Amado Boudou

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?

Up it goes

Everything goes up and stays there these days, especially taxes and the heat.

The municipality is about to implement a new traffic scheme in the microcentro — there will be less room to park your car, it will be much more expensive to park it where allowed, and the penalties for violating the parking regulations will be much stiffer. Good for the mayor, but doing it at the same time people are receiving their new municipal tax bills with increases ranging from 30 to 1,500% with respect to the previous month doesn't show a lot of political savvy. And this in turn comes after the failure of the provincial government to pass a new tax law, and just before they try to introduce a new one.

The national government also recently authorized some impressive utility fee hikes for Buenos Aires and its metropolitan area, as public transport went up as well and subsidies were cut. Everybody behind a government desk is trying to squeeze money out of taxpayers to keep things going, at the same time trying not to be too brutal about it because it's an election year y el horno no está para bollos.

With the worldwide economic crunch, the campo crisis still looming, the drought, the prices of exportable commodities plunging to depths unheard of, and the general perception that Cristina K is deaf, blind and clueless, anybody with half a mind can see that 2009 won't be nice. At least the global recession should keep inflation at bay, but even that may fail — Argentina has a way to crash economic models...

Seven point two

7.2%

According to the official datum of inflation ("it is no longer correct to call it a measurement, since it is not measured", as La Nación reads today), during 2008 the Consumer Price Index rose by 7.2%, the smallest rate in four years. The Basic Food Basket, which enters the calculation of the poverty line, rose by less than a half of a percentage point (less than 2 pesos). So last year was a bargain. How come we didn't notice?

One strongly feels that this is about it — it's just not possible to lie any more than this and still pretend to be in contact with reality. The government first denied there was inflation, then accused a vaguely defined ensemble of foes of fueling price increases, all the while letting the thuggish Secretary of Trade, Guillermo Moreno, mangle the figures produced by INDEC. Last year the mangling became unnecessary: you don't have to tweak the figures when you've intimidated all the figure-checking personnel into silence or replaced them by your own employees.

Although the real inflation rate, as measured by several independent sources, is about three times the one reported by INDEC, it doesn't really matter to anyone (except the holders of inflation-pegged bonds, for whom this represents a fraud for $5.5 billion). People in the streets have turned from anger to indifference. As in many other respects, this once promising-looking government has abandoned us. We know they're lying, they know we know, and we know they know we know. How they plan to stay on top for three more years like this is a mystery to me. We can only hope they will die with a whimper and not with a bang.

Christmas at home

It's been a while since I last wrote, and I feel bad about that, given how often I used to post in earlier times. But such is the way of things.

The last year or so has been busy for me, mostly in the good sense (new girlfriend, new job routine, new places traveled to), but not spectacularly good for news (about the city, or the country or the world as a whole, for that matter). I seem to remember apologizing for a seemingly endless string of depressing political posts. I don't want to do that again.

Christmas season is about to end, thank Jeebus, and truth be told it doesn't seem like "the crisis" has hit that hard. Judging from the sheer volume of the throngs that squeezed along every inch of the downtown commercial streets last Monday (that's when I went gift-shopping myself), there's still lots of spare change in people's pockets for one last spending binge. The soft credits promised by the government have still failed to materialize (and seriously, nobody thinks they will, or at least it's highly doubtful they get past the nicest parts of Greater Buenos Aires) but retired people have got their extra 200 pesos, there'll be a similar supplement for minimum-wage workers and welfare benefits, and it seems the tendency to pay the aguinaldo before the holidays, instead of in January, has caught on.

As for me, I spent an unexpected amount buying little gifts for everyone in the family, which now includes Marisa's parents and her brother's family of three. Back in 2000, when I first got a stable job, and for more than a couple of years after that, I didn't earn enough for such luxuries as gifts, so now I love having the chance, although the act of going around and choosing the actual gifts is still stressful, being such a detail freak.

Since Marisa and I will each have dinner with our own families, and both driving yourself or getting a cab are virtually impossible on Christmas, we exchanged gifts days ago. I promised not to peep, so as to keep the surprise until tonight. There's no-one left at home that believes in Papá Noel (Santa Claus), and of course I don't believe anybody of divine origin was born on December 25, but one comes to appreciate the symbolic importance of waiting until midnight, as is the custom in Argentina, to open the shiny, bow-topped packages and peer inside to see what our loved ones thought we'd find nice or useful.

These days are exhausting, what with the summer heat and the crowded shopping malls and the explosion of red-and-green kitsch everywhere, and it's true that more people than usual feel depressed or lonely at this time of the year. In this sense I loathe Christmas. But maybe we should have more of it. It wouldn't be so special, but maybe one week as each season turns into the next, with less of a focus in overdoing (overspending, overeating, overdrinking) and more of simple expectation and celebration of our continued friendship. Our ancestors (no matter who they were exactly) had a developed awareness of seasonal change; why couldn't we? Imagine four short holiday seasons instead of a protracted one — better for the economy, for our digestive system, and for our inner peace.

Here's to a happy and peaceful Christmas, to all my readers. I'll see you again sooner than expected, I hope.

Expensive, those principles (by Martín Caparrós)

What follows is a translation of an article by Martín Caparrós on today's Crítica Digital (Caros, los principios) about the sweeping tax and capital smuggling amnesty proposed by Kirchner's government and currently being discussed in Congress. In dire need of fresh funds, Cristina is basically offering criminals a free pass to launder their money in Argentina, and inviting all those Argentinians who illegally sent their undeclared foreign currency abroad to take them back without paying taxes, dropping any legal investigations under way. [For some more background, see the American Task Force coverage.] Caparrós, once a leftist militant, again voices his disappointment with this supposedly progressive government, whose true leader (Néstor Kirchner) famously said he would never agree to check his principles at the door of the Casa Rosada.

The good thing is that we now at least know how much they're worth. Or rather how much they believe they're worth. (It may be, if anything, as in the classical sudaca joke about the best business deal: buy an Argentinian for what he's worth, sell him for what he thinks he's worth.) We now know, I was saying, the price. They're not cheap: they must believe their principles are better than they look — and they're charging a lot for them. The savings repatriation and tax moratorium proposal, which Congress began discussing yesterday, is that: a price label. They were supposed to have some principles: equality before the law, opposition to financial capitalism, a "new tax culture", a push towards some [wealth] redistribution by the State, an insistence on justice being made despite [purposeful] oversights. All of which crumbles when the government tells those who took away the money, those who evaded taxes, that there's no problem, that everything's forgotten. For a handful of dollars: various economists reckon that, on the best scenario, five percent of the Argentine capital that escaped might come back — that is, some six billion. That, if anyone believes them and brings in the bucks, which isn't a safe bet at all. With luck, the State could recover 10% of that 5%, some 600 million, and at the same time, of course, take advantage of the modicum of reactivation that money could bring to our economy.

