Argentina in turmoil: Can shock therapy really turn the economy around?

Mondo Sports Updated on 2024-02-16

According to CCTV News on January 25, local time on January 24, Argentina's trade unions, left-wing organizations and non-governmental economic organizations launched a 12-hour national strike, and the new policies implemented by Milley in the country. At the same time, the reference news network also quoted a report from the Spanish newspaper El País, saying that thousands of people took to the streets of Buenos Aires and various parts of Argentina to express their opposition to the national dismantling plan promoted by Milley**. Despite a mega bill pushed through parliament, trade unions, social organisations, opposition politicians and spontaneous groups have all staged demonstrations to resist Milley's plan. In addition, a general strike that lasted until midnight began at 12 noon on the same day, the first large-scale strike facing Argentina** this year.

Leaving aside the situation of the Pampas, historically, countries that have implemented shock economic policies have a core point, which is that during the shock period, there must be a large number of external blood transfusions. In the torrent of history, the demise of the Soviet Union was like a nightmare before dawn, and without the support of the West, it collapsed in an instant and turned into dust. Today, when we are faced with Argentina's predicament, we can't help but ask: who can be its lifeline? And that so-called"Shock**"What are the success stories?

Some people will mention Bolivia, which in 1985 had a high inflation rate of 24,000% and a huge fiscal deficit. However, when the shock** was implemented here, hyperinflation was brought under control within a week and prices gradually stabilized. Over the next few years, the inflation rate fell year by year, reaching only 16 in 19896%。It may seem like a glorious victory, but the price behind it is heart-wrenching. The welfare of the Bolivian people has shrunk dramatically, and their incomes have fallen sharply. The shock** that began in 1985 did not bring per capita GDP back to 1984 levels until 1998. Federal Reserve Chairman Alan Greenspan once commented: "[Bolivia's shock**] has shifted all the social costs onto the poor." "Two years after the implementation, real wages in Bolivia fell by 40 per cent, and at one point even reached 70 per cent.

This is a true portrayal of shock**: behind the short dawn, there is a long period of darkness and pain.

In 1985, when the shock occurred, Bolivia's per capita income was US$ 845; It was reduced to $789 after two years. In 1987, the average annual income of Bolivian farmers was only $140, less than one-fifth of the "average income". Hundreds of thousands of full-time pensionable jobs have been laid off and replaced by casual workers with no security at all. From 1983 to 1988, the number of people eligible for social benefits in Bolivia decreased by 61.
In the waves of history, Poland is like a bumpy flat boat, which has gone through wind and rain and finally seen a rainbow. Once upon a time, domestic prices in Poland soared like a loose horse; Commodities are rare and hard to find. At that time, Poland was experiencing a wildfire inflation rate that was over 2,000 percent and the country was in dire straits. The level of production is like yellow leaves in autumn, withering down, and the gross domestic product is even more shocking. The weight of foreign debt, which is as high as $49 billion, makes people sigh. In 1991, Poland was facing debt repayment pressures like dark clouds before a rainstorm, heavy and oppressive. However, foreign exchange reserves are only a drop in the bucket, at only 36$2.4 billion, which cannot support this huge debt. Poland had no choice but to suspend its debt repayments. It was a painful decision and a hopeful turning point. They tell you that the implementation of shock ** in Poland is like a magical catalyst that allowed Poland to achieve a magnificent turn two years later. Like a phoenix, Poland has risen from its once devastated and shattered predicament to become the world's most developed country. Today, Poland's per capita GDP has sprung up, reaching $15,000+, far exceeding many Eastern European countries. This is a new Poland, a Poland full of energy and hope.

However, the story behind it is not so simple. The West forgave Poland $10 billion in debt in 1998 and provided Poland with billions of dollars in aid through various channels. The money nourished Poland's economy from the crisis of debt default and the frantic devaluation of the zloty. This aid is key to Poland's economic recovery, otherwise Poland would not have been able to absorb more than $12.2 billion in foreign investment in the 10 years following the upheaval. In fact, after the upheaval in 1991, Poland's debt was still three times the value of its exports. It was not until 1996 that debt fell to 1 percent of exports12 times. On the public GDP table, Poland has shown a positive growth trend since 1991. However, the reality is that Poland's debt situation and economic functioning are still dependent on external aid. In particular, the strict requirements of the IMF and the supervision of the final budget accounts allowed the implementation of economic reforms in Poland.

According to incomplete statistics, between 1989 and 1991,Poland acquired at least 39The $200 million in direct aid exceeded the total amount of Polish foreign exchange in 1991In September 1989, the U.S. Senate approved one$1.2 billionof technical and monetary assistance to Eastern European countries ended up almost entirely in Poland. The European Union followed suit6.600 million US dollarsMeta Financial Aid.

On January 2, 1990, the West offered again$1 billionStability**; At the end of February 1990, the IMF finalized the agreement with Poland$700 millionfinancial assistance agreements, which are provided separately by the World Bank3.$600 million

On 18 March 1991, the Paris Club agreed to the full cancellation of Poland's 30 per cent debt due, as well as a second tranche of 20 per cent forgiveness, subject to Poland's use of the three-year EFF. The criteria for this review are to increase the privatization of enterprises to 50% and reduce inflation to less than 36%; On the same day, the United States and France announced 20 percent and 10 percent debt reductions for Poland, respectively.

Over the past few years, Poland has been bathed in generous aid. The support given by Europe and the United States is immeasurable. They forgave Poland three times its foreign exchange reserves, providing billions of dollars in direct aid. This series of aid, like a spring breeze and rain, has nourished the flower of Poland's economy, stabilized its currency and finance, and attracted the favor of foreign investment. The strong assistance from Europe and the United States was not without cost, and it was exchanged for the opening of Poland's financial markets. From the end of 1998 when foreign capital began to pour into the Polish capital market and the official opening up in 1999, foreign capital occupied a pivotal position in the Polish banking sector. By 2001, foreign capital accounted for 80 percent of the banking2%, assets accounted for 692%。Of the 71 commercial banks, 48 are foreign-controlled banks.

Do you understand? Who's earning? Who's in the Raid?

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