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Argentina: Repeat Economic Offender

Argentina's Stock Market in Buenos Aires.
Argentina's Stock Market in Buenos Aires.Photograph by Victor R. Caivano/AP Photo

How many Argentines does it take to screw in a light bulb?
Three: two to grill up meat while the other guy bribes the electrician.
That extemporaneous wisecrack has been winning me free alfajores at Miami bakeries for more than a decade now.
And why not? The rent may be too high in Buenos Aires, for everything from apartments, to beef, to auto parts. But Argentina doesn’t seem to care. This is, after all, an economic recidivist, having defaulted on its debt in 1982, 1989, and 2001—and it is about to do so yet again even as it still fights jilted creditors over the last reneg.

Argentina’s borrowing costs now stand near a two-year high; its government notes due 2017, which have fared the worst in a basket of 65 emerging markets clocked by JPMorgan Chase, yield 19.25 percent. That is painfully hard to service when your holdings of foreign currency stand at a seven-year low: $28 billion now compared with $53 billion just three years ago. The market for credit-default swaps suggests an 85 percent chance of Argentina defaulting again within five years.