That's what their principles are worth. Or rather the price of shitting on them: if you laundered money, if you evaded taxes, if you forged your bills to take home your "10% commission", don't worry, we'll fix it; and if you were in jail, you can now go home. If you stole 10 kilos of beef from the butcher's on the corner, or 80 pesos from some boy on a dark street, then no, this deal doesn't include you. Evading taxes is not stealing from one person — it's stealing from all of them, from the State which should spend that money on schools and hospitals for everyone, or at least for those who don't have them. Tax evasion is robbery worse than any other robbery: it's robbing those who have the least. These are the crooks this law wants to spare: the big crooks, the shirt-and-tie ones, the friends.

That's why this law is a full stop: a point of no return. If they pass it as it is, they won't ever again be able to speak of their principles: they will have sold them, under the excuse of a crisis that didn't exist days ago. A bit expensive, it's true: as in that bad joke.

The translation is free; the links are mine. Caparrós employs a few local references that may not be obvious unless you live in Argentina: the use of sudaca as a self-effacing slur; the soundbite por una nueva cultura tributaria ("for a new tax culture") which the Federal Tax Administration uses to advertise its fight for citizens' fiscal responsibility (which this moratorium turns into a mockery); the diego or "10% commission" — an euphemism for bribery; the expression punto final, which compares this obscene pardon for the wealthy to the law that halted investigations of the dictatorship's crimes. It just came out and I felt I had to share.

Our illegitimate debt

The government of Ecuador is considering defaulting on 40% of its debt because it's "illegitimate, corrupt and illegal" (as per the words of president Rafael Correa). An ad hoc international committee studied 32 years of indebtedness, with a focus on the dictatorial period of 1976–1980, and produced a 30,000-page document detailing how and why a large part of the buildup of Ecuador's US$13-billion debt involved questionable or outright criminal maneuvers by governments, creditors, negotiators and other middlemen.

The committee included President Correa's advisor, Argentine historian Alejandro Olmos Gaona. You might remember I mentioned the possibility of Argentine collaboration with Ecuador in a post of February 2007.

Crítica de la Argentina titles this, quite appropriately, Ecuador hizo el Nunca Más de la deuda — a reference to Argentina's Nunca Más ("Never Again") document about forced disappearances. To my knowledge, this is the first time a Latin American country revises its history of debt in this manner. Most of if not all Latin American countries have had long periods of right-wing dictatorship in the late 1970s and early 1980s and neoliberal governments during the 1990s, and a common tendency for these has been to get the country indebted with the IMF, the World Bank and other financial vultures, then divert funds for corrupt purposes and finally trash the economy, leaving the next administration with no seeming choice but to ask for more money and repeat the cycle... each time squeezing the economy a bit more.

Not only did the Argentine military abduct, torture and murder thousands, but they also increased our debt and stole whatever they could. A creditor that lends money to a corrupt, illegal government shouldn't expect to be paid, least of all if the negotiators and overseers of the loans were well aware of that corruption. Moreover, anything done under the pretense of legality during a dictatorship shouldn't be, in principle, considered legally binding. (Laws and other regulations passed by a dictatorial government should be voided ipso facto, though this hasn't been done for practical reasons.)

In 2000, Judge Jorge Ballesteros ruled that the part of Argentina's external debt contracted during the 1976–1982 dictatorship was fraudulent, due to more than 470 irregular operations detected in the loans' proceedings. The debt went from 7 to 45 billion dollars, including formerly private debt that was nationalized by then-minister Domingo Cavallo (a specialist in this matter, judging by his career). Ballesteros left it in the hands of Congress to take action. Nothing happened.

Argentina has much to learn, even from Ecuador — most people don't even question the legality of the debt, but only complain about the politicians who took the money. Would it be impossible to repeal the illegal debt and take the responsible people to court? Even in those cases where 30 years have passed, an argument could be made that Argentina's indebtedness has caused more misery and death than all our dictators. Of course, the reason is political: most of those who benefited from bankrupting the state repeatedly are still Senators, Deputies, ministers, government secretaries, prominent lawyers, presidents of corporations, respected bankers, or family or relatives thereof. In politics and big money, these dynasties and mafia-like networks, essentially the country's owners and managers, haven't changed in decades.

PS: More reading material: Committee for the Abolition of Third World Debt.

Nationalizing pension funds: more money for the Kirchners?

It's time again for a depressing anti-government post! This time, about the nationalization of AFJPs (private retirement funds). I strongly feel it's a good idea, and as strongly as that I also feel we must keep it from happening as intended by president Néstor Kirchner. (If you think Cristina's the one in charge, you must be living inside a jar, as we say over here. For months she's been devoting her time exclusively to cutting ribbons to [unfinished] public works and, lately, to writing newspaper articles in praise of her husband's ideas. Néstor is de facto big guy.)

Now you mustn't believe I do this because I like destructive criticism. I'm absolutely for "big government" as Americans call it, and I believe important stuff should never be left fully in the hands of private corporate interests whose creed is "make money fast whatever way you can". Kirchner's government has taken us far in this sense, and that's OK.

The problem with the Kirchner administration is that they always, somehow, manage to turn good theory into bad practice, and for a long while now (and not because the media or the far right are trying to make it look so, as C&K passionately believe) everything they've proposed has been born tainted by association. Or, as in this case, destined to fail before (a good part of) public opinion because common sense and the typical Argentine paranoia will kick in, and all alarms will go off, as soon as the state gets close to our pockets.

About 15 years ago, the law that allowed the creation of the AFJP system was drafted and passed, accompanied with a heartfelt defense of private capital accumulation (the so-called "capitalization scheme") by many who now profess to be old-time fans of the old-fashioned state-regulated collective saving scheme, including many faithful Kirchnerists (flip-flopping is another word for pragmatism — the only thing that can be truly called "Peronist doctrine"). Gobs of money were transferred to private capitalization accounts from the state's coffers, and the AFJPs (Administradoras de Fondos de Jubilaciones y Pensiones) started recruiting associates. The law said if you didn't choose where your retirement funds should go, then it would be automatically assigned to an AFJP; thus millions of distracted workers were signed up for a massive speculative operation. The AFJPs invested money in assets of various kinds and for a while they actually increased their clients' funds, although they charged huge commissions.

Pensions were frozen for ten years, as the economy entered into a low-growth phase, unemployment rose steadily, and finally recession entered the picture. After president Carlos Menem (cursed be his name) got away with murder, president Fernando de la Rúa found the dying economy and, instead of trying to resuscitate it, he finished it off with such nice measures as cutting 13% of pension payments. We all know what happened then... so fast forward to 2003.

