I'm being asked to come back and write something. So instead of apologizing (again) for doing something else instead of writing, I thought I'd share short snippets of my thoughts that might interest my readership. Here comes one: did you know (or notice) that phonetically, the name of our latest Minister of Economy, Amado Boudou, means Beloved Voodoo?
Voodoo seems an appropriate subject to relate to the minister. Our economy, with its ups and downs, is faring surprisingly well given the crisis, but since Néstor Kirchner decided to get rid of Roberto Lavagna, the office of the Minister of Economy is like a periodically revived zombie. When someone alive steps into the post, or she or he's promptly bludgeoned into an undead state by the Kirchners' requirements of absolute loyalty. Felisa Miceli was an undead from the start, as was Miguel Peirano; his successor, Martín Lousteau, like him a promising, independent young minister, made the grave mistake of proposing Resolution 125 and the fatal one of disturbing the government's inflation denialism, and lasted very little after that; Carlos Fernández was barely seen or heard, an undead without even the redeeming features of romanticism or tragedy, and passed without a sigh.
Argentine governments tend to burn economy ministers fairly quickly. Boudou has just started and he's half wasted already, having had several members of his work team vetoed or hand-picked by Néstor Kirchner on the basis of personal loyalty. Want to bet how long he'll last?
28 July 2009
Amado Boudou
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That's some thought-provoking linguistic symbolism you've uncovered Pablo. It seems that the Kirchners really are vampires. Obviously the administration is using its considerable power to suppress the truth!
ReplyDeleteI have to disagree with your opinion that the Argentine economy is faring surprisingly well.
Yesterday the official gazette announced that the government is borrowing pesos from the Banco de la Nacion to meet current financial obligations (loans of up to 7.3 billion pesos were authorized by the government in a May 28 resolution).
It was also reported yesterday that the government intends to use $US2 billion from BRCA funds to make an August 3 payment on dollar-denominated bonds (and will use pesos for the dollar purchase and bypass the local foreign exchange market).
Since the federal government has essentially no access to outside credit, what happens when the money runs out? Has the government already spent the seized AFJP funds? Will we see a repeat of the 2002 fiscal meltdown?
OK, I should've toned that down a little bit. What I meant, essentially, was that right now people aren't running on the banks, though there's a lot of foreign currency flight going on, and unemployment hasn't skyrocketed as in Europe or the US. Inflation is not faster than it's been lately, and the foreign trade balance isn't that bad, since imports have plummeted. Soybean's up, next year's harvest will be OK, so maybe we can live on that until foreign demand recovers. I'd like to think Congress will do something about the indiscriminate borrowing and spending...
ReplyDeleteI don’t think you’re going to see a run on banks because probably very few customers currently have any significant account holdings in US$. Accruing domestic profits from businesses are continually being moved outside the country via the parallel market, but given the state of the local economy, there’s currently a lot less money to move.
ReplyDeleteThe rich have always kept much of their wealth outside the country both because of mistrust of the government and for tax avoidance reasons. Anyone ensnared in pesoification in 2002 will never trust banks with anything but a minimal account in dollars. Better to keep dollar bills hidden at home if unable to move funds outside the country.
Only 7.8% of the US private sector workforce is unionized, and many states have ”at will” employment, so layoffs are quickly implemented when economic conditions deteriorate. However, the Argentine workforce is highly unionized and the government has been exerting considerable pressure on large companies to maintain employment. (I’ve heard rumors that companies that don’t comply have been threatened with tax audits.) So I don’t think that’s a valid country comparison.
Although prices for soybeans are currently high, that’s the result of the drought conditions that plagued the Argentine and Brazilian crops this past season. The completed harvest in Argentina is 28% below last year’s. In contrast, the US crop is looking to be the highest ever and the price of soybeans is predicted to drop as the harvest approaches later in the year. Additionally, China has been hoarding commodities, so a soybean surplus is predicted with perhaps a lowered demand worldwide if global economic conditions do not improve. Even though Argentine and Brazilian farmers are planning on planting even more soybeans (being the safest and cheapest agricultural bet), increased yields will not necessarily mean increased income.
Worldwide corn prices are depressed and the Argentine wheat crop has been a disaster that may necessitate the importation of grain to meet local demand.
Of course it’s still just a bet on soybeans – everything will depend on the coming southern growing season. Pressing demands from the agricultural sector to lower export taxes on grains and oilseeds could also mean lower tax revenues for the government.
With this evening’s announcement that the minimum wage will increase from $1240/month to $1400 on August 1, and to $1500 on January 1, 2010, it’s a sure bet that real inflation will now increase sharply (as opposed to indeked-inflation).
ReplyDeleteKeep posting... uncensored....
ReplyDeletethanks for the post
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