Quotulatiousness

July 10, 2014

Argentina’s economic woes – tourist edition

Filed under: Americas, Economics — Tags: , , , , — Nicholas Russon @ 10:56

How bad is the Argentinian economy right now? So bad that middle class Argentine tourists in Brazil eat at soup kitchens, according to the Wall Street Journal‘s Miriam Jordan:

The state-funded Citizen Restaurant in downtown Rio is accustomed to serving a balanced meal at an unbeatable price to about 5,000 poor residents of this city each day. During the World Cup, however, this cafeteria has been catering to another clientele as well: middle-class Argentines.

“We serve homeless people, drug addicts, blue-collar workers and retirees,” said Jose Barbosa, Rio de Janeiro state coordinator for food security. “This World Cup we have been welcoming Argentine soccer fans, too.”

With the value of the Argentine peso deeply eroded amid the country’s economic woes, many Argentines who have flocked here to root for their soccer team [...] say they’re counting every Brazilian real they spend — and hunting for bargains. On Monday, dozens of Argentines lined up alongside Brazilians to buy lunch at the cafeteria, where a meal of black beans, white rice, salad and choice of meatballs or chicken sausage cost 1 real, or about 40 U.S. cents.

“Rio is very expensive — that’s why I am here,” said Fernando Castillo, a 24-year-old bartender from Buenos Aires. With gusto, he dug into his plate of food, which sat on a plastic-blue tray beside a cup of guava juice and a fresh orange for desert, both included in the price. “This is perfect,” he said, “especially at this price.”

“The generous portion keeps us filled all day,” added his cousin, Thomas Castillo.

[...]

To save on accommodations and flights, many Argentines drove to Brazil. In Rio, their campers and cars occupied prime beachfront parking spots until the city evicted them.

It then allowed them to park vehicles and pitch tents in a vast parking lot downtown that abuts the permanent bleachers where Rio’s samba schools perform during the annual carnival celebrations.

Word spread quickly at these parking lots that Citizen Restaurant, within walking distance of the Argentine encampment, offered good Brazilian fare at a bargain-basement price in a clean, safe environment. “It started with 10 of them one day, then 50 of them came and now we’re seeing about 200 Argentines each day,” said Ricardo Chaves, the eatery’s administrator.

May 31, 2014

Amusing Telex exchange as Falkland Islands were invaded by Argentina

Filed under: Americas, Britain, History — Tags: , — Nicholas Russon @ 09:35

Falklands invasion Telex conversation

H/T to Jonathan Liew for the image.

February 24, 2014

Argentina reported to be increasing military spending

Filed under: Americas, Military, Politics — Tags: , , , , , — Nicholas Russon @ 08:09

The Argentine government has announced it will be increasing spending on their armed forces by a third in the coming year. While this report in the Daily Express takes it seriously, it fails to account for the overall sorry state of the Argentinian economy … it’s not clear if there’s any actual money to be allocated to the military:

Buenos Aires will acquire military hardware including fighter aircraft, ­anti-aircraft weapons and specialised radar, as well as beefing up its special forces.

The news comes months before drilling for oil ­begins in earnest off the Falkland Islands, provoking ­Argentina’s struggling President Cristina ­Fernandez de ­Kirchner.

Last month she created a new cabinet post of Secretary for the Malvinas, her country’s name for the Falklands.

Meanwhile, Defence Secretary Philip Hammond has refused to confirm that Britain would retake the Falklands if they were overrun by enemy forces.

The extra cash means Argentina will ­increase defence spending by 33.4 per cent this year, the biggest rise in its history. It will include £750million for 32 ­procurement and modernisation programmes.

They will include medium tanks and transport aircraft and the refurbishment of warships and submarines. The shopping list also ­includes Israeli air ­defence systems, naval assault craft, rocket systems, helicopters and a drone project.

As reported earlier this month, the economy is suffering from an inflation rate estimated to be in the 70% range, the government has expropriated private pensions and foreign-owned companies, and is unable to borrow significant amounts of money internationally due to their 2002 debt default. Announcing extra money for the military may well be the economic version of Baghdad Bob’s sabre-rattling press conferences … just for show.

On the other hand, military adventurism is a hallowed tradition for authoritarian regimes to tamp down domestic criticism and rally public opinion. Being seen to threaten the British in the Falkland Islands still polls well in Buenos Aires.

