Bradford DeLong wrote:
>
>
> 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.
>
> Of course, time is wasting...
>
>
Devalue first will create a huge financial hole. For example, all Public Utilities have their tariffs set up is dollars as part of the privatization arrangements. Most families have debts in dollars and so do firms. Certainly I would not recommend devaluation first....What is likely is "pesification" and then devaluation which would hurts small savers who have their savings in dollars...If you devalue and then dolarize you are lowering NOMINAL wages in dollars by, say, 25%??? hummm.
Brad, these measures could all be consider, but again, strong political leadeship, an urgent plan to feed the poor, a minimun salary to households heads unemployed. Monetary solutions, I believe, miss to diagnose the real problem....
> >
> >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...
with the same kind of policies IMF is advocating to Argentina????