Post-Chávez Venezuela

[luiz]

How exactly did the argentinian government do all that? That inflation is high is a sure thing, Argentina never defaulted on its whole accumulated debt and the government is still having to devalue in order to reduce the remainder. There are only two ways of getting rid of unplayable debt: inflation or defaults. Pick your poison.

But what about trade? Is the argentinian current accounts flow balance positive or negative now? If negative, I can easily understand problems with imports, and I wouldn't be convinced that the government is to blame: keeping imports will depend on willingness of lender to borrow to a country which as not yet completely gotten rid of its debt problems, and the government will have a duty to prioritize essential imports (energy, machinery, other productive stuff) over tourism and other imports for consumption.
If they have a positive balance it becomes harder to explain: the only explanation I can think off is that such a government would be forcing the build-up of deposits in banks at home, in order to use that money, probably as a cheaper source of refinancing for outstanding government debt being rolled-over.

I do need to overthink before judging, if by overthinking you mean discussing the specifics of the argentinian situation, the constraints under which its government must operate. The same trade policies, tax policies etc, may be good or bad, depending on the present situation of a country.

Their debt is hardly unpayable by now, in fact their public debt to GDP ratio is rather low at 42.9% (in Brazil the public debt is 54.4% of GDP, and inflation is about 6%). They wouldn't need inflation if the government was to run a primary budget surplus, instead of running a primary deficit year after year. I don't see why Brazil, Uruguay, Chile, Peru and Colombia can run primary surpluses but not Argentina. So the issue here is not debt, but rather deficit (the primary deficit was of 2% of GDP in 2011). So they keep an extremely high inflation that royally screws over Argetinean workers who lack inflation-protected securities, and try to mask that by giving big nominal wage increases year after year which in effect are zero if not negative in real terms. And of course nothing justifies the fact that the Argentinean government has engaged for years now in blatantly falsifying inflation statistics, threatning with jail anyone who dares publish the real numbers.

As for trade, they actually have a sizeable surplus (they exported 84 billion dollars in 2011 and imported 72 billions). That they're still worried about stopping all imports is another sign of their gross mismanagement, since they need all the dollars they can get due to capital flight and the budget deficit.

As for books, they're about 0.1% of Argentina's imports on financial terms. The reason for banning foreign books was not economical, it was political (censorship). Any government that goes after books is automatically evil in my view.

 

[innonimatu]

Their debt is hardly unpayable by now, in fact their public debt to GDP ratio is rather low at 42.9% (in Brazil the public debt is 54.4% of GDP, and inflation is about 6%). They wouldn't need inflation if the government was to run a primary budget surplus, instead of running a primary deficit year after year. I don't see why Brazil, Uruguay, Chile, Peru and Colombia can run primary surpluses but not Argentina. So the issue here is not debt, but rather deficit (the primary deficit was of 2% of GDP in 2011). So they keep an extremely high inflation that royally screws over Argetinean workers who lack inflation-protected securities, and try to mask that by giving big nominal wage increases year after year which in effect are zero if not negative in real terms. And of course nothing justifies the fact that the Argentinean government has engaged for years now in blatantly falsifying inflation statistics, threatning with jail anyone who dares publish the real numbers.

Put that way it indeed looks like the argentinian government should either cut spending or raise taxes. Didn't they try to raise some tax on commodity exports a few years ago? I think that got defeated in congress there. It's what you get when the government is weak. The alternative is cutting public spending, but that usually has the consequence of leading to recessions unless the private sector is ready and willing to increase spending...

As for trade, they actually have a sizeable surplus (they exported 84 billion dollars in 2011 and imported 72 billions). That they're still worried about stopping all imports is another sign of their gross mismanagement, since they need all the dollars they can get due to capital flight and the budget deficit.

Don't they pay imports with dollars? If they need all the dollars they can get them it's only to be expected that they're trying to limit imports.
And if we follow the money, where is that income from exports going? Capital flight? Means that all that surplus is getting captured as profits by some sectors and sent out of the country? Now I won't be surprised if they try capital controls too...

As for books, they're about 0.1% of Argentina's imports on financial terms. The reason for banning foreign books was not economical, it was political (censorship). Any government that goes after books is automatically evil in my view.

I don't know anything about that in particular, but to think it possible in this age to ban books is totally delusional. It's simply impossible to do so, almost every book is being swapped in p2p networks in electronic form. And I don't think the argentinians are building any "great firewall". Worse, making something forbidden would only make it more attractive. If it was censorship it was a totally toothless, ineffective form of censorship.

 

[Bootstoots]

Start by here, read the entire newspaper. Well, the Politics and Economics sections, anyway.

Most stuff I know comes from Spanish-language media, I don't know how comfortable you're with that.

Here, too: Socialism for foes, capitalism for friends.

Also read Obama's recent statements on freedom of expression in Latin America and go on a wiki-walk from there.