Néstor Kirchner passed a series of decrees increasing both salaries and pensions, which were well-received, even as employers complained. The economy took off and pensions did as well. There was a small problem, though: the private pension funds couldn't keep up. They started losing money. The law said that the state must guarantee pension payments, if necessary by compensating (subsidizing) the private funds. So the state poured money into the AFJPs, whose risky investments had proven disastrous (does that sound familiar?), and when the companies began accumulating too much debt, the government forced them to buy national debt bonds. Yes, that's right: the government forced the guarantors of retirement funds for millions of Argentinians to accept what amounted to wet paper in order to rid itself of them (the only other feasible destination for those bonds was Hugo Chávez).

In January 2008, after the scarce enthusiasm that followed Cristina's election had faded, someone near her came up with the idea of "letting people choose" where to place their retirement savings. The Kirchnerists hastily passed a law opening up the choice for everyone: 180 days to take your money away from the private box to the state's bag (or the other way round). And the law also established that, if newcomers to the labor market didn't explicitly choose which way, their funds would go to the state system, not some AFJP. The AFJPs understandably lost a lot of clients, but in all fairness they deserved to, and the law didn't force anyone to accept anything against their interest. It had some other very good points as well, so good in fact that, "better late than never" aside, some of us wondered why it hadn't been passed before. Like four years before.

The answer came easily. Why indeed? Because it was only now that the economy had begun slowing down, while debt payments were looming closer and the whole economic structure was showing the strain. High inflation, high interest rates, no way to get fresh funding for things like the bullet train, and the need to pump more and more money into subsidies for electric power, drinking water, fuel, natural gas and everything else. Néstor Kirchner had always ruled with a big wallet of state money freely available to him, but Cristina's future was uncertain. The fresh funds from the AFJPs, of course, should have never been used to fund the state in any respect other than pension payments, but the new law didn't say anything about that. Already in 2007, his last year, Kirchner had signed a decree allowing the government to divert funds from ANSeS (the social security agency) to expenses such as public works.

After the fiasco of Resolution 125 (another, more desperate attempt to get money for the state) came the worldwide financial crisis. After being deprived of juicy taxes on exports of soybean, both exporters and the government have seen the prices of soybean plummet to half the levels of the first quarter: less and less money! Subsidies on buses, natural gas and power were reduced, but that's not enough; with a world recession looming, and the economy visibly decelerating, it would be economic suicide to raise the prices of basic services. On top of that, 2009 is an electoral year, and that means a lot of wills and votes must be bought. Back then, Néstor and Cristina could campaign all year round, visiting one town after another in provinces with "loyal" governors, handing out multimillion checks without any real oversight, and making sure crowds of bussed-in "supporters" would be ready to applaud their presence; but all that costs money.

The national state keeps about 70% of what the provinces contribute, and what it shares, it does so rather unfairly. Most provincial governments are strapped for cash right now, and more than a few are absolutely dependent, on a short-term basis, on presidential whims when it comes to distribution.

Kirchner's desperation is now becoming noticeable. Initially he ordered the bill that nationalizes AFJPs to be approved and turned into law at once, without any changes. His parliamentary bulldog, deputy Agustín Rossi, first attempted this, then saw it was impossible, and timidly conceded that the government's bloc would accept discussion of the finer points.

Now, the bill seeks to overturn a 15-year-old system with millions of associates, in a context of financial turbulence, and to do so in a matter of weeks, so that all the money from the private pensions can be transferred to the state's social security before the end of the year. Not only does this negate the choice of millions of people who decided to stay in the private companies earlier this year, but it also looks rather suspicious.

Why the hurry? True, the assets of the AFJPs are taking heavy hits from the world's financial meltdown. But those things come and go. It's also true that the AFJPs haven't given their associates what they promised, and that they've engaged in some dubious practices. That's something to be settled with general audits. If you have a critical system that doesn't seem to work as intended, you don't decide to break it. You fix it and keep it going while you prepare the transition. The president can count on ample powers, a Congress controlled by overwhelming margins, and a social consensus that private pension funds aren't a good idea for most of us. I repeat, why the hurry? Cristina still has three years to go.

This administration has frustrated me time after time. I'm really tired of seeing great ideas given such bad names by the Kirchnerist gang. I'm fed up with having to agree with certain people... being forced to be on the same side as some who hold principles completely opposite from mine.

Yet I have no alternative. It's just plain common sense that the Kirchners want the private pensions' money to continue their incessant campaigning for their own permanence. They have no new ideas, no plan, no policies, nothing but a hunger for power that sometimes translates into seemingly brilliant developments, soon marred by corruption and negligence. Are we as a nation doomed to go from one rotten set of politicians to another?

Argentina's economy: what now?

Everybody's talking about the financial crisis, so I thought I could chip in with my two cents..., especially seeing how our own Argentine government continues to deny we'll face serious trouble. In fact, President Cristina Kirchner has devoted a lot of time to deride, with barely concealed glee, the proponents of globalized laissez-faire capitalism (we must acknowledge that "kicking them while they're down" never felt better) and to defend the Kirchnerist achievement of decoupling Argentina from international market shocks, which would be terrific — if it were true.

First of all, not to despair: we are, as Cristina says, better prepared than ever in recent history for the shock. The problem started outside our borders (we have different problems) and we'll just have to slow down and wait, hoping that they don't spill into our own economy. For example: we need money to pay our foreign debt next year (and it's a lot of money — more than we owed before Néstor Kirchner renegotiated it, because we actually exchanged debt for more debt), and it'll be difficult to get money from abroad or to refinance the debt once again, with interest rates being so high and everybody clutching desperately to their remaining assets; but we still have a fiscal surplus and a trade surplus.

The peso-dollar rate jumped a bit, too, and that will help the trade surplus. There's just one problem — we're dependent on imports of all kinds, so a higher exchange rate means inflation. And one more problem: the Brazilian real has devalued as well, only much more brutally, so Brazil will be able to sell cheaper stuff to us, they won't be able to buy as much from us, and they'll be much more competitive with respect to third parties. Brazil has a long-standing state policy of industrialization; we don't. Brazil can cope with lower or higher exchange rates; we can't.

Yet more problems: our trade surplus feeds our fiscal surplus, via retenciones (export taxes), especially on soybean products. The price of soybeans (as with other commodities) has taken a deep dive, so that means less revenue from exports. China buys most of our soybeans, but China, like all countries around the globe, will start buying less of everything. Less revenue from exports means less available money to (for example) cover the costs of subsidizing inefficient public services and utilities, and funding public works. The national government has already left the inner country to its own devices, delaying or altogether abandoning plans to build homes, schools and such (Minister De Vido lies, as usual); now it's Buenos Aires's turn. Natural gas, drinking water, domestic power, buses, trains, the subway — they'll go up and up, while construction (the engine of Argentina's economic recovery since 2002) will come to a halt. Tourism and foreign investment will suffer as well; people in the US and Europe simply won't have money to spend on Third World countries like Argentina.

