Greek economic instability resembles Argentina default

November 2, 2011

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(AP/Daniel Luna)
Shortly after Argentina's 2002 default, the unemployed burned tires in Buenos Aires to demonstrate their frustration.

Just when it looked like the European Union's bailout would begin to stabilize Greece, the situation got more complicated. On Monday, Greek Prime Minister George Papandreou announced he’d call a public referendum so Greeks could vote on whether to accept the latest package.

The move shocked just about everyone. Market jitters ensued. Greece’s finance minister checked into a clinic, citing severe stomach pains.  

Some economists say Greece's troubles look a lot like Argentina's did in 2002, when, after years of massive inflation and bad policy, the country experienced a messy default.

We discuss the lessons of Argentina’s economic collapse and subsequent rebound with Stephen Nelson, a professor of political science at Northwestern University who studies the politics of debt and has been following Greece closely.