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===Conclusion=
==Conclusion==


Argentina must take immediate action to increase its level of economic freedom. Liberalizing its economy would reassure international investors and set Argentina on the path toward long-term growth and stability. Specifically, Argentina should:
<p align="center"> [[Image:Deterna.JPG]]</p>
</br>


Adopt the U.S. dollar as its official currency. Speculation about the sustainability of the currency board has helped to increase interest rate premiums on Argentine debt beyond the normal spread between peso and dollar debt. In these circumstances, the best way to address the interest rate premium resulting from currency risk would be for Argentina to adopt the U.S. dollar as its own currency. This would eliminate the risk stemming from the peso-dollar exchange rate and lead to lower interest rates on the country's debt, which is what happened in El Salvador 56 and Panama after they adopted the dollar. 57
==='''Reduce spending and taxes'''===
 
To spur economic growth, Argentina needs to bolster productive behavior by lowering taxes to increase the incentive to work, save and invest. To lower taxes without creating an economic disaster, it also needs to decrease government expenditures.  
 
Reduce spending and taxes. To spur economic growth, Argentina needs to bolster productive behavior by lowering taxes to increase the incentive to work, save, and invest. 58 To lower taxes without creating an economic disaster, it also needs to slash government expenditures. Cavallo's plan includes a cut in expenditures; but instead of lowering taxes, it would shift the tax burden from businesses to international investors, imposing new costs without allowing the beneficial stimulus associated with an overall reduction in taxes. Restoring economic growth will require much deeper reductions in government expenditures and more extensive tax cuts.
 
 
Foster further deregulation. President de la Rúa succeeded in getting a labor reform bill passed by the Senate and the lower house. Argentina should build on this progress by scaling back regulations governing, for example, the ability of employers to lay off employees. The government also needs to scale back the wages and numbers of public-sector employees, since high public-sector wage rates make it difficult to adjust private wage rates. This is particularly true in the provinces, where many public sector workers do not contribute to production and are merely a drain on public resources.
 
 
Encourage free trade. Argentina should expand its export markets and diversify its export base by signing agreements with other nations that are receptive to unrestricted trade. Considering the linking of the peso and the dollar, a free trade agreement between the United States and Argentina would be particularly beneficial by providing greater stability to Argentine exporters. The United States is Argentina's second largest trading partner, and reducing trade barriers would enhance that relationship to the benefit of both countries. Argentina will need to open its market in order to facilitate trade talks with the United States. If necessary, it should withdraw from Mercosur as an exclusive trade area; if it wishes to remain a political ally of Mercosur as Chile has done, it could do so.
 
 
Strengthen the rule of law. The vulnerability of the judiciary to bribery and political influence has undermined public confidence to the extent that ordinary Argentines do not use the legal system and businesses restrain their investments. The Argentine government must punish corruption more aggressively, insulate the judiciary from political pressure through whistle-blower protections, and increase standards for those employed in law enforcement.
Argentina should not look on these reforms as options. Unless the country resumes strong economic growth soon, it will likely default on its debt and see its access to international capital
markets crippled.


==='''Strengthen the rule of law'''===
The vulnerability of the justice system to bribery and political influence has undermined public confidence to the extent that ordinary Argentines do not use the legal system and businesses are deterred from investing. The Argentine government must punish corruption and free the justice system from political pressure.


==='''Legal concept'''===
The democratic government could challenge the debtholders concerning the credits generated by a previous illegitimate dictatorship. The debtor should be able to prove that that debt was legitimately used for the benefit the Public Interest of the country, especially taking into account that the creditor was well aware of the illegitimate nature of the Regime, those funds were supporting torture and genocide. These loans found its way out of the country in criminal and illegal activities. The debt, however, was left to Argentine citizens.
::<ins>'''Iraq example'''</ins>
::After the invasion of Iraq in March 2003 and the toppling of the Saddam Hussein Regime, the United States, the United Kingdom, Germany, France and Russia together considered Iraq’s foreign debt by Saddam Hussein as “Odious Debt”, condoning around 85% of it. They were all very careful, knowing that other countries such as Argentina could use exactly the same arguments, precisely because the bulk of its own Public Debt can be traced back to the debt originally generated by the illegitimate Military-Civilian Regime which suppressed the Constitution and perpetrated crimes against the population.


