Final Analysis

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

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

Interim Presidents | Néstor Kirchner | Graphs