Re: [spiers] Argentina's New Plan

Hi John;

This is very interesting - but no surprise. The only possible shock is that
Cavallo stopped at 7%. I'm sure he really wanted around 13% but could not
sell it to the World Bank and Trade organizations.

I'm not sure when the term 'Free Trade Equals Jobs' had 'But Only With
Government Intervention And Controls' added to it.

It appears to be a replay of the college syndrome. That is a famed person
who has spent a lifetime 'in study' but with no practical experience outside
of the learned study system.

Unfortunately, if he sells this 7% split, other Latin American countries
who's economies are in shambles will follow. Mexico could take a huge hit
in the near future and accordingly try to pass it on to the US through NAFTA
amendments.

And depending on how much those economies need to be supported, the US may
just go along with it. The down side being a signal that it is OK to go
above the 7% floor set by Argentina.

In conclusion, I don't like it very much.

Rick Blum


----- Original Message -----
From:
To:
Sent: Tuesday, June 19, 2001 8:38 AM
Subject: [spiers] Argentina's New Plan


> Folks,
>
> Here's news out of Argentina... what do you think the impact will be?
>
> ***
>
> Argentina has been in a terrible three-year recession. A few months
ago,
> famed economist Domingo Cavallo was brought in and given "superpowers" to
do
> what was necessary to bring the economy out of recession.
>
> The new plan says the peso will remain at 1-to-1 (to the US Dollar) for
> the man on the street. But exporters can sell at a "new" exchange rate
(the
> average of the dollar and the euro), which, at current rates, gives them
> about a 7% advantage. And importers must use this "new" rate as well,
giving
> them a 7% disadvantage.
>
> ***
>
> John Spiers

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