Argentinian Crisis – A Financial Quandary

When you think of Argentina, what do you associate it with?

I always think amazing steaks! Argentinian steaks are so good, it’s unbelievable. And I would have thought that for a country that can export such a costly product, their economy would be stable. Maybe not brilliant, but okay.

Turns out, I was wrong. Argentina has gotten into a little bit of a mess.

It turns out that the country is in such significant debt that even the IMF is struggling to forecast just how bad the situation is going to be in the up-coming years. Argentina’s debt is, as of now, around 93% of its GDP. Imagine it, if your debt was around 93% of your income every year, but then you had to pay for food, security (defence costs), healthcare, maintenance, and God knows what else…you’d be very stuck.

There’s one theory of confidence in economics, that suggests that a confident country will do better with their money than an uncertain country. Keynes is a good read for anyone wanting to get a better understanding of economics, and his book General Theory has often been recommended to me. Unfortunately I’ve not had the chance to read it myself as of yet, but its reputation suggests that it’s worth a read.

The general idea, in regards to Argentina, is that due to the high levels of debt and low levels of confidence, the country is going to be very stuck for a very long time, and no one really knows how to handle it.

Money lenders are starting to get nervous, and demand repayment of loans granted to Argentina. Two major lenders include Fidelity Investments and Pacific Investment Management Company; Fidelity is owed $325 billion by Argentina, while Pacific is owed $1.4 billion. I don’t know about you guys, but those numbers send shivers down my spine.

But now everyone’s watching Argentina, warily staring at the country out the corner of their eyes, because they know what’s coming. They think it’s going to default on the loans. It’s the country equivalent of going bankrupt. And if they default, those money lenders won’t get their investment back. They’re going to be seriously angry.

The Argentinian people are going to face severe austerity. The currency will have to be devalued. And the situation will get really rough for a while.

So you know what? If you’re reading this and you’re from Argentina, shoot me a message. If you’re interested, I can tutor you in Chinese – and given the situation in the country at the moment, it will be free of charge. If you can get a qualification of Chinese, it not only could help you get some more money in, but it might be the ticket you need to get out of the country for a little bit. At least until things calm down.

Published by Academic Research

I love studying and sharing. If you find anything in Chinese that you want translating, send it my way and I'll see what I can do!

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