June 23, 2011
I’ve been otherwise occupied so I didn’t get around to beating up this utterly bizarre NYT story that features Argentina as presenting a clear warning to Greece of the dangers of default. Fortunately, Krugman picked up on it on his blog.
The basic point is that Argentina’s economy has done extremely well following its default. It is difficult to see why anyone in Greece would not default in an instant if they thought Greece’s economy would follow the same path as Argentina’s economy has over the last 9 1/2 years.
There are good reasons for thinking that Greece may not be as successful, most importantly that it does not currently have its own currency. But Argentina is a model that countries would likely want to emulate, not avoid.
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