>Devalue, default, and dollarize is my favorite option. Dollarization
>helps you avoid the hyperinflation that is the likely consequence of
>a large devaluation. If you structure default in a way to preserve
>the principal while cutting back interest to U.S. Treasury levels,
>the New York banks won't be *that* unhappy. And devaluation is
>needed if you are to have any hope of generating an export boom.
But how do you devalue and dollarize at once? Or if you devalue, then dollarize, how do you deal with the underlying fundamental problem, the productivity gap?
>>The only countries that have closed some of the income gap with the
>>First World were those in Asia...
>
>?? Southern Europe as well. Plus China and India...
Southern Europe wasn't that poor to start with, and Spain, Portugal, and Greece got lots of EC aid. China is a very big, very powerful country that hasn't followed any rules promulgated by the IMF or the Harvard economics faculty. India is only a relatively recent (and incomplete) convert to orthodoxy, and the Indian poor aren't exactly thriving.
Doug