There's a political problem as well, because 2009 is a legislative election year, and the Kirchners doubtless had plans to pour money into cheap, quickly-unveiled public works all over the country, as Peronists are fond of doing; that just won't be possible in this scenario. Least of all if the opposition gets to revise the budget, which contains certain provisions deserving a "best fiction" award, plus the infamous "superpowers" that let the Chief of Cabinet move around huge chapters of the budget under the excuse of an economic emergency that supposedly ended years ago.

All in all, it looks like the next months will bring a "plateau" in Argentina's so far swift growth, and the Kirchnerist government will have to deal, for the first time ever, with a tight budget. It's easy to play when you have cards, as we say over here. The feeling of opportunities for true growth, for industrialization, for true redistribution of wealth, wasted and lost and now unlikely to return for a few years, is almost unbearable.

Musketeers of redistribution: Guillermo Moreno

This is the third and last installment of my translation of the Crítica Digital article titled Los mosqueteros de la redistribución ("The Musketeers of Redistribution"), which shows how the Kirchner administration has failed to redistribute income, which they claim as their main economic goal. This time it's about the worst offender in many respects, Secretary of Commerce Guillermo Moreno. This is what the article says about him:

In theory, his mission was to keep inflation from diluting the purchasing power of fixed-wage workers and retired citizens. The price agreements that he signed with companies at the beginning ceased being complied with long ago, except for [the statistics bureau] INDEC, where Moreno draws the lines of his private world.

Of course I've already written about INDEC and its ridiculous, obscenely faked figures of inflation, which the government continues to defend as true. Moreno is de facto leader of INDEC, which used to be a purely technical organization, fairly independent from the national government and thus trustable, until Néstor Kirchner decided he didn't like reality and let Moreno appoint his minions in places of power there. And that's not all.

[The manipulation of INDEC's figures] is a well-known story. Less known are [Moreno's] practices to favour concentrated companies, consolidating monopolic or oligopolic markets. For Moreno, competition is [a subject] for textbooks. He has always chosen commanding phone calls and verbal agreements with the major actors in each economic sector (cereal producers, mills, supermarkets, dairy companies, food companies, etc.) over transparent regulations that might discourage [the formation of] concentrated structures and encourage competition.

The removal of José Sbatella from the leadership of the National Commission for the Defense of Competition, key to the enforcement of anti-monopoly laws, is the culmination of that process. Sbatella, a professional with a long career, ruled against the Cablevisión-Multicanal merge, which two of Moreno's deputies in the Commission approved on the last day of Néstor Kirchner's term; Sbatella also set conditions for other multi-million [company] purchases in the food sector, which were not taken into account.

Guillermo Moreno is the kind of official that any sane administration would get rid of as quickly as possible, preferrably offering him (as compensation) a trip to some faraway land. Cristina Kirchner's unspoken excuse for keeping him is that everybody in the opposition and the major media is asking for Moreno's head, so firing the guy would be interpreted as a sign of weakness. I can understand that, but it also shows quite plainly that Cristina cares more for an appearance of overwhelming power and firm determination than for doing her job well despite her personal pride.

Moreno is a wrench in the most sensitive part of the economic machinery; the more he stays, the more difficult it will be to restore the credibility of the government regarding inflation and their goal of reducing poverty. Right now we don't know how many poor people there are in Argentina, but we know for sure they're many, many more than Cristina Kirchner and Guillermo Moreno would admit.

Musketeers of redistribution: Ricardo Jaime

Continuing with the translation of the Crítica Digital article titled Los mosqueteros de la redistribución ("The Musketeers of Redistribution"), about the subsidies granted by the Kirchner administration.

The second musketeer of redistribution is the Secretary of Transport, Ricardo Jaime. During the first semester of the year, subsidies to transportation (urban buses, trains and subways) reached AR$2.66bn, up by 71% compared to the same period last year.

Néstor and Cristina Kirchner (for all practical purposes, it's all one open-ended presidential term) have channeled billions into subsidies for public and private companies, with almost complete freedom to alter the budget and without oversight, so these figures are important. They usually say they need freedom to redistribute the income collected by the state so that it reaches the poor, but in fact all that money and all that freedom gives a few people a huge amount of power. Unsurprisingly, they've been using it to benefit the companies.

Subsidizing public passenger transportation is not an Argentine invention. And there's a consensus that such subsidious mostly benefit the lower-income rung of society. However, here we have doubtful criteria for assignment of subsidies, [which are granted,] in the case of bus companies, on the basis of sworn statements without control over cost structures, and in the case of trains and subways, over cost structures that are inflated by companies linked [to the main ones] as suppliers.

If you've travelled by train in Buenos Aires, it should be obvious to you that the companies that provide the service aren't pouring money into it. I mean, people have set fire to train stations out of anger, due to how bad the services are. By giving money to private companies and not overseeing their investments or forcing them to give a reasonably good service, the government is an accomplice of fraud. If the Secretary of Transportation can't make sure that people aren't treated like cattle in buses and trains that he (using our money) is paying for, then he should resign.

Aerolíneas Argentinas is a completely different matter. The poor do not generally travel by plane. The decission of re-nationalizing is debatable, but valid if weight is conceded to arguments such as regional integration or economic development. What is not trivial from the point of view of redistribution is who will take on the cost. Jaime said that, if it were up to him, he would pay nothing to the Spaniards of [the Marsans group]. And he says they gutted the company, while he looked the other way for five years…

This is especially relevant now that Aerolíneas is being really nationalized. It certainly looks as if we'll be buying back a company laden with debt and with a dismal record of service, and we'll be taking care of fixing it.

There is not a successful precedent of redistribution, either, in the case of LAFSA, the state company that in 2003 took care of the employees of former companies LAPA and DINAR. LAFSA never flied and today it is in the process of dissolving itself. But in the budget there are still funds set aside to pay the salaries of 99 employees, about 10 of them with wages above AR$10,000 per month.

Empty shells masquerading as actual companies for accounting purposes are so common in Argentine history that this surprises no-one. "Enterprise ethics" is an oxymoron in Argentina. This case is also interesting because the state invokes the welfare of the workers to justify the intervention in the finances of failed companies. We're hearing this kind of thing in the debate about Aerolíneas Argentinas as well. At the risk of being accused of insensitivity, I think the state should decide whether it wants a serious company that works and can sustain itself as a flagship airline, or a mockery of an airline whose main purpose is to produce money for its workers, some of who have never done any actual work besides showing up at union meetings.

I'll be posting the last installment of this series in a few days.

