"For the better part of a decade, overseas investors have viewed Argentina as a pariah: After a currency collapse in 2001, the country suspended payments on some $95 billion in foreign debt--the largest sovereign default in history. Then in 2005, the government offered creditors, ranging from Italian pensioners and American teachers' unions to Wall Street hedge funds, just 30 cents on the dollar if they agree to swap their old bonds for new notes. about three-quarters of the debt holders grudgingly accepted the deal. ... The goal is to resore [Kirchner's] government's access to financing and tap into the global demand for debt that pays higher yields than US and European treasury bonds. ... Kirchner has lavished billions of dollars on subsidies for food, fuel, and electricity, sending state expenditures up by some 30% annually since she took office two years ago. The problem is, tax revenues have been rising just 12% annually, so a comfortable fiscal surplus has become a deficit equivalent to 2.5% of [GDP] over the past two years. To make up the shortfall, Kirchner tried in 2008 to raise export taxes sharply on soybeans and other grains", Geri Smith at Businessweek, 25 January 2010, link:
Obama, are you watching?
1 comment:
This routine has been happening since Louis XIV borrowed so lavishly to fund 4 wars...
The monarch borrows, spends and taxes the people.
The estimate is that President Obama will spend $10 million an hour in Afghanistan once all troops are deployed...
And Iraq.
And military presence in 100+ countries.
And stimulus.
And support for states and local govs.
And Medicare.
And Social Security.
Going broke at an accelerating rate. All the Bernanke/Geithner/Summers tricks won't slow this train down.
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