No Reserve: The Limit of Absolute Power

255 Pages·2011·1.24 MB·English

by  Martín Redrado

NO RESERVE
The Limit of Absolute Power
NO RESERVE
The Limit of Absolute Power
Martín Redrado
Translated by Dan Newland
Text copyright © 2010 Martín Redrado
English translation copyright © 2011 by Amazon Content Services LLC
All rights reserved.
No part of this book may be reproduced, or stored in a retrieval system, or
transmitted in any form or by any means, electronic, mechanical, photocopying,
recording, or otherwise, without express written permission of the publisher.
No Reserve: The Limit of Absolute Power was first published in 2010 by
Editorial Planeta as Sin Reservas: Un límite al poder absoluto.
Translated from Spanish by Dan Newland.
First published in English in 2011 by AmazonCrossing.
Published by AmazonCrossing
P.O. Box 400818
Las Vegas, NV 89140
ISBN: 978-1-935597-23-0
Table of Contents

Prologue
The Beginning of the End
Why Do Emerging Countries Keep Reserves
My Arrival
Chronicle of a Death Foretold: Relations with the IMF
Inflation
The Pressure to Devalue
Double or Nothing
A Country without Credit
The Temptation for the Reserves
A Battle Is Not a War
My Last Stand
My Balance Sheet
A Central Bank Committed to the Society
Argentina Needs a Sound Plan and a Reliable Team
About the Author
About the Translator
Prologue

I have no doubt that emerging countries will play a leading role in the decades to
come. The kickoff provided by China when it opened its doors to the world, in
just a short time becoming a major world power; the veritable explosion of
world-class new technologies that India is producing; Brazil’s economic growth
with social inclusion, which has garnered it the kind of worldwide recognition to
permit it to host the 2016 Olympic Games, becoming the first South American
country ever to do so; these are but a few examples of the leading roles that
emerging countries are taking on.
Furthermore, the 2008 world crisis has placed emerging countries in a
privileged position. While the United States, Europe, and Japan are still suffering
the collapse of credit, industry and employment, developing nations in Asia and
South America present a sound growth rate and have become attractive places in
which to invest.
Be that as it may, the question that arises when one tries to gain deeper
knowledge of these countries is how do their governments behave? How do
those at the highest levels of power act? No Reserve: The Limit of Absolute
Power is a book that provides insight into this little-explored question. It offers
the reader the possibility to understand how decisions are made at an executive
power level in emerging countries.
I directed the Central Bank of Argentina for five years and four months.
During that period, I came to know firsthand how the Executive Branch, which
is still in the same hands today as then, pulls the strings of power in one of the
emerging countries of greatest potential in South America.
Supported by previously unpublished documents, this book reproduces the
dialogs that I had with the highest authorities in my country, and provides a
chronology of the crisis that was unleashed when an attempt was made to devise
a new role for the international reserves of the Central Bank, on the strength of
an executive decree and in conflict with the law. No Reserve is a first-person
narrative that tells precisely what happened in key spots where decisions are
made that affect the destiny of an entire society.
This story provides a look at the web of power in Argentina from an
insider’s point of view. In fact, I wrote these pages while I was still in office.
This is why No Reserve offers readers something about emerging countries that
cannot be found elsewhere. It demonstrates a clear example of a nation that
could rank among the most important in the world, but that, when it comes to
increasing its development, finds itself immersed in difficulties, due to certain
attitudes taken by those who govern it.
It has only been in the past twenty-five years that emerging countries in the
South American region—including Argentina—initiated the road to democracy,
following decades of military coups, crimes, prohibitions, and even the
disappearances of individuals. But today, in Argentina as in neighboring
countries, the elections of governing officials and members of Congress are held
without any major disturbances or threats.
Despite the importance of this fact, Argentina’s institutions still show certain
weaknesses. Currently in this country, republican checks and balances are
frequently undermined by the eagerness of one power to advance on the
institutional territory of another.
At the end of last year, the Central Bank, which, during my term, functioned
as an institution with independence of criteria but did so while taking an active
role in attending the country’s current problems, became the victim of such
abusive and improvised attitudes.
Readers will also find the complete story of the work that my team and I
carried out during these years at the head of the Central Bank and of how, as a
result of the measures taken by the institution, the country managed, from 2008
on, to steer clear of one of the worst global crises in the history of modern
capitalism.
While several of the world’s leading countries succumbed to bank closures,
plummeting stock markets and high unemployment rates, and while, still today,
others are facing tough situations, as in the cases of Greece, Ireland, Portugal,
and Spain, Argentina came through the crisis practically unscathed, thanks to a
series of economic measures implemented by the Central Bank under my
direction.
At the beginning of this century, my country lived through one of the worst
economic and social crises in its history. In 2002, however, Argentina managed
to leave “intensive therapy” and take the road to a process of growth.
Argentina learned its lesson, and while in 2000 and 2001 we provided an
example to the world of what should not be done, in this new era of worldwide
upheaval, we have become an example to be followed. In these pages, readers
can also find a description of the mechanisms that we employed in successfully
facing up to this grave crisis.
Additionally in No Reserve, I provide an outline of my vision for Argentina
in the years to come, as an example of the good fortune that could well await
emerging nations, if they do what they should. I also present an agenda for
sustainable growth.
In this sense, this book can be considered an opportunity to observe the
strengths, weaknesses, and present scenario displayed by an emerging region
that promises to play a more leading role in the years to come, within the
complex framework of the world economy.
Chapter 1