[SamuraiProgrammer]

Andres, I ask that you take all I say in the spirit of friendship. It is how I offer it. If I offend you, it is unintentional and I hope knowing that keeps you from being offended. Also note that when I say 'you' I often mean the people of your country. Don't take it personally.

Originally posted by Andr&eacutes Lescano:
Yes Samurai you're correct that the fixed currency exchange rate, known as "convertibility" started to slide and prevented our exports to sell at a competitive price.

Well, actually, the sliding made your exports more competitive on the world market. The problem was that the government tried to set things up so that they (and not the owners of the commodities) kept the difference between the new exchange rate and the old exchange rate.

At least that is how it looks from here. The end result is that many of the agricultural producers are planning on sitting on their crop rather than selling it because it will not lose value like the currency will if inflation continues.

The unwillingness to sell creates a bigger problem because now your country has a trade deficit and cannot come up with enough foreign currency to pay the IMF.

(I was going to attempt to explain the historical situations that lead to that situation, and why it was prolonged more than necessary but it would take too long, and I'm not as good in history as I'd like)

Your instincts are correct, in my opinion.

This is where things get fuzzy. I believe that ultimately a trade surplus is good and a trade deficit will *always* lead to this problem if allowed to go on. Some economists will disagree with me, but I will stand by that opinion.

The problem is you have to count interest payments to the IMF as part of the equation.

What you fail to mention that the IMF and WB encouraged that economic policy, and that imperialistic companies took advantage of that to sell us goods we didn’t have access to before at prices that appeared cheap to us, while they lent money to the government to sustain that fictional economy.

I did not mention it directly, but I do not intend to shy away from it. You are exactly correct in how these things can work. The world loaned you money to buy the things you wanted and before too long there was more debt than could be serviced. I don't disagree that that is what happened.

The problem is to assign the blame. Everyone involved (The IMF, your government, and the people who voted them into office) shares some of the blame. The IMF will say, "You asked for the money and we were kind enought to loan it to you." Your government will say, "We needed to have the money to bring our economy up to world standards." Your populous seems to be saying, "We expected someone else to tell us this would be bad for us."

To the part about 'imperialist companies', I have only this to say: I don't think anyone figuratively held a gun to you heads and said buy this or we will punish you.

It is true that the industrialized world wants a larger market for its goods. It is true that the IMF loans money to allow those markets to grow. Someone must show restraint and not borrow more than can be paid back. Unfortunately governments are notorious for letting the next poor sap who gets elected hold the bag. In my opinion, this is why there is a problem.

Making your employee have a debt with you with a debt that he will never be able to pay is one of the modern shapes of slavery.

First, remember that the IMF is not your employer. While there may be some similarities, it is not strictly correct.

Yes, there are situations like this that can be just as unethical as slavery. If we were selling you life's necessities at too large a price and a high rate of interest, this would be evil. But was it life's necessities that the money was borrowed for?

We face exactly these problems in the United States. For example, a landowning farmer borrows money to raise his standard of living. This is a perpetual thing because he is living beyond his means. Each year, the bank is happy to lend him more and more money because (a) he asks for it and (b) he has enough colatteral in the value of his owned land to cover the debt. He does not realize there is a problem because there is always money in the bank account.

Then the bad things start to happen. The economy goes soft, land values go down substantially, and prices for the produce are depressed. The farmer has a very unprofitable year. It is then time to renew the loan. The farmer's equity is not enough to cover any more debt, he is unable to pay all of his payments because of the poor crop year, and he has not enough cash to put in a crop without a loan.

Now he is bankrupt.

He will cry and moan about how the bank did him dirty, but who is to blame?

Is it possible that your government has been selling your future to make themselves look good for the next election? Who is really to fault.

I know you are having problems and I know they are troublesome and I hope that they can be resolved. But unless the real reasons for the problems become obvious, they will only repeat themselves.

If you can find a copy, you should read "The Creature From Jekyll Island" It deals with world monetary policy and how it came about. You might find that all of us are 'slaves' to a very few. In fact, many individuals in this country are in the same boat as your government. If the world economy continues to soften, you will see evidence of it here as well.

Peace

[ March 01, 2003, 01:58: Message edited by: SamuraiProgrammer ]