Comment
US: The
Argentina's Test.
April 24, 2001
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Read this in relation to our comment yesterday, "Can we prevent the collapse of the US dollar and escape Armageddon?" Argentina economy is in depression. Its indebtedness is so severe that there is little faith that the country could manage without external help. They are in crisis mode right now, and Cavallo has been asked back as Economics Minister. Furthermore it has a currency board system, which like Hong Kong means that it, cannot devalue its currency to obtain some temporary relief. And if a currency board system fail - none has in history, the effect is expected to be water crashing pass a demolished dam wall. On present
trend, Argentina would need external help. It is important to see how
the US will respond, given that it will infect Brazil and the rest of
South America. How narrowly the US interprets its interest will become
clearer, and with that we can estimate the durability of one of the
key support of US dollar strength as per the maps we have posted earlier.
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