Country comparisons should be viewed with caution and are often used to support a fixed view while inconvenient information is ignored. Wittingly or unwittingly, proponents of a Eurozone exit for Greece underestimate the devastating consequences - - the risks are also high for Ireland given that it is the developed country that is more dependent on foreign-owned firms than any other.
Last July, Shane Ross, Irish politician and journalist, cited Argentina, Russia and Iceland in making a case for Ireland defaulting on its debts and leaving the euro. In respect of Argentina, he wrote: "Default marked the beginning of a long recovery. A series of defaults have helped to sustain a dramatic return to prosperity." People who lived through it know better than Ross that the reality less sanguine while Argentina did have the good fortune that its default coincided with the start of a global commodity boom.
Argentina is an impressive producer of soft and hard commodities; it did not have to launch a new currency; the price of soybean, its biggest export, was $160 per ton in January 2002. It peaked at $554 in July 2008 and is trading about $440 per ton in early 2012. At the time of its default, Argentina had an annual fiscal deficit of 3.2% of GDP (gross domestic product). Greece’s deficit was 13.6% in 2009. When Greece got its first bailout in 2010, it's national debt as a ratio of GDP was almost treble Argentina's 54% level at the time of default.
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