February 1, 2014

Argentina’s economic end-game

Filed under: Americas, Economics — Tags: , , , , — Nicholas Russon @ 09:19

In Forbes, Ian Vasquez looks at the plight of the Argentine economy:

Argentina’s luck is finally starting to run out. It devalued its currency by 15 percent last week, marking the beginning of a possible economic crisis of the kind Argentina has become known for. Argentina’s problem is that it has followed the logic of populism for more than a decade and President Cristina Kirchner is showing no interest in changing course.

In the 1990s Argentina combined far-reaching but sometimes flawed market-reforms with irresponsible fiscal policies, culminating in its 2002 default on $81 billion in debt — the largest sovereign default in history. The country delinked its currency from the dollar, experienced a severe economic crisis, and initiated its current period of populist politics.

Those policies included price controls on domestic energy, reneging on contracts with foreign companies, export taxes, more pubic sector employment and vastly increased spending. When you don’t pay massive debts, you get temporary breathing room, so growth resumed. High commodity prices and low global interest rates that lifted demand for Argentine exports also helped produce Argentine growth.

But the government’s appetite has consistently grown faster, and, with little ability to borrow abroad, it has turned to other sources of finance. In 2008, Kirchner nationalized private pension funds worth some $30 billion, and has since nationalized an airline and a major oil company. As it drew down reserves, the government turned to printing money to finance itself, falsifying the inflation rate it says is about 11 percent, but which independent analysts put at about 28 percent. Economist Steve Hanke estimates it is much higher at 74 percent

August 15, 2013

Argentinian primary results may signal the end of Cristina Kirchner’s presidency

Filed under: Americas, Politics — Tags: , — Nicholas Russon @ 09:26

In The Beacon, Alvaro Vargas Llosa explains why the odd primary system in Argentina may have created an impossible situation for President Cristina Kirchner:

Argentina held open primaries last Sunday whose ostensible purpose was to pick the candidates that will compete in October’s midterm elections. But Argentineans saw them as a major test of Cristina Kirchner’s increasingly corrupt, authoritarian presidency — and she was badly humiliated.

The rules make these primary elections a foretaste of the real race, which means that the president will be roundly defeated in October. More importantly, this spells the end of Cristina’s attempt to change the constitution so she can run for a third consecutive term. (Since she succeeded her own husband, who was president between 2003 and 2007, it would actually amount to a fourth Kirchner term.)

The beauty of Argentina’s political underdevelopment, if one can put it that way, is that, unlike what happens in Venezuela, where the competing factions of the dictatorship have been able to keep their differences from bringing the government down, Peronismo has a kind of built-in system of checks and balances that ensures no autocrat can rule forever. As soon as one Peronista smells electoral blood, he goes after the governing Peronista with gusto, with the result that the president is eventually brought down in large part due to internecine fighting.

This is what happened in Sunday’s primary election. A former Chief of the Cabinet of Ministers who used to be a loyal Kirchner underling, Sergio Massa, turned on her at the last moment and ran against her chosen candidate in the province of Buenos Aires, which accounts for a bit less than 40 percent of the national vote. Not to speak of several Peronista dissidents who have been in opposition for a while and also ran against her candidates in several other districts. Over all, seventy percent of the country voted for anti-Kirchner candidates, while only twenty-six percent voted for the government. Kirchner, who was reelected with 54 percent of the ballots just two years ago, has lost half of her supporters.

August 7, 2013

Gibraltar as this year’s “shark story” filler

Filed under: Britain, Europe, Media — Tags: , , , , , — Nicholas Russon @ 11:28

Sir Humphrey thinks there’s rather less than meets the eye in the media’s coverage of the Spanish government’s recent series of escalations over Gibraltar:

Its August, the sun is shining, the politicians are on holiday and the media are desperately searching around for some kind of story to fill the news. Suddenly, the perfect story has emerged — those dreadful Spanish are doing all manner of dubious things to threaten Gibraltar and simultaneously the Falkland Islands. Is there reason for panic, or is it a case of just summer bluster in order to distract attention from other problems? The UK has always had a challenging relationship with the Spanish over Gibraltar — no matter how much the UK wishes to move the relationship forward (and in many areas it remains an extremely strong and positive relationship), this feels as if it is an issue which cannot easily be resolved.

