Consider the parallels between the two countries:
From 1998 to 2001, Argentina experienced a severe recession. It attempted several rounds of fiscal austerity that only had the effect of further slowing the economy. The country had a fixed and overvalued exchange rate, a large trade deficit, and a shrinking economy.
Its austerity plan, directed by the International Monetary Fund, included cuts in government spending, tax increases, and structural reforms to make markets more flexible. The IMF and international lenders dogmatically insisted on debt repayment and maintenance of the currency peg to the US dollar. They hoped reductions in wages and prices would make Argentina competitive in global markets.
Greece today is experiencing many of the same symptoms as pre-default Argentina. For Greece, the euro is too strong. The economy is stagnant, with unemployment at record levels. Over the past several years, the European Union and the IMF have insisted on increased austerity and structural reform in exchange for funds used to service the country's debt, note this means giving money to the investors and not the people.
The history of both countries on the way down is also similar. Argentina tied its currency to the dollar in 1991 as a way to control rampant hyperinflation. Inflation was dramatically reduced, but the currency peg left the government with little freedom to control its money supply and smooth economic shocks.
This lack of flexibility worked during a time of large capital flows from abroad that helped finance investment. Creditors became worried that Argentina would not be able to repay its debts. The government cut spending and raised taxes, but these actions only further decreased growth and required additional austerity to ensure the country could pay its bills.
Last month, Greece pulled off a massive restructuring of debt held by banks and pension funds - offering bondholders new debt with less than half the face value. Guess what? Most accepted the painful deal and the world did not fall apart.
Meanwhile recovery took place in Argentina from 2002 onward, Argentina has grown nearly twice as fast as Brazil, and has sported one of the highest growth rates in the world. Its success is not dependent on a commodities boom
It has increased social spending from 10.3% of GDP to 14.2% of GDP. Inequality has fallen. Poverty and extreme poverty have fallen by roughly 2/3.
The election in Greece yesterday simply postpones the inevitable and sentences workers, youth and the weak to even more misery. Greece should proceed to a restructuring of its remaining debt. And like Argentina, it should also free its currency from the Euro.
For a past view on Argentina and a report on its progress see 2002 see these links.
From the Austrian school - i.e. those in favour of free markets but opposed to fractional reserve banking http://mises.org/daily/890
Academic http://www.thirdworldtraveler.com/South_America/Disasters_Neolib_Argen.html "Catastrophe is coming to Argentina. The banks have no money to return to their depositors, so a breakdown in the banking system appears imminent, especially given the pressure of the international financial institutions, which is forcing the nation to follow the same rules that applied before this crisis erupted. As a result, an immediate moral dilemma for the politicians is to evaluate which economic risk the Argentine government is willing to take in order to avoid an even greater economic or social risk".
Post crisis analysis
http://www.nakedcapitalism.com/2011/10/the-verboten-story-of-argentinas-economic-success.html