, squalid, country where the last savings of the petty bourgeoisie 
will pay for the drainage of money of all these decades.

I am lucky enough not to have anything with the banks but debts (but if they 
dollarise my debts without dollarising my income -and of course we are always 
talking of 1 to 1 dollarisation of incomes- then I will be quite hard pressed), 
ah yes and a whole month's salaries that have not been paid to me as yet...

My case is a very common one in the petty bourgeoisie.

The essentials of the situation are that we have a government of the murderers 
that has to give some solution to a town that has been depopulated by the same 
murderers in charge. A solluble fish. 


(1)who is also something of a psychopat with an obsessive will to save his 
"convertibility" from the flames: I have seen him in person, recently, for the 
first time, and I could not escape that feeling

Néstor Miguel Gorojovsky
gorojovsky at

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