... “Bank Run” to dump Ruble led to large loss of
– Devalued Ruble
– Defaulted on domestic debt
– Moratorium on payments on foreign debt
• Quick recovery due to surge in oil prices
Emerging Market Economies: economies in an earlier stage of
... Stage1: Initiation of Financial Crisis
Path1: Mismanagement of Financial
1) Eliminating restrictions
Fixed Exchange Rate
Interest Rate increases
2) Weak Supervision
3) Moral hazard problems and adverse selection
4) Deterioration in bank’s balance sheets
Example: Mexico E ...
Argentina`s crisis of 2001, resulted from a confluence of
... sector not like in Mexico, trade liberalization, deregulation, and adoption of currency board.
The 1rst of April of 1991, Argentina’s Congress creates a convertibility Law, which legally
adopts the currency board guaranteeing the convertibility of peso currency to dollars at oneto-one fixed rate and ...
Argentina 2 - BYU Marriott School
... historically uneven.
developed country in South
America (measured in GDP
per capita and HDI)
Principles of Business
22. Which type of interest rate is offered by the Federal Reserve to financial institutions for loans?
23. What are the four main factors to the international business environment?
Geography, cultural influences, economic development, and political and legal concerns
24. This ...
Ankara, Turkey, September 12, 2006
... i.e., serious difficulty in rolling over significant
amounts of bonds as they mature or come due.
Thus, especially dangerous are:
Beyond the Border - The Tequila Effect
... the central bank’s ability to act as a
those of Latin America. By the end of
lender of last resort or to provide deposit
February, Argentina’s stock market had
insurance (bailing out financial institudropped 32.1 percent, Brazil’s 33.6
tions or depositors by printing money
percent and Peru’s 28.7 pe ...
GDP Indexed bonds
... Brady Bonds Value Recovery Rights
GDP VRRs (Costa Rica, Bulgaria, Bosnia)
Ciudad de Buenos Aires
Options on US economic statistics
Once Upon a Time in Mexico
... infrastructure and decreasing budget deficits enabled
largely by favorable world oil prices
• Huge gaps between the rich and the poor remain,
unemployment rates still high, political and economic
stability remains in question
Long Term Outlook for the Economy
... • Other problems, such as Credit Default Swaps
($62 trillion last year, now $30+ trillion) are much
• The Credit Crisis is a major de-leveraging of the
financial excesses that have built up in the last 30
years. It should take at least a decade to fix.
The Argentina Debt Case* Jayati Ghosh
... Argentina but for finance in general. The Argentine government appealed against it, but this
appeal has now been dismissed by the US Supreme Court.
Consider just some elements of this US court decision. First, it is based on a peculiar and
unprecedented interpretation of the pari passu (equal treat ...
... up to October), although this was less dramatic than in
previous years. Total receipts from the general sales tax
expanded by 20% in this period, while real receipts from
income tax edged up only slightly (mainly on account
of lower prices for exports of natural resources). As a
result, the central ...
From Poster Child to Basket Case
... the stronger peso made Argentine exports more expensive and helped produce a boom in
imports. Through the 1990s, Argentina was fortunate that Brazil had also pegged its
currency, the real, to the dollar as an anti-inflation strategy. This move helped shift the
bilateral exchange rate more favorably ...
... • Because of an upcoming presidential election on August 21, 1994, political
developments caused an increase in Mexico’s risk premium () due to
increases in default risk and exchange rate risk: These events put
downward pressure on the value of the peso, Mexico’s central bank had
promised to mainta ...
Declaración Carta Abierta 17-02
... aspects and denouncing the reduction of the negotiations to the technical-financialeconomic spheres only reinforce the asymmetries between powerful oligarchies
and people. This is the reason why we highly value the way chosen by the Greek
Hyperinflation and state bankruptcies: an acute threat?
... A state is said to have experienced a "credit event" if it
can no longer service its debt or requests a payment
deferral, or when the maturities of its bonds have to be
extended. The threat of a credit event or of default is often
foreseen on the market, pulling down bond prices by up to
70% for the ...
Financial Crisis 2008
... NOTE: Depth measures the average percent change from peak to trough for real GDP and real
GDI and the average percentage-point change from trough to peak for the unemployment rate.
Changes in real GDP and real GDI during the Great Depression are based on annual data.
SOURCE: Kevin L. Kliesen’s calcu ...
1998–2002 Argentine great depression
The 1998–2002 Argentine Great Depression was an economic depression in Argentina which began in the third quarter of 1998 and lasted until the second quarter of 2002. It almost immediately followed the 1974–1990 Great Depression after a brief period of rapid economic growth.The depression, which began due to the Russian and Brazilian financial crises, caused widespread unemployment, riots, the fall of the government, a default on the country's foreign debt, the rise of alternative currencies and the end of the peso's fixed exchange rate to the US dollar.The economy shrank by 28 percent from 1998 to 2002. In terms of income, over 50 percent of Argentines were poor and 25 percent, indigent; seven out of ten Argentine children were poor at the depth of the crisis in 2002.By the first half of 2003, however, GDP growth had returned, surprising economists and the business media, and the economy grew by an average of 9% for five years.Argentina's GDP exceeded pre-crisis levels by 2005, and Argentine debt restructuring that year were resumed payments on most of its defaulted bonds; a second debt restructuring in 2010 brought the percentage of bonds out of default to 93%, though holdout lawsuits led by vulture funds remained ongoing. Bondholders who participated in the restructuring have been paid punctually and have seen the value of their bonds rise. Argentina repaid its IMF loans in full in 2006, but as of 2014, the bond default had not been completely resolved.