The current situation owes much to the Spanish ratcheting up tensions after claims that Gibraltar was laying concrete blocks into local waters, in turn threatening traditional fishing grounds. It is hard to work out whether this is a genuine grievance, or merely a convenient pretext in order to gain some traction on putting pressure on the territory. Following a previous weekend where long traffic jams occurred with checks on all cars transiting the border, the Spanish are now reportedly considering imposing an entrance / exit tax of 50 Euros on anyone transiting their side of the border. While such taxes may be deeply unpleasant, they are perhaps not necessarily new (many countries impose similar entrance taxes around the world). The question is to what extent would this damage the local economy? It is worth considering that many Gibraltarians work in southern Spain, so any tax would probably make it difficult to get to work and damage the livelihood of many small businesses – perhaps appealing in a nation where youth unemployment is ever higher, but in the interim it could easily cause more long term economic damage to both the Spanish and Gibraltarian economies.

So what is the tie-in to the Falkland Islands? A media report on Spain selling Mirage fighter jets to Argentina:

It is not clear whether this is actually news, or whether it’s the case that the Tabloid press have been looking on Wikipedia and turned what is a one line entry on future Spanish Mirage jet prospects into an article designed to raise tensions. In reality this site has long made the point that the Argentine Armed Forces are in a parlous state, and that they are desperately short of spares, training and operational experience.

They’ve also taken various fleets of aircraft out of service in recent years, so its entirely reasonable to expect some form of replacement at some point. In the case of the Mirage jets, they entered service in 1975 and are extremely old and not necessarily front line fast jet material any longer. Acquisition of a small number of 1970s vintage jets which have been worked hard for nearly 40 years is not really going to change the balance of power in the South Atlantic. Indeed, its worth noting that right now (if you believe Wikipedia) the entire Argentine Mirage fleet is grounded anyway due to spares and safety issues. At best this acquisition may try and restore some limited capability. So, its fair to say that the Falkland Islands are hardly at risk of collapse — if the acquisition of a small number of ancient fighter aircraft materially changes the balance of power, then something has gone very badly wrong in UK defence planning circles.

July 4, 2013

“Buenos Aires [...] is the headquarters for the central planning bad idea bus”

Filed under: Americas, Economics, Government — Tags: , , , , , — Nicholas Russon @ 08:32

At the Sovereign Man blog, Simon Black discusses Argentina’s sad history of central planning failures:

The more interesting part about Buenos Aires, though, is that this place is the headquarters for the central planning bad idea bus.

Argentina’s President, Cristina Fernandez, continues to tighten her stranglehold over the nation’s economy and society.

This country is so abundant with natural resources, it should be immensely wealthy. And it was. At the turn of the 20th century, Argentina was one of the richest countries in the world.

Yet rather than adopting the market-oriented approaches taken by, say, Colombia and Chile, Argentina is following the model of Venezuela.

Cristina rules by decree here; there is very little legislative power. She may as well start wearing a crown.

Just in the last few years, she’s imposed capital controls. Media controls. Price controls. Export controls.

She’s seized pension funds. She fired a central banker who didn’t bend to her ‘print more money’ directives. She even filed criminal charges against economists who publish credible inflation figures, as opposed to the lies that her government releases.

Inflation here is completely out of control. The government figures say 10%, but the street level is several times that.

[. . .]

Being here in this laboratory of central planning makes a few things abundantly clear:

1) Printing money does not create wealth. If it did, Argentina would be one of the richest places in the world again.

2) All of these policies that are ‘for the benefit of the people’ almost universally and up screwing the people they claim to help.

Printing money creates nasty inflation. If you’re wealthy, it leads to asset bubbles, which can make you even wealthier. If you’re poor, you just get crushed by rising prices. Or worse – shortages (remember the recent Venezuelan toilet paper crisis?)

3) Desperation leads to even more desperation. The worse things get, the tighter government controls become… which makes things even worse. It’s a classic negative feedback loop.

Both the United States and pan-European governments are varying degrees of this model, with only a flimsy layer of international credibility separating them from the regime of Cristina.

So Argentina is really a perfect case study in things to come.

April 2, 2013

Reporting on “Maggie’s War”

Filed under: Americas, Britain, History, Military — Tags: , , , — Nicholas Russon @ 09:02

In History Today, Patrick Bishop recounts his experiences as a war correspondent during the Falklands War, 31 years ago:

For me, a young reporter attached to 3 Commando Brigade aboard the requisitioned cruise ship Canberra, covering ‘Maggie’s war’ was a process of constant revelation. The soldiers, the sea and landscapes, the actuality of combat — everything was surprising and collided with expectations.

