Sovereign Default in the Core? C.P. Chandrasekhar

The declaration by the government-owned conglomerate Dubai World that it proposes to unilaterally suspend payments due on its large debt has triggered a new fear in international financial circles: that of sovereign default. Strictly speaking, the sums owed by Dubai World were not sovereign debts, but debts incurred by the company. But because of the nature of the company's ownership, these debts were seen as (implicitly) guaranteed by the Dubai government. Since Dubai is part of the United Arab Emirates, these debts were also seen as being implicitly guaranteed by the leading nation in the group, the oil-rich Abu Dhabi.…

Argentina Since Default: The IMF and the depression Alan B. Cibils, Mark Weisbrot and Debayani Kar

More than eight months since the economic crisis has passed and Argentina's economy continues to decline, with the recession now having lasted more than four years. This paper looks at Argentina's crisis since the default in an attempt to find a way out of the Depression. argentina_default (Download the full text in PDF format)

What happened to Argentina? Mark Weisbrot and Dean Baker

Policy failures played a role in Argentina’s economic collapse. The most important mistake was the fixed exchange rate. But the immediate cause of Argentina’s crisis was a series of external shocks that were beyond its control, beginning with the US Federal Reserve Board’s decision to raise interest rate in February of 1984. The effect of these shocks was much worse than it otherwise would have been because of the fixed exchange rate. But the commonly believed story that the government could not accept a sufficient dose of the painful medicine of austerity, or spent its way into a hole, is…