What brought on Argentinas current problems?
The Dollar peg made Argentina uncompetitive, because its trading partners and neighbouring countries all devalued. Argentina became the most expensive country with which to do business in Latin and South America. A number of soft deals were struck with overseas utility and banking companies to take over Argentinian companies in the same sectors or buy the privatised assets cheaply on the basis that they modernised the sector infrastructures within Argentina. Prices of services remained indexed to US Inflation rates and, despite the fact that Argentina did experience three years of deflation, this overwhelmed the economy. The emerging markets crisis of the late 1990’s resulted in investors being very reluctant to pump money into the Argentinian economy so that capital inflows dried up. What are the solutions? Unfortunately, there are only two possible economic solutions: dollarisation or devaluation. They may provide some form of economic solution but do not solve the social and economi