I arrived in the war, like Britain itself, bemused at the suddenness of events. One minute I was a home news hack on the Observer, the next I was an official war correspondent, with a red cloth-covered Second World War-issue booklet of regulations and the rank of honorary captain.

We left from Southampton on a drizzly Good Friday evening. Two or three hundred wives, girlfriends and children had gathered on the quayside to say goodbye and good luck to their menfolk, while onboard a band played ‘A Life On The Ocean Wave’ and ‘Land Of Hope And Glory’. The crowd was cheerfully patriotic. Some waved union flags. Two buxom girls, soon the object of close attention by the TV cameras, were wearing T-shirts with the legend ‘Give The Argies Some Bargie’.

Who were these people? To my metropolitan eyes they appeared somewhat alien. Indeed they were. The era of Callaghan’s Labour government, which was replaced by Margaret Thatcher’s Conservative administration in 1979, had forced patriotism underground. Mrs T. was untried and not yet confident enough to encourage its resurrection.

March 13, 2013

Argentinian president derides Falkland Islanders as “squatters”

Filed under: Americas, Britain — Tags: , , — Nicholas Russon @ 08:24

I figured the Argentine government would brush off the overwhelming result of the Falkland Islands referendum once it became clear that the result would not flatter Argentinian egos:

In her first public comment on the referendum, the outspoken president dismissed the vote as a “parody” and thanked Argentinians for their “monolithic opposition”.

She said the referendum, where residents voted in favour of remaining a British overseas territory, was “as if a group of squatters had voted on whether to continue to occupy a building”.

Speaking at an event at the Presidential Palace in Buenos Aires, she added: “We reaffirm our commitment to dialogue in accordance with the UN.

“To achieve a solution that also included the interests of those who live on our Malvinas islands.”

She quoted British Foreign Office minister Hugo Swire as saying that the referendum result didn’t change the situation “from a legal point of view”.

The vote wasn’t even close, with only three votes for the “No” option out of 1,517 total votes cast.

February 4, 2013

Argentina’s real inflation rate is a state secret

Filed under: Americas, Economics, Government, Media — Tags: , , , , — Nicholas Russon @ 13:19

Argentina has lots of issues, but one of the biggest problems is that their official statistics fall somewhere along the spectrum between “a bout of wishful thinking” and “a tissue of lies”:

Argentina, the only country in the world that threatens private economists with jail terms for disputing the government’s obviously bogus inflation numbers, is now the only country in the world to be censured by the IMF for unacceptably bad economic statistics. In a rare move by the 24 member board of the world’s most prestigious financial institution, Argentina’s government was censured for failing to improve the quality of the numbers it uses to calculate things like GDP and, especially, the inflation rate.

The current president’s husband fired the professional economists in the statistical office in 2007. Ever since, the patent bogosity of Argentina’s statistics has undermined the government’s credibility at home and abroad. Inflation is a deadly sensitive subject in Argentina, where past bouts of hyperinflation have wiped out the savings of whole generations. Currently the government claims inflation is no higher than 11 percent; when the thought police aren’t watching them, private economists whisper that the real rate is more than 25.

This isn’t a new story: The Economist stopped using the official figures in their weekly economic summaries about a year ago. Argentina’s economic policies have become a valuable primer on “what not to do” for other countries. Argentina could be a South American version of Canada, but the political class ensures that will not happen.

January 23, 2013

Retired Argentinian destroyer ARA Santísima Trinidad sinks at naval base

Filed under: Americas, Military — Tags: , , — Nicholas Russon @ 09:34

The Argentinian defence minister was sure to include the possibility that the ARA Santísima Trinidad was sunk by enemy action:

Arturo Puricelli, the defence minister, said the loss of the Holy Trinity was due to “negligence in the best-case scenario, or an attack” aimed at making the government look bad. He did not go into detail.

The destroyer, which was retired from active service in 2004, took on water at the Puerto Belgrano naval base after a six-inch pipe burst, the navy said.

The minister later said, however, that he was surprised that the ship sank quickly while it was moored at the port.

First it started listing, he said. “So the breakdown must have been major, or someone opened a value to sink it,” he said.

The ARA Santísima Trinidad was the warship that landed the first military forces — 84 marines and a team of divers — to start the Falklands War of 1982.