Musketeers of redistribution: Julio De Vido

Long time no write, sorry. I resume the translation of the Crítica Digital article titled Los mosqueteros de la redistribución ("The Musketeers of Redistribution"), which shows how the Kirchner administration isn't Robin Hood taking from the rich to give to the poor, as they arrogantly assert all the time.

… [T]he residential natural gas fee in Buenos Aires amounts to 30 cents per cubic metre. However, four million low-income households which have no access to the natural gas supply network are forced to buy [pressurized natural gas] containers at a cost of AR$1.70/m³, that is, almost six times more. Since the devaluation [of the peso, in early 2002] the residential gas fees have been frozen; but the price of the 10-kg gas container has climbed 275%, to an average of AR$30…. [Minister of Federal Planning Julio] De Vido authorized the deregulation of the gas container market, in which [the private company] Repsol YPF is dominant, and in exchange offered the so-called "social container", which is impossible to find at the price of AR$18 suggested by the State. Even if you could get that, the price (AR$1.20/m³) would be four times that of the network gas….

That is, the government forces the natural gas companies to sell their product at ridiculously low prices to a mostly middle-class public (and gives those companies a good excuse not to invest on surveying and expanding their network to less privileged areas) and allows Repsol YPF to charge six times more to the poor who aren't reached by the network, or who can't pay for a connection to it. (Until a few years ago my neighbourhood itself wasn't connected to the NG network — when it was our turn, we had to pay something in the order of AR$700 to get the pipes into our home; the equivalent price today must be three or four times as much.)

With more concern for fiscal health… in the last weeks Cristina's government started giving signs that it will unfreeze the utility fees. The astronomical growth of subsidies would threaten the fiscal balance if tax revenue were to falter in the future. … During the first semester [of 2008] the energy subsidies alone amounted to AR$8.2 billion, 295% than the same period [in 2007]. The announcement of hikes in the power fees will be followed by the slow thawing of residential natural gas fees.

The interesting thing is that the increases follow a segmented criterion: more [percent] increase for those who consume more. According to data provided by the power distribution companies, 7% of the high-income households account for 25% of the consumption. In the case of natural gas the concentration is similar.

If progressive [as in gradual?] adjustments had been applied two or three years ago, the State would have avoided a huge transference of wealth to the pockets of the less needy. Why wasn't it done before? De Vido used to explain it was not easy to identify the bills of the higher-income households, something acknowledged as possible only now.

More about this coming soon...

Income redistribution?

An example of why I don't consider Cristina Kirchner's to be a progressive government, and why the Kirchnerist mantra about their income redistribution goal is a big lie, and why I think it's OK if the middle- and upper-class heavier consumers are charged more for utilities: an article on Crítica Digital, titled Los mosqueteros de la redistribución ("The Musketeers of Redistribution" — Minister of Federal Planning and Infrastucture Julio De Vido, Secretary of Transportation Ricardo Jaime, and Secretary of Domestic Commerce Guillermo Moreno). I translate freely:

"This year, one million families with incomes in excess of AR$6,000 per month will receive a state subsidy of AR$750/month in the form of cheap power, domestic natural gas and fuel. This is the equivalent of five social plans [welfare payments] of AR$150/month, which are still received by little less than one million household heads under the extreme poverty line."

The minimum wage has been recently raised to AR$1,200, from an earlier figure of AR$980 established in July 2007.

"We have already written about the sales boom of natural gas-powered heaters for swimming pools, of the rage in 1,000-watt searchlights for the gardens of the most exclusive closed neighbourhoods, or the growth of the market of high-end diesel cars. Since nothing is free in economics, these subsidized prices are paid by the state, which this year will give away nearly AR$20 billion to compensate energy companies."

For comparison, the federal state collected taxes for about 17 billion in March and 24 billion in July, so this is like giving away a whole month of taxpayers' money. You could argue the subsidies go to the taxpayers, only they're not the same taxpayers. Most of those billions come from the IVA (our VAT), which is 21% over most goods and services (including food), so the poor pay a disproportionate amount of it, because everybody needs food, and most of what the poor buy is food. A smaller amount comes from a profit tax that leaves ample room for evasion, and that the government doesn't even try to collect. In fact, the government is about to exempt individuals with monthly wages over AR$3,300 (single) or AR$4,500 (married with children) from the profit tax, detracting from the total collection.

The government actually benefits from the "inflation tax". Every month it proudly exhibits huge and increasing tax collection figures, which is easy when your main source of revenue is tied to the prices of consumer goods. Coupled with INDEC's low inflation rates pulled from Guillermo Moreno's ass, it lets them believe or pretend that the country is growing fast, although that plainly happens only in nominal terms.

"From the total subsidies to the energy sector, the generous Argentine State will provide this year AR$9bn to subsidize the consumption of that higher-income social group. Incredibly, there are still well-off middle-class people who complain that the State "gives away" Jefes de Hogar welfare plans, which today are received by extremely poor households mostly headed by women. The 2008 budget for the Unemployed Heads of Household programme is only AR$1.8 billion."

Yes, many in the middle class are really angry that the poor "don't work, don't pay taxes and get money from the government", while "decent hard-working citizens" have to struggle to go on vacations or change the car every few years. I've heard borderline middle-class citizens demand that the government "sends those lazy bums to work", disregarding the fact that most of them are single women with small children, or young men who have no qualifications at all. This is the state's fault, but taking away their welfare payments is not a viable remedy.

"So as to dispell all doubt regarding the magnitude of the redistribution exercised by [Julio De Vido's] Ministry of Federal Planning: the nine billion pesos devoted to subsidize the consumption of well-off citizens are well above this year's budget for the Ministry of Social Development (AR$7.6bn); they're on par with the annual budget of the Ministry of Education (AR$9.3bn); and they represent 2.5 times the budget of the Ministry of Health (AR$3.5bn)."

This was just the first part of the article devoted to the "Musketeers of Redistribution", who (as you see) wield huge power over the lives and fortunes of Argentinians, and who are accountable only to the office of the President. If and when I have the time, I'll translate another part.

More complicated than seven votes

Last Saturday evening the mobile tax exports bill was approved by the Chamber of Deputies. Now it will go to the Senate, and if approved there it will become law.

Each politician and political pundit in Argentina has a slightly different view of the legislative debate and its result. The Kirchnerists are publicly exhilarated, though of course we don't know what they actually believe. For the hardcore K-people, it was a show of power and a triumph of loyalty. For the less sophisticated (the usefully idiotic palaeo-leftists, the Peronist Youth, and all the scum between those extremes), it was victory against the "oligarchy". For more than a few legislators, however, it was simply well-deserved relief from the strain of being pulled in several different directions — by the de facto President Néstor Kirchner, by the farmers, by the governors of agricultural provinces, by the urban middle class threatening with more cacelorazos, by our vulture-like media.

