re. [Marxism] the Argentine recovery

Rod Holt rholt at
Sun Dec 26 22:55:53 MST 2004

There is propaganda value in conventional wisdom--in this case, it is 
better to steal from the rich.
Argentine President Néstor Kirchner in a conversation with Paul Krugman, 
The New York Times columnist and professor at Princeton. Printed in 
NACLA Report on the Americas. Vol. 38, No. 1, July/August 2004. (if my 
notes are correct.) They congratulated each other on their wisdom and 
insight into the world economy and engaged in a long discussion of the 
economic mechanics of US imperialism in South America.
One area they touched on was the crisis of 2001-2003 as precipitated by 
the frenzied flight of capital in anticipation of Argentina's default on 
its payments to the IMF/World Bank, to the US and western governments, 
and to Argentine banks holding government bonds. Kirchner blames this 
flight on foreign ownership of the banks, but Krugman disagrees, 
pointing out that capital has no conscience-national or otherwise.
Below I quote Kirchner. Note that the only income equalization he talks 
of is the one-shot loss to the very rich who hold Argentine bonds and 
will get only 25¢ on the dollar.
 >When it comes to the IMF, today it demands that we achieve a very high 
surplus level and tells us off for not having been serious in the past 
and for not having fulfilled our contracts. Well, the IMF actually 
nurtured this system and protected it. It protected the indebtedness 
that now represents 120% of our gross domestic product. And so I think 
also that much of the responsibility for Argentina's debt lies with the 
IMF, which allowed this sort of indebtedness and encouraged these 
policies, while praising our system as the best possible one. But now 
our country is growing at 8%; at least, that's the figure for 2003, and 
we expect the figure to be a little higher for 2004. And the recovery 
has been without any fresh funds from the IMF--not a single cent. So we 
are surviving using our own funds. All of the recovery is based on the 
Argentine economy itself. You know that only three months before the 
collapse of convertibility in 2001, the IMF gave Argentina another $9 
billion in credit for service. So I think you need to call a spade a spade.
 >Of course, we need to deal with the problem of private debt. ... 
Because often some people say that Argentina doesn't want to pay, and 
actually Argentina does want to pay, but we want to be a serious and 
responsible country once again. When we say that we can pay 26% or 25% 
of our debt, and if you think about that $91 billion in private debt, 
when you actually responsibly and seriously think about it, the bonds 
that were issued paid perhaps 20% a year, and in the rest of the world 
the interest rates were between 1% and 2%, or perhaps 3%. So in 
Argentina, bondholders could earn in a year what it would have taken ten 
years to earn in the rest of the world, which is obviously, completely 
 >Now all those who opened the market, who went into these major debt 
swap programs, and all the things you are aware of, said, "Go and invest 
in Argentina." But it was obvious that these people ended up being 
responsible for much of what happened. When a business goes bankrupt you 
will sustain losses. Now, Professor, we are told that we need to pay 
more, but Enron, for instance, went bankrupt in the U.S. and it pays 14 
cents for each dollar. So I think we could say that we're almost 
extremely generous. We want to pay 25 cents for each dollar.

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