===Mega-swap danger===
Even though United States know that Argentina won't have the economic and financial capacity to honor the new Bonds' future yields and capital payments at their maturity dates and that this would inevitably lead to new and even greater debt defaults, they ended up encouraging this new potential fraud transacted in the US Bond markets.


Conventional Wisdom and Common Sense clearly dictate that if a country has a catastrophic debt situation, it cannot resolve it by incurring even more and greater debt.


==Sources==
[http://www.globalresearch.ca/index.php?context=viewArticle&code=SAL20061107&articleId=3750 Center for Research on Globalization]


----
----
<p align="center"><big>[[Argentina International Debt|Introduction]] | [[Dictatorship|Dictatorship]] | [[Alfonsín|Raúl Alfonsín]] | [[Carlos Menem]] | [[Fernando de la Rúa]]</big></p>
<p align="center"><big>[[Argentina International Debt|Introduction]] | [[Dictatorship|Dictatorship]] | [[Alfonsín|Raúl Alfonsín]] | [[Carlos Menem]] | [[Fernando de la Rúa]]</big></p>
<p align="center"><big>[[Interim Presidents]] | [[Néstor Kirchner]] | [[Argentina Economic Graphics|Graphs]]</big></p>
<p align="center"><big>[[Interim Presidents]] | [[Néstor Kirchner]] | [[Argentina Economic Graphics|Graphs]]</big></p>

Latest revision as of 17:46, 5 December 2006

Conclusion


Reduce spending and taxes

To spur economic growth, Argentina needs to bolster productive behavior by lowering taxes to increase the incentive to work, save and invest. To lower taxes without creating an economic disaster, it also needs to decrease government expenditures.

Strengthen the rule of law

The vulnerability of the justice system to bribery and political influence has undermined public confidence to the extent that ordinary Argentines do not use the legal system and businesses are deterred from investing. The Argentine government must punish corruption and free the justice system from political pressure.

Legal concept

The democratic government could challenge the debtholders concerning the credits generated by a previous illegitimate dictatorship. The debtor should be able to prove that that debt was legitimately used for the benefit the Public Interest of the country, especially taking into account that the creditor was well aware of the illegitimate nature of the Regime, those funds were supporting torture and genocide. These loans found its way out of the country in criminal and illegal activities. The debt, however, was left to Argentine citizens.

Iraq example
After the invasion of Iraq in March 2003 and the toppling of the Saddam Hussein Regime, the United States, the United Kingdom, Germany, France and Russia together considered Iraq’s foreign debt by Saddam Hussein as “Odious Debt”, condoning around 85% of it. They were all very careful, knowing that other countries such as Argentina could use exactly the same arguments, precisely because the bulk of its own Public Debt can be traced back to the debt originally generated by the illegitimate Military-Civilian Regime which suppressed the Constitution and perpetrated crimes against the population.

Mega-swap danger

Even though United States know that Argentina won't have the economic and financial capacity to honor the new Bonds' future yields and capital payments at their maturity dates and that this would inevitably lead to new and even greater debt defaults, they ended up encouraging this new potential fraud transacted in the US Bond markets.

Conventional Wisdom and Common Sense clearly dictate that if a country has a catastrophic debt situation, it cannot resolve it by incurring even more and greater debt.

Sources

Center for Research on Globalization

Introduction | Dictatorship | Raúl Alfonsín | Carlos Menem | Fernando de la Rúa

Interim Presidents | Néstor Kirchner | Graphs

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