For the ones who lost, it was either the first step towards the unification of the opposition or merely one battle in a war that won't end soon. And they got a precious victory of principles: Cristina Kirchner had to subject to the will of Congress.

Mathematically, the result was simple enough: 129 to 122. The Front for Victory had to call on all of its allies for help, and some of their own defected. If three of the Río Negro deputies hadn't been offered a tax exemption that benefits the apple and pear producers of their province, the difference would've been reduced to one vote. If a certain deputy hadn't chosen to abstain at the last moment, instead of voting for the first minority, it would've been a tie. A year ago, even six months ago, Kirchnerism could've passed any law; yesterday it could've lost by a few votes, if only certain deputies hadn't been bought beforehand. That didn't happen, so the Kirchnerists won.

Néstor Kirchner won — the deputies explicitly ratified the authority of the President to set and modify export tariffs. This is so unconstitutional even a ten-year-old could take this matter as far as the Supreme Court, as it will most surely happen, but Kirchner has never been bothered by the law. The rest of the bill was changed almost beyond recognition — first it establishes a new tax and then it returns the money to 85% of the taxed. But the core of the problem, the one thing that matters to Néstor Kirchner, and which we citizens should never stop protesting — the short line that says that the President is entitled to do as she pleases with tariffs, is still there. So Kirchner can count this as a victory.

However, in a sense, it may be said he lost, too, and he's taking her wife and her party down with himself. Cristina Kirchner's approval rate has plummeted, most people don't believe she exercises power in more than symbolic fashion, the party is divided even at its core, and its alliances are coming apart. Right after Felipe Solá announced his vote against the export taxes, fellow Peronist deputy Carlos Kunkel called him "you traitor son of a bitch" so that everybody could hear. Vice-president Julio Cobos was told to "shut up" by an anonymous phone caller, echoing a previous, slightly more polite suggestion by minister Alberto Fernández. Cobos, who will be presiding the Senate next week, calmly replied he won't resign ("How could I resign, when so many people voted for me?"). Many of Kirchner's former allies, who are aligned with Cobos, will vote no to the taxes.

It's been almost four months since this all began, and everything has turned to the worse — consumer spending is down, credit rates are up to ridiculous levels, capital flight has accelerated, the high dollar-peso rate that made industrial exports competitive has had to be decreased to avoid a run on the dollar, and estimates of GDP growth have been taken down a couple of notches already. The export taxes that should've brought billions into the government's coffers are nowhere to be found, since the farmers refuse to sell, and the government is paying tens of billions per year to subsidize utilities and public services, and somehow has to honour a few additional billions of debt payments. Kirchner hates the idea of "cooling the economy", so public spending continues to rise. How will this end? One ugly word — stagflation.

English coverage:

• Al Jazeera: Argentina parliament backs tax hike
• Yahoo!News: Argentina grain tax bill clears lower house
• BBC News: Argentine MPs approve farm taxes
  

Claudio Lozano on Cristina's "political naiveté"

This is a translation of an op-ed by Claudio Lozano on Crítica Digital about Cristina Fernández de Kirchner's speech. Lozano is a left-wing economist associated with the CTA labour union, former Kirchner supporter, and now a national deputy for Proyecto Sur. He speaks of Cristina's acknowledgment that the government's only mistake when implementing the mobile tax exports was the "political naiveté" of thinking that people who earn a lot of money would tolerate the state's demanding of some of that money to give to the poor. The emphasis is mine.

I wish it were the first speech. I wish the argument of political naiveté were believable. I wish we were discussing a serious income redistribution programme while taking responsibility for the fact that in Argentina, since 2007, the economy and hunger are growing in parallel. I wish the debate of a more egalitarian relation between the Nation and the provinces were seriously undertaken. I wish we were in the presence of a government whose goal were capturing extraordinary profits to realize the proclaimed goal of "paying off the Argentinians' deficitary social account". It's a pity that it's not the case. Can it be true that they want to solve the social situation, when INDEC is under intervention and millions of poor people are deliberately hidden from view? What's the reason why the Government speaks of transferring income, and yet its social programme includes no concrete mechanism of transference of resources to families? Does the Government not know that, by just implementing a universal assignment of 100 pesos for every child, extreme poverty (hunger) would be practically eliminated among underage citizens? Does the Government know that simply by setting aside 1% of the annual GDP the issue of hunger would be solved, and with 5% of the GDP poverty would be eliminated altogether? Isn't the Fund created today a bit scarce, when we know that foreign trade taxes will bring in, this year, more than 50 billion pesos? Considering that in the last five years there's been no advance on tax reform, no advance on seizing the profits of oil, mining and fishing, and that in the case of agricultural profits this was done in a small proportion, and granting benefits that favoured the concentration of this economic sector, is today's presidential speech believable? I wish it were true. I wish it weren't just one more speech. But why do we explain what we're going to do with the tax collection above 35%? Weren't export taxes intended to redistribute income?

During five years we've heard the Kirchners and their supporters incessantly congratulate themselves on their progressivism. But nothing has been done to make this country more egalitarian. Kirchnerism has an automatic majority on both Chambers of Congress, a Congress that never refuses a command, and yet all they seem capable of doing is extracting money from one sector of the economy using the bluntest tools at their disposal. Even one of Página/12's commentators, one month after the beginning of the farmers' strike, had to acknowledge that the Kirchners' government is not reformist or progressive at all. Poverty and social inequality are much worse than they were 25 years ago, right after 6 years of a corrupt military dictatorship and a disastrous war. A huge gap still lies between the poor and rich in Argentina: the wealthiest 10% earns 30 times more than the poorest 10%, worse than during the neoliberal rule of the Menem administration. The tax system is horribly regressive: 47% of the total tax revenue corresponds to the IVA (our VAT), a tax on consumption, while you pay no taxes of any kind if you win a million through speculation or when you sell your company's stocks.

And on top of this, the president explains that the leftovers from an exceptionally high tax, imposed by the Executive branch without congressional approval, will be used to redistribute income. I mean, wasn't redistribution the main reason why they needed so much money? And if so, where's the rest of it? Because we sure can't see it anywhere.

I want to believe but...

Just an example of why it's so difficult to believe in Cristina Kirchner's "redistribution programme": the chairman of the Rosario branch of the Argentine Construction Chamber notes that, of 4,000 popular homes the national government had vowed to pay for in Rosario during 2007, not a single one has been built so far. First they were cut down to 1,400, then the funds never arrived, and as of now "we haven't yet obtained a clear answer from the national government regarding the reasons for the delay… all we have is a promise, without details, that the construction of those homes will begin in the second half of this year." And of course, the budgeted prices of supplies and labour are completely outdated; updating them is a bureaucratically slow process and uses INDEC's fudged (and therefore useless) inflation figures. Considering the expediency shown by the Kirchners to deal with other matters bypassing Congress, the Constitution, and basic attempts at dialogue or consensus, it's hard to see why Cristina can't speed this up.