Update: I wonder if Colby is freelancing for the Sun now:

The_Sun_(Gotcha)

January 13, 2013

Britain considering reinforcements for Falkland Islands

Filed under: Americas, Britain, Military — Tags: , , , — Nicholas Russon @ 12:54

If nothing else, the heated rhetoric from Argentina is encouraging the British government to think about sending more military resources to the Falklands:

Britain is prepared to send additional military backup to the South Atlantic as a ‘show of force’ to Argentina over the Falkland Islands.

It is understood an extra warship, another RAF Tycoon [sic] combat aircraft and further troops could be dispatched to the region ahead of the March referendum over whether the islands remain part of the UK.

According to the Sunday Telegraph, the options being proposed by planners at the Permanent Joint Headquarters in Northwood, London, include conducting naval exercises in the region.

Alternatives include sending elements of the Army’s 16 Air Assault Brigade — the airborne task force which includes members of the Parachute Regiment — which has just completed a series of demanding exercises in Spain preparing for ‘general war’.

Islanders will vote on March 11 on whether they wish to remain an overseas territory of the UK.

It is expected there will be a 100 per cent ‘yes’ vote, which intelligence officials have warned the Prime Minister could lead to an aggressive ‘stunt’ by Argentina, such as planting the country’s flag on the island.

December 19, 2012

ARA Libertad finally free to sail home from Ghana

Filed under: Africa, Americas, Government, Military — Tags: , , , , , — Nicholas Russon @ 15:05

If you’ve been following the debt-related travails of the Argentine navy’s flagship, you’ll recall that the ship was impounded on a visit to Ghana back in October. The BBC is now reporting that the ship has been released, and Argentinian sailors will be able to take the frigate home after a UN court decision:

The Libertad set sail from Ghana’s main port of Tema after a United Nations court last week ordered its release.

Argentina sent almost 100 navy personnel to man the three-masted training ship.

It was impounded after a financial fund said it was owed money by Argentina’s government as a result of a debt default a decade ago.

[. . .]

In November, sailors on board the Libertad reportedly pulled guns on Ghanaian officials when they tried to board the vessel to move it to another berth.

The lengthy diplomatic row began when the ship was prevented from leaving Ghana on 2 October, after a local court ruled in favour of financial fund NML Capital. The fund is a subsidiary of US hedge fund Elliot Capital Management which is one of Argentina’s former creditors.

Initial report on the seizure here and here.

December 17, 2012

QotD: Argentina’s little white interest rate lie

Filed under: Americas, Economics, Quotations — Tags: , , , , , — Nicholas Russon @ 09:49

No one gives a toss that Argentina is lying about its inflation rate. Well, except maybe the economists they’ve fined and ruined for calculating the real one. We’ve all put up with Cuba lying about everything for 60 years after all.

Except, except … Argentina has issued index linked bonds as part of the 2001/2 debt restructuring. The interest paid depends on what the inflation rate is. If the government deliberately undercounts inflation then they get away with rooking the holders of those bonds.

That’s what this is about. That’s why anyone cares. It’s not simply that they’re liars it’s that they’re thieves.

Tim Worstall, “I wish people would get it right about Argentina”, Tim Worstall, 2012-12-17

October 25, 2012

Follow-up – Argentine flagship’s crew to fly home after three week delay

Filed under: Africa, Americas, Government, Military — Tags: , , , , , — Nicholas Russon @ 00:01

I originally found this story at the beginning of the month, and after all this time, the bulk of the Argentinian crew finally fly home. BBC News has the update:

Almost 300 sailors left on an Air France plane chartered by the Argentine government.

A skeleton crew is staying on board the three-masted Libertad to maintain it.

The tall ship was prevented from leaving Ghana after a local court ruled in favour of a US fund.

The fund, NML Capital, argued it was owed $370m (£231m) by Argentina’s government as a result of its debt default a decade ago.

[. . .]

An earlier plan for the sailors to fly back on an Argentine plane was scrapped because of fears that the aircraft might itself be impounded as part of the debt dispute.

On Tuesday, Argentine President Cristina Fernandez de Kirchner condemned the Libertad’s seizure and made it clear there would be no negotiations with creditors.


Photo by Martín Otero, 7 April, 2007

Older Posts »
« « How to betray your country in one easy walk into a foreign embassy| Something amusing out of Wikileaks » »

Powered by WordPress