Make Real News!

100K Challenge!

$37,610 raised so farEND DATE: October 3   
Every dollar you donate will be matched until we reach our 100K goal!
  • Latest News
  • Pitch a Story
  • Work with a Journalist
  • Join the Blog Squad
  • Afghanistan
  • Africa
  • Asia
  • Baltimore
  • Canada
  • Egypt
  • Europe
  • Latin America
  • Middle East
  • Russia
  • Economy
  • Environment
  • Health Care
  • Military
  • Occupy
  • Organize This
  • Reality Asserts Itself
  • US Politics
  • Argentina & The Emerging Market Crisis


    James Henry: Facing a surging public deficit, Argentina has devalued its currency in response to the Fed's tapering of quantitative easing and China's slowed purchasing of imports -   February 28, 2014
    Members don't see ads. If you are a member, and you're seeing this appeal, click here

    Audio

      Share to Twitter
    Share to Facebook




    I appreciate immensely The Real News reports. You report news that is covered nowhere else. - Elizabeth Sheppard
    Log in and tell us why you support TRNN

    Bio

    James S. Henry is a leading economist, attorney and investigative journalist who has written extensively about global issues. James served as Chief Economist at the international consultancy firm McKinsey & Co and as an investigative journalist his work has appeared in numerous publications like Forbes, The Nation, and the The New York Times. He was the lead researcher of the recently released report titled 'The Price of Offshore Revisited.'

    Transcript

    Argentina & The Emerging Market CrisisJAISAL NOOR, TRNN PRODUCER: Welcome to The Real News Network. I'm Jaisal Noor in Baltimore. And welcome to this latest edition of The Henry Report.

    We're now joined by James Henry. He's a leading economist, attorney, investigative journalist. He's written extensively about global issues.

    Thank you so much for joining us.

    JAMES S. HENRY, SENIOR ECONOMIST, TAX JUSTICE NETWORK: You're very welcome.

    NOOR: So can you explain what's happening in Argentina? It's all over the headlines. There's a huge inflation crisis, the currency plunge, and this is one of its greatest crises in the last decade. Talk about what's happening and how Argentina got here, because about a decade ago, things looked kind of promising for Argentina.

    HENRY: Well, part of the story is that Argentina is just one of maybe a dozen or so emerging markets, so-called--I prefer to call them submerging markets, because they never fail to provide entertainment. And in this situation they're all devaluing their currencies. We've had about 12 countries devalue. Just this week, Kazakhstan devalued by 19 percent.

    And part of the story is that they are reacting to two recent developments elsewhere. One is the decision by the Federal Reserve to taper its quantitative easing, its purchases of bonds every month, which--it tried to hold interest rates low. And the second is some indication that China may be slowing down its purchases of imports, which has helped developing countries, like Argentina and Brazil and South Africa, that are exporting commodities enormously in the last decade. So those are two external factors that are at play across the board here.

    But the only way to really account for, you know, the fact that Argentina is experiencing by far the largest devaluation here, about 15 to 16 percent, is that this crisis, the change in the world conditions, has basically exposed some unsolved problems in Argentina.

    Argentina, as you know, back in 2001, basically 2001, 2002, defaulted on its foreign debt, and a new government came in that basically relied much more heavily on state action, got rid of some of the--and reversed some of the privatizations that had been going on, did much less foreign borrowing, and, on the other hand, continued to promote exports and the state sector as a source of growth. And that's worked pretty well. Contrary to what the IMF predicted, the Argentine economy has grown at 3, 4, 5 percent--that's on average in real terms--up until last year.

    But the problem was that during this period, the Kirchner government neglected to take some basic structural changes. And that's kind of caught up with it.

