{"id":884,"date":"2019-08-08T13:43:44","date_gmt":"2019-08-08T10:43:44","guid":{"rendered":"http:\/\/www.liberalglobe.com\/?p=884"},"modified":"2019-09-05T15:20:31","modified_gmt":"2019-09-05T12:20:31","slug":"the-debt-crises-the-elections-and-the-future-of-argentina","status":"publish","type":"post","link":"https:\/\/www.liberalglobe.com\/?p=884","title":{"rendered":"The Debt Crises, the Elections and the future of Argentina"},"content":{"rendered":"\n

The first round of the upcoming national elections in Argentina will take\nplace on 11th<\/sup> August 2019 with a view to highlighting the new\nArgentine President who will take the country’s fortunes and its citizens into\nhis own hands. However, there are no created new hopes and expectations for\nArgentine citizens that Argentina will be able to overcome its chronic\nfinancial problems.<\/p>\n\n\n\n

by Thanos S. Chonthrogiannis-https:\/\/www.liberalglobe.com<\/em><\/strong><\/p>\n\n\n\n

The history of Argentinian debt crises<\/strong><\/p>\n\n\n\n

From the <\/sup>19th<\/sup> century and the first debt crisis that took place in Argentina (1890)-which debt crisis\ncaused the collapse of Argentina by then creating a domino-chain debt crisis\n(1890-1897) in Australia, the US and then India-until to date, Argentina has entered an endless spiral of\ndebt crisis and economic problems (high inflation and unemployment).<\/p>\n\n\n\n

In any case, the first debt crisis in Argentina (1890) was not owed to\nArgentina. What caused the then debt crisis was the huge trade deficit of the\nthen Great Britain that forced Great Britain gradually to take a long and huge\nliquidation of its investments abroad with aim to cover its own huge trade\ndeficit.<\/p>\n\n\n\n

Much of the economic scarcity that progressively occurred in Argentina, Australia and the US between (1890-1897) came from the withdrawal of English capital in these countries.<\/p>\n\n\n\n

\"\"
Anverso de un billete 5 centavos de Peso Moneda Nacional (1891)<\/strong>
Photo by Author: Casa de Moneda, Source: Own work,
licensed Public Domain, https:\/\/en.wikipedia.org\/wiki\/Public_domain
<\/figcaption><\/figure><\/div>\n\n\n\n

After the end of the WWII (1945) and until today Argentina for almost\nseventy years has experienced many times the situations of extreme recession in\nits economy. On the other hand, its political system did not appear to be\nworthy of the aspirations of Argentine citizens where in some cases reaching\nthe point that the political system of Argentina was characterized as national\ntraitors.<\/p>\n\n\n\n

This happened when valuable funds to help support and subsequently develop\nthe Argentine economy which had been given as loans by the IMF, a very large\npart of them were smuggled abroad and deposited in third party accounts\n(political persons and members of their families).<\/p>\n\n\n\n

The current situation of Argentinian economy<\/strong><\/strong><\/p>\n\n\n\n

In the current era the currency of Argentina-peso is constantly under pressure.\nAt the same time the Argentine economy is under the supervision of the IMF\nwhich IMF has given the Argentine economy injections of liquidity (capital\nloans) totaling $56 billion.<\/p>\n\n\n\n

On the other hand, the drastic increase in the rate of poverty and the\nsmall size of consumer spending is not enough to support demand in the economy,\nwith result to constantly create shocks on the side of demand and generate\nviolent situations and an explosive climate in society.<\/p>\n\n\n\n

At the same time Argentina is increasing its spending to a greater extent\nthan its revenues, which its revenues are mainly based on its exports of\ncereals and meat. Argentina’s revenues are in US dollars, forcing in this\nfiscal and financial management way to accumulate debts of the Argentine central\ngovernment, which accumulated debts thereafter devalue constantly the value of\nher currency.<\/p>\n\n\n\n

Because of this unchanged deficiency, investors are constantly asking for\nmore and more funds to invest in creating an explosive spiral in the country’s\nfiscal finances.<\/p>\n\n\n\n

The political instability and excessive populism which is used to win the\nelections are the key causes of the frequent occurrence of big inflation and\nthe disaffection of the national currency.<\/p>\n\n\n\n

That is why Argentine citizens themselves do not have confidence in the\ncurrency of their country and prefer their savings to be in US dollars,\nindirectly guaranteeing the stability of the currency value.<\/p>\n\n\n\n

More are the deposits in $ US overseas than the deposits in Argentine pesos\ninside. On the other hand, the IMF loan instalments will be finalised (as a\nfinancial support program) in 2020.<\/p>\n\n\n\n

The causes of the debt crises and the solution<\/strong><\/strong><\/p>\n\n\n\n

Argentina’s misfortune boils down, to the state’s administration’s which\nconsumes large proportion of the country’s GDP, the public industrial sector is\nbankrupt and unable to perform, the Argentine market is too small in order to\nimplement an import substitution strategy, while the Treasury to cover the\ntreasury deficit forces any Argentine government to make uninterrupted money\nprinting that continually increases inflation and public debt.<\/p>\n\n\n\n

The only way to escape this vicious circle is Argentina’s total annual\nexpenditure of the Argentine State not to exceed 15% of GDP annually with 4% of\nGDP being the total annual wage and pension expenditures of the public sector.<\/p>\n\n\n\n

At the same time, it should apply equivalent fiscal value measures to the\neconomy that bear the amount of taxation at the level of coverage of this\nannual 15% of GDP that will absorb as maintenance costs the state.<\/p>\n\n\n\n

This will release the healthy forces of entrepreneurship in the sectors of\nthe economy that Argentina has a comparative advantage to produce new wealth\nthat will support its growing currency.<\/p>\n\n\n\n

Mauricio Macri advocated a market economy, vigorously addressing populism\nand his populist political opponent. But the fear of losing victory in the upcoming elections forced him to\nslide and adopt populist practices, choosing the freeze on electricity bills\nand food prices.<\/p>\n\n\n\n

Thanos S. Chonthrogiannis<\/strong><\/p>\n\n\n\n

It is prohibited by intellectual property law or in any way illegal use of this article, with heavy civil and criminal penalties for the offender.<\/em> <\/p>\n","protected":false},"excerpt":{"rendered":"

The first round of the upcoming national elections in Argentina will take place on 11th August 2019 with a view to highlighting the new…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[820,390],"tags":[894,893,779,129,63,896,493,895],"class_list":["post-884","post","type-post","status-publish","format-standard","hentry","category-america","category-politics","tag-argentina","tag-debt-crises","tag-elections","tag-gdp","tag-imf","tag-mauricio-macri","tag-populism","tag-trade-deficit"],"_links":{"self":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts\/884","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=884"}],"version-history":[{"count":1,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts\/884\/revisions"}],"predecessor-version":[{"id":886,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts\/884\/revisions\/886"}],"wp:attachment":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=884"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=884"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=884"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}