Firstly, this article is just an another reminder that when you make your investment choices – you have to diversify. Numerous retirees in Argentina, Germany and Italy lost their investments in Argentina’s default in 2001. Most of them lived very comfortably for a while but the default had wiped out everything.
The second important point is the danger and uncertainty of investment in countries like Argentina. The economy in Argentina moves rather erratically going from boom to bust and article gives the clear picture on how hard it is to deal with the mess after the bust. Here is the problem in a nutshell:
“Argentina is the world’s leading exemplar of how a sovereign should not treat its creditors,” Brodsky said in an emailed statement last year. “The global financial system is placed at risk by rewarding such behavior, not by enforcing contracts.”