Devaluation, Default, Depression

Feb 1, 2002

Argentina's banks are bust and the economy is paralyzed. Everyone is going to lose in the biggest default in history, starting with the foreigners.

The shambles unleashed by default and devaluation has devastated Argentina's financial system, and one of the urgent tasks facing President Eduardo Duhalde's government is to set it back on its feet. But the statements and particularly the actions of Duhalde and his ministers show they have little understanding of the severity of the financial crisis or that if left to fester, it will further deepen the depression in the real economy.

Bankers are a favorite hate figure for politicians everywhere, particularly in Argentina today where protestors trash bank branches. Duhalde told a meeting of Argentine union leaders and industrialists that, "We have to end the decades-long alliance in Argentina that has made the country suffer, and that is the alliance between those in power and the financial sector and not an alliance with the productive sector. The financial sector is important, but in its proper place."

Bankers have spent...

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