IPFS
John Green
More About: Economy - Economics USAThis guy nailed it: The Economic End Game for the US
61. The crisis broke with a run of private sector deposits, which fell by more than
US$3.6 billion (6 percent of the deposit base) during November 28–30. The authorities
responded with a wide range of controls on banking and foreign exchange transactions. These
included a weekly limit of Arg$250 on withdrawals from individual bank accounts (el
corralito), a prohibition on banks from granting loans in pesos, and foreign exchange
restrictions on travel and transfers abroad. The ensuing riots and protests—in which more 62. By end-2001, both the economy and the public finances were in deep crisis. In December, economic activity collapsed, with industrial production falling by 18 percent (year-on-year), construction by 36 percent, and imports by more than 50 percent. Tax revenues plummeted 17 percent (year-on-year) in the final quarter of 2001 (in December, tax collections fell by almost 30 percent, year-on year), and despite across-the-board spending cuts, the federal government ran an overall deficit of 4½ percent of GDP in 2001 against a (revised) program target of 2½ percent. Provincial finances also deteriorated, with the deficit widening to 2 percent of GDP against a program target of 1 percent. Moreover, out of Arg$17 billion of federal transfers to the provinces, about Arg$1 billion were in the form of federal guarantees of provincial treasury bills (lecops), while the provincial governments
issued about Arg$1.6 billion in provincial bills (quasi-monies) to pay wages and suppliers, some of which were acceptable by the federal government in lieu of tax payments. On December 23, the new President Sáa declared the intention to default on government debt (except on debt that had been subject to the phase I restructuring) and to call presidential elections within 60 days.
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