This report comes after Cristina granted an audience to Santa Fe governor Hermes Binner, who had criticized the handling of the farmers' crisis and asked for a better redistribution of federal funds. Yesterday, after the audience, Cristina gave a speech next to Binner noting that Santa Fe has received a lot of funds for public works, and how that shows in Rosario's growth and prosperity. Well, while it's true that we've received funds, we're still waiting for the national government to pay for the repair of a section of our coastal park that Néstor Kirchner promised to deal with in 2005 (!) and that will be finished no sooner than 2009 (hopefully). And most of Rosario's recent prosperity, as everyone over here above kindergarten age knows, is due to the money coming in from the nearby countryside, the construction boom being just one example. Put simply, when people have money to spend, they come to the big city and splash.

Yesterday, the President rubbed her figures on Binner's face noting that federal money transfers to Santa Fe had increased 30% in a year — which is true of all provinces, because that's how much tax collection increased in nominal terms, mostly due to inflation. She also claimed Santa Fe had received over AR$42 billion since 2003. However, according to our Finance Minister Ángel Sciara, the books only show AR$15 billion on all accounts. And the federal government is behind schedule by about AR$1 billion.

The national government has legal obligations — by law Santa Fe must receive 8.84% of the federal taxes, and that's not a grant, a gift, or in any sense something we must thank for to our most gracious Cristina Kirchner.

Crazy Argentina, take 4: Crumbling country

The campo-vs.-government conflict keeps getting nastier and nastier. The farmers went back to the roads, only to block grain trucks on their way to the ports; but the truck drivers, who haven't had any work for almost three months, decided to go after them and block the roads, in some cases letting only private cars and buses pass, or not even those. As in the first days of the farmers' protest, there are regions and cities almost isolated from each other — as of today it was very difficult to go from Rosario to the towns on the northern Greater Rosario, and impossible to get to Santa Fe.

Also, once again proving that the Kirchners and their minions have no moral boundaries, several opposition politicians and agricultural organizations' leaders have been summoned to court under accusations of illegally blocking roads (not that it's not illegal — it's just that Kirchnerist piqueteros don't usually receive such treatment, and never so swiftly); Néstor Kirchner says that he's ready to resist even as the whole country demands a peaceful solution ("This is a long fight and it's only begun…The government is going to show them it has the power") because the farmers' "would already have staged a coup if they had bayonets"; Kirchner's son Máximo says the Kirchnerist Youth are ready to kick farmers' ass if necessary; Cristina Fernández de Kirchner (co-owner of a US$11-million dollar luxury hotel in Patagonia) asked the farmers to "think of the poor", for whom apparently fake inflation rates are no longer enough; and the state-financed shock troop leader Luis D'Elía has warned that he and his gang are planning to "refresh the memory of the oligarchy" and they're coming to Rosario on Flag Day (June 20) to clean, so to speak, the stain left by the massive meeting of May 25.

In the meantime, there's a different protest every day, fuel and natural gas are running out, as are milk and dairy products, beef, vegetables. And of course, our patience.

Martín Lousteau's fall, a sign of the times?

Martín Lousteau resigned from the Ministry of Economy yesterday. This looks like one more step towards a catastrophic failure of the economy. It's not that Lousteau was our last hope, but he seemed at least flexible enough to admit his mistakes and propose alternatives. His resignation, after he spoke publicly of the inflation problem and supposedly presented the president with a set of proposals to cool the economy, followed a vitriolic speech by Néstor Kirchner as the new chairman of the Justicialist Party. What happens confirms the generalized suspicion that Néstor K continues to pull all the strings in the government.

The new minister is Carlos Fernández, a pure technician whose only political cachet is that he's very close to Néstor Kirchner. One has to guess that he'll be as weak as all the Kirchnerist economy ministers have been after Lavagna. Miceli, Peirano and Lousteau never did anything without presidential prompt; Peirano's suggestion that the INDEC's figures shouldn't be tampered with earned him his exclusion from Cristina's cabinet, and Lousteau was practically stillborn, excluded from important matters, a dummy doll used to fill in a position.

Guillermo Moreno, Secretary of Domestic Commerce, is as powerful as, or more than, the economy minister. Moreno is a brute, a blunt instrument who may have been useful to deal with an emergency situation, but who is now an obstacle to the negotiations with the agricultural producers, and a liability. He won't be fired, because Néstor Kirchner wants him there — he needs enemies, and Moreno is ideal to induce conflict.

Regrettably, outside of Néstor Kirchner's partisan island, Argentina has problems. A sensible government must avoid turning serious technical issues into politico-ideological wars. The Kirchners are political warmongers, and stubborn to boot. They refuse to hear their own subordinates' warnings, and they're alienating their allies. And they're losing this war, bringing all of us down with them.

Inflation is clearly out of control; it's not the ten or twelve percent that you can expect from a burst of economic expansion and which most businesses can manage, but more like thirty or forty percent, enough to set off all the alarms on the Argentine psyche, more than enough to make long-term planning impossible. With high inflation and a government that seems lost and in denial, you don't save; you spend your money as quickly as possible before it loses its value, or else you rush to the exchange house and buy dollars or euros. Every Argentinian above a certain age has seen this happen before; it's terrifyingly familiar to us. I'm old enough to remember the end of the 1980s, when prices started to climb at a steady pace, then accelerating, and then it came to a point when supermarkets rewrote the prices two or three times in one day. Things like that eventually resolve themselves in a catastrophe; and after the crisis, even after things have quieted down and some form of economy recovery has reached us, we are a bit worse than before.

Insisting on an expansive policy and branding everyone who opposes it as the enemy while inflation eats away all the economic achievements of the last four years, while basic items become unaffordable to the poor, while a food crisis looms over the whole world, while oil prices break records every day and you have no way to supply yourself, while your farmers are ready to stop delivering food to your big cities, and refuse to acknowledge you need to change — it's madness.

The neoliberal governments of the 1990s insisted on the orthodox economic recipe of "adjustment": cooling the economy, removing money from circulation, increasing interest rates, and (in the background) "shrinking the state". Not only did their policies harm the poor and bring more inequality to Argentina; they wrecked the whole economy, and yet they continued to apply them with almost religious zeal. They even ruined their political careers! The Kirchners have an equal and opposite ideological bias — they have an ideal structure of power in their heads, and they'll fight to impose it on reality even as the whole country is crumbling around them. Do they stop to think, "maybe we're doing something wrong and that's why so many people are angry at us?" Do they ever wonder, "what will people in the future think about our government?". I don't think so.

