In 2001 the economy of Argentina went off the edge of a cliff. Amidst cries of 'Ar-gen-tina...Ar-gen-tina' the response of local lawmakers was the biggest ever sovereign debt default in world history - $81bn. That figure should give us an idea of the size of the problem the wider global economy now faces. For example, the £500bn bank rescue pledged yesterday by Gordon Brown will take the UK's national debt up to 65% of GDP.
Argentina should be a lesson to us all. Its economy was bigger than that of France and Germany before World War I and even after half a century of political and economic mismanagement, 60% of Argentines in the 60s still considered themselves to be "middle class". These days however, in terms of income distribution, the country has little to distinguish it from its neighbours...other than its peculiarly anguished sense of entitlement.
It took the Argies 7 years to turn things round to a point where they could start to pay off some of the debt they had defaulted on. They needn't have bothered...
My Bulgarian friend Stefan joked yesterday that he has now lived through both the fall of socialism and the fall of capitalism! He has only the fall of New Labour to look forward to now.
And last night Jim Ellis, Assistant Managing Editor of Business Week told his CNN interviewer that what we have witnessed over the past few days is nothing less than "a giant socialisation of the banking system".
Recent economic downturns in the West have resulted from sudden contractions of consumer demand. This time though there will be something of a double-whammy effect - with little credit in the system the market itself seizes up causing production itself to slow, regardless of how tight consumers' belts may already have become.
Argentina should be a lesson to us all. Its economy was bigger than that of France and Germany before World War I and even after half a century of political and economic mismanagement, 60% of Argentines in the 60s still considered themselves to be "middle class". These days however, in terms of income distribution, the country has little to distinguish it from its neighbours...other than its peculiarly anguished sense of entitlement.
It took the Argies 7 years to turn things round to a point where they could start to pay off some of the debt they had defaulted on. They needn't have bothered...
My Bulgarian friend Stefan joked yesterday that he has now lived through both the fall of socialism and the fall of capitalism! He has only the fall of New Labour to look forward to now.
And last night Jim Ellis, Assistant Managing Editor of Business Week told his CNN interviewer that what we have witnessed over the past few days is nothing less than "a giant socialisation of the banking system".
Recent economic downturns in the West have resulted from sudden contractions of consumer demand. This time though there will be something of a double-whammy effect - with little credit in the system the market itself seizes up causing production itself to slow, regardless of how tight consumers' belts may already have become.
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