The pleasures of default

Patrick Bond pbond at wn.apc.org
Mon Jan 10 14:44:49 PST 2000



> From: DANIEL.DAVIES at flemings.com
> But now I want to lift capital controls and start running a big external
> deficit to help support my reflationary policies (screw the IMF program,
> I'll renegotiate it). For that, I now need foreign funds.

Was with you up to here, Daniel. But if you're a serious president, w.r.t. reflating a stagnant economy and promoting poli-econ stability, why would you a) lose control of domestic financial circuitry (and with it interest rate determination) by lifting capital controls, and b) reflate with foreign funds instead of easy-to-print local currency? If the answer to a) is to allow your elite chums the opportunity to skidaddle and to b) you'll just default again (lather, rinse, repeat), I don't think you're being realistic about power relations. How long can you stay in power under such circumstances?

The most interesting default in memory remains apartheid South Africa, September 1985, don't you think? Brazil, February 1987, was a six-month flash. Others between then and Ecuador?



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