Argentine Great Depression
The Argentine Great Depression refers to a severe economic crisis that occurred in Argentina between 1998 and 2002. It was characterized by a sharp decline in economic activity, high unemployment rates, and a significant devaluation of the Argentine peso. The crisis was triggered by a combination of factors including fiscal mismanagement, currency pegs, and external debt.
3 Key excerpts on "Argentine Great Depression"
eBook - ePubFear and Greed
Investment risks and opportunities in a turbulent world
- Nicolas Sarkis(Author)
- 2012(Publication Date)
- Harriman House(Publisher)
...Seeing the writing on the wall, Argentinean consumers rushed to withdraw their money, triggering a run on the banks. The government responded by freezing all bank accounts and then placing strict limits on withdrawal amounts. With the economy effectively starved of cash, violent street protests erupted in the week before Christmas 2001. The BBC’s commentary on events in Argentina at that time is particularly noteworthy, as it emphasises the suddenness with which the end can come, however leisurely the build-up has been: “Argentina’s desperate economic crisis has been long in the making, but the violence and the serious political ramifications it provoked came suddenly. During the day on Wednesday, the country saw some of the worst rioting in a decade as the government’s austerity measures continued to bite. Police fired tear gas and rubber bullets to disperse looters near the capital, Buenos Aires, as people prised open shops and carted away everything they could. Unrest also spread to other parts of the country. A short while later, Domingo Cavallo offered his resignation as economy minister.” [69] The default On Christmas Eve, Argentina defaulted, suspending payments on US$61.8 billion of public bonds and US$8 billion dollars of other debt instruments. [70] At that stage, however, the default excluded debt service repayments worth some US$32.4 billion, along with guaranteed loans of some US$42.3 billion to the likes of the IMF, the World Bank and the Inter-American Development Bank. Nevertheless, as Baer, Margot and Montes-Rojas observe, the default amounted to the largest ever default in Latin American economic history, affecting US$82 billion out of total debts outstanding of US$153 billion. Freed from the straitjacket of the dollar peg, the Argentinean peso devalued sharply. While barred from access to trade credit, Argentina enjoyed a sharp increase in exports. Imports shrank, meanwhile, resulting in a near immediate balance-of-payments surplus...
eBook - ePubRethinking Macroeconomics
A History of Economic Thought Perspective
- John F. McDonald(Author)
- 2021(Publication Date)
- Routledge(Publisher)
...CHAPTER 8 The Great Depression Introduction The Great Depression of the 1930s was both the deepest and longest depression in U.S. and European history. This chapter provides a brief review of the facts and theories that have been advanced as explanations for this economic disaster. The focus of the chapter is on the U.S. and U.K. economies, but briefer discussions of other European economies are included. Some of the same themes are pertinent to the first decade of the 21st century. A great number of economists and historians have weighed in on the Great Depression, of course, and there is no consensus on a single main cause of the depression. However, there does appear to be agreement that there were several causes and exacerbating factors. The English classical economist A. C. Pigou published a book titled Industrial Fluctuations in – of all years – 1927, in which he examined six possible fundamental reasons for economic fluctuations. These are errors of optimism and pessimism, agricultural fluctuations caused by weather, new inventions, monetary instability, changes in tastes, and industrial strikes. But Pigou argued that, in all cases, the economy would return to full employment quickly. As noted in Chapter 2, Pigou served as the main example of outmoded thinking for Keynes. As you know already, most macro economists divide into three main schools of thought – Keynesian, Monetarist, and real business cycle. (The Austrians are a small group among professional economists.) According to Keynes (1936), a depression is the result of aggregate demand that is deficient to employ the resources of a nation. Demand consists of four categories: private consumption, private investment, government purchases of goods and services, and net foreign trade in goods and services. These four add up to the gross domestic product (GDP), the total measure of the value of all final goods and services produced during a year...
eBook - ePubKeynesianism vs. Monetarism
And other essays in financial history
- Charles P. Kindleberger, Charles P. Kindleberger(Authors)
- 2013(Publication Date)
- Routledge(Publisher)
...The contrast with the 1970s and 1980s is striking, since in the later period there have been banking crises in Argentina, Chile, Colombia and Mexico, and the end of such crises is not in sight. It has already been noted that currency depreciation in depression by Latin American countries with heavy stocks of commodities tended to push world prices down further. O’Connell (1984) observes that devaluation in Argentina failed to raise domestic prices. It follows that it lowered them abroad. This was especially true in wheat, where lack of storage space in Argentina (and Australia) made export supply unresponsive to price. Canada and the United States tried through their Wheat Pool and Farm Board to hold the price up, but failed as early as May 1929. The unremitting availability of Argentine and Australian wheat hurt, especially after France imposed quantitative restrictions in 1930 as it struggled to raise the price paid to its farmers. One further item on prices, in part to correct a mistake I made in The World in Depression, 1929–1939 (1973). In that work, I emphasized how the liquidity crisis in the New York stock market had been communicated to the commodity markets through a squeeze on New York banks. Typically in those days, commodities were shipped to New York to be sold on consignment, rather than bought in the producing region and imported for the owner’s account. A financial seizure caused by withdrawal of call-money from the stock market spread to commodities when the New York banks stopped other lending in order to be ready to replace out-of-town banks and ‘others’ withdrawing call funds. Merchandise shipped to New York for sale on consignment could not find buyers for lack of credit, and prices fell drastically between September and December 1929. Commodities financed in the interior of the United States, such as wheat, corn, sugar, did not fall to the same degree as rubber (26 percent), hides (18 percent), zinc (17 percent)...
