Nobel Prize winner Paul Krugman took to his blog in the New York Times to say he didn’t see how Argentina’s default could be seen as a cautionary tale for Greece, and questioned a local economist who assured Argentina was not considered “a serious country.”
His reply came in response to a story in which experts assured that if Greece defaulted, it would have negative consequences, like the ones that affected Argentina a decade ago.
“Argentina suffered terribly from 1998 through 2001, as it tried to be orthodox and do the right thing. After it defaulted at the end of 2001” the economist points out.
“And after it defaulted at the end of 2001, it went through a brief severe downturn, but soon began a rapid recovery that continued for a long time,” he adds.
The 2008 Economy Nobel Prize winner assured that “surely the Argentine example suggests that default is a great idea; the case against Greek default must be that this country is different (which, to be fair, is arguable).”
“I was really struck by the person who said that Argentina is no longer considered a serious country; shouldn’t that be a ‘serious’ country? And in Argentina, as elsewhere, being ‘serious’ was a disaster,” he concluded.
His statements were made in response to a piece published this week in the New York Times, in which an economy expert from Rosario discussed the Greek reality, warning that Argentina’s situation should be considered a “cautionary tale,” since the country was still “not considered serious
“OK, I guess I don’t quite see how Argentina’s default, of all examples, can be viewed as a cautionary tale for Greece”.
The New York Times article “As Greece ponders default, lessons from Argentina” by Charles Newbery and Alexei Barrionuevo was published this week and quotes an economic consultant from Rosario (soy-bean capital), Jaime Abut.
“A default is not free; you have to pay the consequences and for a long time. Argentina is no longer considered a serious country”, said Jaime Abut.