By Mats Kinnwall, Head of Research, Blue Institute, SVD selected
During the summer, Argentina regained its place in the financial markets radar screens after an unusually long period of relative calm, but now live once again, with their 8th default since the mid-1800s, up to the title of "World Champion in bankruptcy." Those interested can immerse themselves in the underlying process, for example, in reporting on SvD Business but the bottom line is that the rating agencies declared gdit careers Argentina in technical default. This brings with it significant risks of sharp interest rate increases and that the country is again banned in financial markets. What makes this development particularly gdit careers interesting is that Argentina this time voluntarily goes in Konken while previous collapses caused by significant current account and / or state financial crises that triggered significant exchange outflows, drainage of foreign exchange reserves, interest rate shocks, devaluations and recession. Since Argentina now has not fixed exchange rate and do not need to engage in costly defense of the peso, the impact is unlikely to be as dramatic this time. In addition, the country's gdit careers economy nowhere gdit careers near as shaky as before, although a steadily gdit careers deteriorating current account pointing to specific needs of real depreciation of the peso. Finally, do not apply Argentina an inflation gdit careers target without aiming gdit careers for "maximum growth" which means that you can take with relative ease on a possible rise in inflation. Yet it is likely that interest rates will rise and the economy will be kicked. The recent global stock market decline can probably be partly - if not primarily - attributed to concerns gdit careers about Argentina, the economy is far too small (less than Sweden) to seriously affect the economic outlook, in Latin America and the world. Nor is it likely that the confidence crisis would spread spontaneously to other emerging countries, unlike earlier. Adds one other geopolitical crises and continued gdit careers uncertainty about the global economy can be found, however, other good arguments for continuing the bumpy stock markets and record low interest rates.
Newspaper headlines disaster certainly plays a big role in this, if not then at least the short term. Buying opportunities present themselves as always in disaster headlines in the dubious press in most cases exaggerations.
Before giving their opinion about where the blame should be should read "The Shock Doctrine" by Naomi Klein. She provides a thorough review (600 pages) about what happened in Chile, Argentina and others countries. This book should be required reading for all those concerned with economics, journalism and politics.
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