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View Diary: Neoliberalism Defied? The Argentine "Miracle" (148 comments)

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  •  Argentina == WorldCom? (none)
    I'm skeptical of this case as an anti-IMF breakthrough.

    WorldCom got big fast the old-fashioned way -- they cooked the books, which gave them an enormous advantage in the capital markets. Telecom firms couldn't compete unless they cooked the books too ... which they almost universally did, leading to a multi-trillion-dollar misapplication of resources.

    When they got caught, they handled it the old-fashioned way -- they stiffed the creditors. Legally, of course. They went through bankruptcy, keeping assets they bought on credit but discharging the corresponding debts. The stock turned worthless, but the company survived -- with an unbeatable advantage versus rivals who built out their networks and keep paying for the build out of continuing revenues.

    Deadbeats have a decided advantage in every game of cost and risk. The world game can afford an occasional small stiff, just as it can afford a little fudging and a little counterfeiting. Argentina is big enough to raise concern. If a big fish (like the US?) plays without the intent to pay, the whole game is in a heap of trouble.

    At best, Argentina is a mixed lesson that can lead us to bigger and better meltdowns, or worse -- to insurmountable reluctance in the face of opportunity.

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