Wednesday, November 24, 2010

Should the IMF enable Argentina?

Argentina is seeking "technical assistance" from the IMF to help design a new inflation index.

Why?

Well, the past (in more ways than one) and current President have made the inflation numbers a political football, firing statisticians and deliberately underreporting inflation by a large magnitude.

Why?

Well, among other reasons, Argentina had issued a lot of inflation indexed bonds and allowing the real inflation rate to be officially reported would have cost the government a lot of money.

Which is exactly why the IMF should NOT be getting involved here.

Making this into a technical issue of coverage or method and not an issue of systematic fraud and abuse will cover the government's tracks and protect it against potential lawsuits by holders of indexed debt.

The Kirchners have been crapping on the IMF for years. It's hard to imagine that the organization has such low self esteem that they are willing to enable their tormenters just to get their foot back into the door.

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