Well, Lousteau and the question of whatever will become of Argentina's economy is all over the news today, so I'll say no more for now. For my own good I should stick to reviewing books... but I couldn't pass this up.

1 in 200

One in two hundred. That's my (admittedly rough) estimate of how many people believe INDEC is reporting the true inflation rate for February — which turns out to be, according to them, exactly 1 in 200, or as those math snobs say, 0.5%.

The good news is that, according to one economist consulted by La Nación, last month's Consumer Price Index "doesn't seem as fudged as in other cases". Let's rejoice.

Food and drink did rise a bit more — 1.1%. That's just 11 more pesos. It's not much, and now that tomatoes are cheap (in real life, not in Kirchnerland) you might actually be eating and drinking a lot more for that modest extra amount.

Not only that, but with the soon-to-be-implemented seasonal substitution sampling method, inflation will be magically reduced further! The method works by ignoring large price variations — replacing the varying items with others of the same category, whatever that means. Take, for example, potatoes. Suppose they're suddenly up by 15%. That's a lot. That has to be anomalous. It must be because it rained a lot — or not enough — or maybe the Chinese suddenly developed a taste for fries. So you take potatoes out of your statistical sample for this month's inflation rate. You can do without potatoes for a month, can't you?

The true experts note that, once you begin tampering with the inflation rate, the whole statistical edifice has to crumble. Those GDP growth figures, for example, say nothing if you don't factor in inflation to get the real growth. Gloating over the nominal GDP figures, like the Kirchners love to do on every conceivable occasion, is like coming from the gym and congratulating oneself on gaining weight when most of it is fat rather than muscle.

And then the fudging of the inflation rate is not only obvious if you go to the supermarket, but can be easily inferred by looking at the (presumably untouched) figures of tax revenue. If the VAT brings in 38% more than last year, and people are buying more or less the same amount of things and there aren't a lot more people buying and you haven't caught a massive amount of tax evaders and forced them to pay the tax, then it's obvious that most of that increase is due to rising prices.

Since INDEC is irrelevant, most people who care are now working with private estimates, which produce rates on the order or two to three times the official figures. By now it's clear that INDEC is not doing statistics but propaganda, so I think we should rename it to something more meaningful. The acronym is so math-geekily cool I wouldn't want to change it, but I have an idea to preserve the initials... Let's call it Instituto Nacional de Distorsión de Estadísticas a medida de Cristina.

A bullet train through our pockets

Remember when I told you about the cost of the "bullet train" proposed for the Buenos Aires–Rosario route? Many people already felt it was a lot. Enough to rebuild a good part of the national railway grid, remember?

Surprise, surprise: the actual amount of money involved has shot up to four times what I reported! Not only do we have to pay $1.3 billion for this white elephant, we also have to issue Treasury bonds for about $4 billion as a guarantee for the loan that Alstom, the winner of the bid, will have to get from the Société Générale bank. No-one, and I mean no-one, told us about these extra billions up until now — when it's too late to back out. Congress must authorize the spending. (All who believe Congress will have a serious, informed, non-partisan debate about this, raise your hands. How many hands do I count? I thought so.)

And note I say "we" because that's us getting indebted through our government, and that's our money being spent. Indebting a country with much more pressing needs to pay for a railway where a trip will cost twice as much as going by plane, a train that cannot possibly be profitable, a train that will be given for exploitation to the government's Big Business friends and kept running through subsidies — again our money.

Powerless

Remember when there was not an energy crisis? Remember when the constant blackouts were not signs of an impending energy collapse but just the growth pains of a flourishing, rapidly expanding economy? Well, we might be heading for another no-crisis again!

Just as they deny that inflation is high and growing, the government is now forcefully denying that the meeting of Argentina, Brazil and Bolivia's heads of state to solve the energy problem was a failure. It was a failure, of course. Bolivia told us they've got contracts signed with Brazil to send 30 million cubic meters per day of natural gas their way, and they intend to fulfill them, unless Brazil agreed to loosen up the terms. Upon Argentina's request, Brazil (that is, Petrobras) kindly replied they're not going to let us have a single molecule of their Bolivian natural gas, because they need it to power the massive (and politically influential) São Paulo's industrial complex. Faced with Argentina's teary-eyed despair, it's quite likely Brazil and Bolivia tried to console her, "You still have Venezuela."

We need fossil fuel for our power plants, industries and vehicles. You can't cut fuel to the power plants, or you'll have blackouts. Angry citizens in the dark aren't good for presidential popularity. You can't cut natural gas for cars, because there are over a million cars in Argentina running on it. You also can't cut NG for homes, because we cook and heat our bathwater with it. You can't cut fuel oil, either, because most heavy vehicles run on it, from the trucks that transport consumer products all across our vast territory to the machines that harvest our crops.

Last year, industries were forced to agree with the government on programmed cuts of the supply of natural gas, and on new working hours. They moved their working shifts around, and to cover the rest of their demand they imported fuel oil from Venezuela at four times the price of natural gas, with some help from government subsidies. This was a problem and will be a problem again this winter, when everybody in the cities starts turning on the NG-powered heaters at full blast. There are some industries and power plants that need natural gas no matter what.

Brazil finally agreed to send a few million megawatts of their spare electricity our way as a compensation for depriving us of our Bolivian natural gas. The offer is neither enough nor well-meaning. It seems Brazil is still angry because last year we re-negotiated the price of natural gas with Bolivia, and Brazil ended up paying a lot more because the new Bolivian government realized they'd been giving it away.

Oh, and Bolivia just realized that they don't have the infrastructure they need to deliver the 20 million m³ of natural gas they'd promised..., the gas for which we're building a huge, expensive gasoduct. We were expecting it for 2010, but Bolivia says the private companies that must invest in exploration and transport of the gas are withholding their money — because they don't like a Socialist/populist government that takes 50% of their massive profits from them. So the gasoduct will be just an empty, useless pipe for a couple of years at least.

Chile also needs natural gas to heat homes. They imported a lot from us, but starting in 2004 we broke our contractual obligations (with some legal protection — national needs are above contracts with foreign companies) and nowadays our gas exports are a trickle (or maybe a whiff?). So not only we're screwed, we're also screwing Chile. Argentina met Chile too, on a separate account, and they agreed that Chilean companies will get natural gas and they'll give our companies fuel oil. This is good for Chile because otherwise they'd have to use diesel, which is pricier. The equation doesn't work for Argentina, however, because fuel oil is so much more expensive than natural gas. Something will have to be done to fix that.

And, of course, this mess is not such, but only the reflection of a flourishing economy. There is and there won't be an energy crisis, and if you say so, you're a conspirator against the government, bent on destroying the country, and probably a neoliberal serial baby killer as well.