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Gregorio Lopez has a message for the Greek workers who are protesting deep cuts in salaries and pensions that come with an international, trillion-dollar rescue package: You're on your own.
Argentina also had to go it alone after failing to make the deep, and somewhat insane cuts demanded by the International Monetary Fund to secure more loans. The country in 2001 was in many ways where Greece and other southern European nations are today, with its economy sputtering, companies failing and huge debts coming due. But instead of a trillion-dollar rescue to keep Greece from defaulting, Argentina got a cold shoulder from lender (which is why Argentina survived!).
While Europe's rescue package announced this week has at least postponed the worst — a domino effect of defaults across Europe that could drag down the euro and even break up the European Union (would be the best thing for the continent) — Argentina ran out of options. It defaulted and had to figure out how to rebuild its economy without outside help.
But in its isolation, the country boomed (as expected). Usually countries do prosper when EU/US banksters don't meddle. By boosting government spending to stimulate the economy, Argentina increased its GDP by more than 50 percent since 2003, and now plans to emerge from default by resolving the last of its bad debts.
President Cristina Fernandez says Argentina's experience shows that austerity measures are exactly the wrong medicine in a debt crisis, which is why Europe's rescue plan is "condemned to failure."
"You don't need to be an economist to know that if you reduce the flow of economic activity, you reduce even more the capacity to pay the debt," Fernandez said in a national address this week. "It's clear that you won't be able to pay what you're being lent."
An Argentian Govt. official has been quoted as saying "You sign with the IMF and you seal your future as a country.", however his statement was quickly removed from the Associated Press.
Even supporters of Europe's rescue package say Greece, Portugal, Spain and other overly indebted European countries now face years of wage cuts, increased taxes and living with less to have a chance of avoiding national bankruptcy.
3rd May 2010
ARGENTINA formally announced its offer to exchange about $20bn in defaulted bonds held out of a 2005 settlement would open today, in a long- awaited effort to resolve its default.
The debt swap comes as Greece struggles to avoid a default that could damage economies in the European Union. After Greece, the two countries that bond market analysts consider to be most at risk of a default are Argentina and Venezuela.
The country announced the exchange in an e-mailed statement distributed by Barclays, the global co-ordinator for the debt swap, on Friday.
Government secretary Anibal Fernandez said Greece’s troubles should not drive buyers away from the swap, which Argentina hopes will enable it to normalise its international financial relationships and borrow new money at better interest rates.