    The main problems, I'd say, right now are in the area of the surging public deficit, which is back to about 4 percent of national income. And that means that in order to control inflation, which is driven by that deficit in this small economy, they need to do two things. They need to control public spending, cut a lot of the subsidies that have been going to energy and to other influential sectors in the economy, and then raise taxes. Argentina's losing a lot of tax revenue, and they've failed to collect taxes from some of the largest companies in the economy, especially grain exporters. There's an enormous amount of hidden grain export going on from Argentina right now to avoid currency controls, and to avoid taxes as well.

    So I would argue that, you know, this crisis is a good thing if they can use it to motivate some of these basic structural reforms.

    But they don't have much time. Two thousand fifteen is the presidential election, and the right wing, which basically ran the economy into the ground a decade ago, is salivating. My old classmate Domingo Cavallo is writing now about how if they don't basically put his kind of official in office and restore neoliberal economists to control, they'll be facing 40 percent inflation, a peso that's 100 percent cheaper than it is now, and the real economy will have a major recession.

    I don't think anybody really believes those doom forecasts, and they certainly don't have much credibility coming from him, but this is definitely a warning to the center-left that's been running the economy that they need to tackle some of these major reforms.

    NOOR: James Henry, thank you so much for joining us.

    HENRY: You're welcome.

    NOOR: You can follow us @therealnews on Twitter. Tweet me questions and comments @jaisalnoor.

    Thank you so much for joining us.

    End

    DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


    Comments

    Our automatic spam filter blocks comments with multiple links and multiple users using the same IP address. Please make thoughtful comments with minimal links using only one user name. If you think your comment has been mistakenly removed please email us at contact@therealnews.com

    Comments


    Latest Stories


    Progressive Caucus Split on Issue of Arming Syrian Rebels
    Historic Climate Change Protests Only Days Away
    Philadelphia Decriminalizes Marijuana
    Coalition to Fight the Islamic State Unlikely to Succeed
    Upsurge in Voter Participation and Scare-Campaigns As Scots Head To The Polls
    Are Combat Troops on Their Way to Iraq?
    Media Failing to Provide Substantive Debate on ISIS
    Interpret or Change the World?
    Special Report: Scots in Their Own Words on Independence
    What Drives U.S. Foreign Policy Towards Israel?
    The Federal Reserve Makes "Effort" to Rein in Big Banks
    An American Fascism - Eddie Conway on Reality Asserts Itself (5/8)
    Breakthroughs Unlikely at Upcoming UN Climate Summit
    The Untold History of The Star Spangled Banner
    What Drives Obama's Foreign Policy?
    Israel Facing Major Economic Consequences for 50 Day War on Gaza
    FBI Targets Minority Communities in Mortgage Fraud Investigations
    Obama's 'Moderate' Syrian Rebels Are Nowhere to Be Found
    "The State Targeted the Panthers Because We Were Socialists, Not Because We Were Armed" - Eddie Conway on Reality Asserts Itself (4/8)
    Democrats Have Options to Pursue Campaign Finance Reform
    The Bennis Plan: Here Is a Real Strategy for Dealing with ISIS
    Baltimore Cop Says Some Officers Are a Threat to the Communities They Serve
    The World Made A Much More Dangerous Place by the U.S. Since 9/11
    American Bombs Will Not Defeat ISIS
    Obama's Syria Plan Will Strengthen IS and Warlordism
    ISIS Wants the US Drawn into a Ground War
    New Iraqi Government Will Abide by U.S. Regional Goals
    COINTELPRO, Attack on the Panthers - Eddie Conway on Reality Asserts Itself (3/8)
    Federal Reserve Data Shows Growing Wealth Gap Based on Race
    Is The Anti-ISIS Campaign Attempting to Renew War Against Assad?

    RealNewsNetwork.com, Real News Network, Real News, Real News For Real People, IWT are trademarks and service marks of IWT.TV inc. "The Real News" is the flagship show of IWT and Real News Network.

    All original content on this site is copyright of The Real News Network.  Click here for more

    Problems with this site? Please let us know

    Linux VPS Hosting by Star Dot Hosting