Cool, thanks! I was mostly curious to see where everybody was getting their published information from, so I could read more. I've been meaning to brush up on my crappy Spanish reading abilities too, so that's doubly useful.

If anyone knows of any good English-language news sources on Latin America in general, that would be nice too. It could just be me, but I find there's a relative lack of reporting on Latin America in most English-language sources relative to, say, the Middle East or East Asia.

 

[plarq]

I don't know anything about that in particular, but to think it possible in this age to ban books is totally delusional. It's simply impossible to do so, almost every book is being swapped in p2p networks in electronic form. And I don't think the argentinians are building any "great firewall". Worse, making something forbidden would only make it more attractive. If it was censorship it was a totally toothless, ineffective form of censorship.

It will hurt the academia in many situations by banning books.

 

[luiz]

Put that way it indeed looks like the argentinian government should either cut spending or raise taxes. Didn't they try to raise some tax on commodity exports a few years ago? I think that got defeated in congress there. It's what you get when the government is weak. The alternative is cutting public spending, but that usually has the consequence of leading to recessions unless the private sector is ready and willing to increase spending...

In the short term, both raising taxes and cutting spending have the same downward pressure over the output. On the long run, however, the effect of raising taxes is worse, given the dead weight costs.

Don't they pay imports with dollars? If they need all the dollars they can get them it's only to be expected that they're trying to limit imports.
And if we follow the money, where is that income from exports going? Capital flight? Means that all that surplus is getting captured as profits by some sectors and sent out of the country? Now I won't be surprised if they try capital controls too...

They need more dollars than they can get for two reasons: the deficit and the default. The default means the traditional channels of financing their deficit are pretty much shut down. What they should do is run a surplus, but that is politically costly. Kirchner has to buy the support from many groups, if the money stops flowing she is finished.

I don't know anything about that in particular, but to think it possible in this age to ban books is totally delusional. It's simply impossible to do so, almost every book is being swapped in p2p networks in electronic form. And I don't think the argentinians are building any "great firewall". Worse, making something forbidden would only make it more attractive. If it was censorship it was a totally toothless, ineffective form of censorship.

It may be a pathetic attempt at censorship but it is censorship nonetheless. It was also a way to annoy middle and upper class argentineans, who are among the most avid readers in the world, and always crowd the bookstores (Buenos Aires competes with the likes of Paris in terms of availability of excellent bookstores). It goes to show the petty and authoritarian nature of the K regime.

@Takhisis: the paid pro-government commentators of Argentina follow the same pattern of their Brazilian counterparts: never address the actual issue (because the issues are virtually always true!) but rather attack the newspaper, the journalist, etc. Note that in both links you posted no Kirchnerista thug even tried to argue against the story: all they did was resort to insults. Fascist tactics, to the bone.

 

[Cutlass]

In the short term, both raising taxes and cutting spending have the same downward pressure over the output. On the long run, however, the effect of raising taxes is worse, given the dead weight costs.

That doesn't inherently hold true. It matters what the money is spent on.

 

[luiz]

That doesn't inherently hold true. It matters what the money is spent on.

Yeah, I was speaking in general terms. In Argentina, due to the political and wasteful nature of much of public spending, cutting spending is certainly far less harmful than raising taxes even in the short term.

 

[Cutlass]

I heard once an economist quipped "there are 4 types of economies in the world; developed, undeveloped, Japan, and Argentina". Or something like that.

 

[plarq]

Yeah, I was speaking in general terms. In Argentina, due to the political and wasteful nature of much of public spending, cutting spending is certainly far less harmful than raising taxes even in the short term.

Well, corruption is also ample in the industries. So there'll be similar issue to put money in government comparing to cut spending and left the money for the tycoons. Especially for the poor people who relied on government sponsored education to get out of ghetto.

 

[innonimatu]

Well, corruption is also ample in the industries. So there'll be similar issue to put money in government comparing to cut spending and left the money for the tycoons. Especially for the poor people who relied on government sponsored education to get out of ghetto.

Indeed. And considering that the larghest private industries in Argentina are very much those privatized during the previous cleptocractic governments of Menem &co, you can be sure that they are so corrupt that even the italian mafia could get some lessons there!

Governments can be replaced. It may take what amounts to a revolutions (as happened in Argentina), but they can be replaced, new ones can be elected. In the end they are accountable. But private owners of corporations, to whom are they accountable?

Well, in the first place to states, if and when their governments choose to intervene. But when they do intervene we get the pimple-faced Oxford boys who write anonymously for the The Economist telling us that they're bad governments. Bad puppy, bad!
Those governments would do well to remember that if states fail to make companies accountable, if they stand by while their countries are ruined, then they will eventually be held accountable by their people.

 

[Takhisis]

Er... let's be honest, neither the economist not Obama are reliable sources: both will shamelessly lie as much as they can get away with to protect the bankers, at the cost of everything and everyone else. If anything, knowing that those two are campaigning again the current argentinian government makes me believe that the argentinians are doing something right!

