A Traveller's Tale: Argentina's well-rehearsed tango through recession

Argentina's president is now so unpopular that the locals are willing to swap her for Gordon Brown...

Last Updated: 31 Aug 2010

As the Eurozone grapples with the potential contagion from the troubles of Greece, Portugal, Spain and other enfeebled debt-ridden EU jurisdictions, it can be comforting to spend time in a country that knows a thing or two about financial crises. Welcome to Buenos Aires, capital of one of the world’s serial sovereign debt defaulters - currently on its seventh different currency of the past century or so. The official inflation figure is 7.7%; private estimates suggest that the real number is double that. The MerVal stock exchange index has shed 5.8% in the past week and the peso is sliding (although not nearly as badly as it might if the US dollar was stronger).

Argentina faces debt obligations of $15bn this year and is hobbled by its exclusion from international debt markets following its last debt default back in 2002. But the government, led by the deeply unpopular President, Mrs Fernández de Kirchner, has found a simple solution. Having previously nationalised private pension schemes, it is now proposing to raid the Central Bank’s $6.6bn foreign currency reserves to plug part of this gap. When the Central Bank chief objected, he was removed by the President - after a month of stubborn resistance - and replaced, unsurprisingly by a close ally of the ruling party. [CLICK HERE TO READ MORE AND COMMENT]

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A Traveller's Tale: Argentina's well-rehearsed tango through recession
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