Even if inflation remained moderate, many firms as well as the government would default on loans, since 90% of government debts and 80% of private-sector debts are in foreign currency.Not only does Argentina lack the option of a "quick fix" devaluation, but the currency board means that it forswears monetary policy, too.
But quick changes — including a 4percentt devaluation of China's currency against the dollar in early August, and a gradual devaluation in late December and early January — have led to global bouts of market turmoil.
Plus, unlike Ireland, Spain's economy is subject to structural rigidities that prevent a fast return to growth and a quick competitiveness adjustment through internal devaluation.
A fast means of changing relative price levels is devaluation, which is likely to have a quick effect on the prices of imported goods.
Devaluation and default would not be "quick fixes", and might threaten the political institutions and Mr de la Rua's presidency, argues Vladimir Werning, of J.P.Morgan Chase, an investment bank.Instead, to balance the budget in the face of falling revenue, the government is seeking yet more cuts.
But many banks were quick to note that they thought a Chinese devaluation was unlikely, especially since the Chinese currency is inconvertible against Western currencies.
Europe wouldn't be in this fix if Greece still had its drachma, Spain its peseta, Ireland its punt, and so on, because Greece and Spain would have what they now lack: a quick way to restore cost-competitiveness and boost exports, namely devaluation.
They are producing at the quickest rate since the fall of the Soviet Union, after a currency devaluation and three years of high oil prices brought them more cash for modernization.
He has pestered economists and written passionate posts on obscure blogs, convinced that the benefits from a devaluation of Greek's currency, while no doubt painful, will result in a quicker return to growth than more wage cuts and firings.
"Sure, there was devaluation.
