What we all assumed has now come true: Latin America is not dragged away by the Argentine crisis, the country-risk rate reported a 1 to 5 ratio against Brazil and the stock exchange received savings in panic….

Our stock exchange is quite small and nobody knows what will happen. It should go up for it is too low now but also within the framework of an economic plan relied by people and capable of fueling some growth. I believe the room to maneuver is not as large as people think. Whenever these moves appear, fantasies arise and people say, ‘I put all upside down and problems solved’. But it is not so easy. Everything at discussion here –abandoning currency board, floating, ‘pesifying’ (switching the economy into pesos)- are major problems with serious implications. Logic says we will not be too far away of what today exists as economic system.

What are the alternatives with respect to the peso?

The alternative is to abandon currency board and float giving rise to devaluation. Now, within this framework there are many alternatives: how to make floatation?, will exchange rate controls continue or not?, are we heading for double exchange rate? Will limits on cash withdrawals continue or will deposits be freed? There is also the idea of ‘pesification’, which is quite complex…

Has the idea of dollarization vanished?

It seems to have died for now. But not completed for some dollarization still exists and if that will be reverted to pesos, then many people’s rights will be affected. It does protect debtors but only some because those who are indebted abroad in dollars will continue indebted in dollars. Those who have placed deposits in dollars trusting in the country are deeply disappointed. This destroys the financial system for long.

Someone is going to lose…

Of course, but we must work hard to rebuild the financial system despite the loses. In the end, the economic loss of this year accounted for deposits of over 21 billion, 24% of January’s total. No economy can endure that and so interests increased staggeringly. So will we keep on destroying the financial system just when we need so much credit and cash?

What would happen today if convertibility were based on new values, for instance two to one?

That would unleash a staggering inflationary spiral. Apart from the rise in the price of products expressed in dollars, many forget that due to their past experience, Argentines and the Argentine society as a whole, think in terms of dollars. So when people think in dollars and begin to fix prices, then a dangerous inflationary spiral will appear. Some dismiss this idea as untrue due to recession but I have my doubts, it will not be easy.

A forecast for the next 10 years?

Argentina may grow strong. I have been saying for long, it is the world’s country most capable of scoring high growth. It is not difficult in Argentina to explain this period of big growth but to explain what we are experiencing now. In other words, explaining this long-running recession plunged into depression in the past few months when the world has grown in recent years and when in fact one understands there is no real reason to undergo this. Argentina is the best positioned country in Latin America to grow for we do not have the problems gripping other nations such as illiteracy, cultural sluggishness problems, endemic diseases, etc.

Does the PJ today offer a viable economic plan to walk the country out of these problems?

There is no magical formula but it may handle things better than Cavallo, who this last time left no blunder unmade. Of course, it can also handle things worse. I can’t tell.