Ah, so North korea must be doing something right then, by yoru logic.

As for re-nationalizing fuels, looks like a good idea! I mean, you were complaining of energy shortages and such problems, so it looks like the present private arrangements are not working. If any government is to successfully intervene there it will need, first of all, to achieve control over the energy sector again!

It's not re-nationalising, it's just squeezing the same mafia you sold the oil company to less than 20 years ago. look for videos of our beloved Saint Néstor praising then-President Menem in the '90s and calling him 'mi amigo el Presidente'. Curiously enough, Menem has always got electoral backing from the Kirchners and is now voting for the expropriation. Besides, instead of just taking over a business (which it's done with Aerolíneas Argentinas and the airline now loses $2 million every day without even being able to provide regular service) you can regulate it.

If you also read here, you'll see that this is just a corrupt transfer between different mobs as there's already a project for re-privatising shale gas and tight oil within the year.

What's even worse, the natural resources are the property of the provincial governments, not the federal government. And it's stated in the Constitution!

Cool, thanks! I was mostly curious to see where everybody was getting their published information from, so I could read more. I've been meaning to brush up on my crappy Spanish reading abilities too, so that's doubly useful.

If anyone knows of any good English-language news sources on Latin America in general, that would be nice too. It could just be me, but I find there's a relative lack of reporting on Latin America in most English-language sources relative to, say, the Middle East or East Asia.

For Argentina itself, try the Buenos Aires Herald.

The BBC does have some good articles from time to time, but they usually leave it to their Spanish-language service to come up with the (moderately) good stuff.

Put that way it indeed looks like the argentinian government should either cut spending or raise taxes. Didn't they try to raise some tax on commodity exports a few years ago? I think that got defeated in congress there. It's what you get when the government is weak. The alternative is cutting public spending, but that usually has the consequence of leading to recessions unless the private sector is ready and willing to increase spending...

In the short term, both raising taxes and cutting spending have the same downward pressure over the output. On the long run, however, the effect of raising taxes is worse, given the dead weight costs.

Besides, taxes have a history of never coming down, and the fiscal tax pressure must be coming up to Sweden levels.

The defeat in Congress in 2008 was partly because it was inconstitutional to try to tax over half the gross value of any outbound crops, and then charge them VAT, of cours ehaving slapped them beforehand with a Gross Income Tax. More than half the sale value of your crops go to the government which doesn't do anythig whatsoever to earn it

They need more dollars than they can get for two reasons: the deficit and the default. The default means the traditional channels of financing their deficit are pretty much shut down. What they should do is run a surplus, but that is politically costly. Kirchner has to buy the support from many groups, if the money stops flowing she is finished.

Of course, the bribery chain reaches all the way to the top and the bottom of the Kirchnerist power structure. Even the awarding of scholarships to students who engage in 'spontaneous' demonstrations hundreds of miles from where the live, it all adds up to billions.

I don't know anything about that in particular, but to think it possible in this age to ban books is totally delusional. It's simply impossible to do so, almost every book is being swapped in p2p networks in electronic form. And I don't think the argentinians are building any "great firewall". Worse, making something forbidden would only make it more attractive. If it was censorship it was a totally toothless, ineffective form of censorship.

It may be a pathetic attempt at censorship but it is censorship nonetheless. It was also a way to annoy middle and upper class argentineans, who are among the most avid readers in the world, and always crowd the bookstores (Buenos Aires competes with the likes of Paris in terms of availability of excellent bookstores). It goes to show the petty and authoritarian nature of the K regime.

Also, there's lots of places where you can't get e-books. This is not the first world. With the constantly devaluating currency,

@Takhisis: the paid pro-government commentators of Argentina follow the same pattern of their Brazilian counterparts: never address the actual issue (because the issues are virtually always true!) but rather attack the newspaper, the journalist, etc. Note that in both links you posted no Kirchnerista thug even tried to argue against the story: all they did was resort to insults. Fascist tactics, to the bone.

Wow, someone bothered reading the comments.

Well, corruption is also ample in the industries. So there'll be similar issue to put money in government comparing to cut spending and left the money for the tycoons. Especially for the poor people who relied on government sponsored education to get out of ghetto.

As of right now, Industries are not allowed to pay dividends to their shareholders.

 

[Takhisis]

We've also had the expropriation announced by 'cadena nacional', so, as long as the President was talking, every single channel broadcasting from Argentina (over a dozen in this city, more in other areas) were forced to broadcast her, no breaks, none of their original programming, nothing.

This article is quite interesting, note reply #478: replying to the title (the three issues Cristina didn't see coming) the issue is dodged entirely and the replier posts that there's a fourth 'issue', this being the author of the note being a traitor, a sepoy, etc. etc.

 

[Takhisis]

See here also for excerpts of Mrs. Kirchner's arguments in Congress in favour of the 'spurious privatisations' in 1992.

 

[innonimatu]

Interesting. So what you are saying is that despite everything Argentina went through you have not managed to get yourselves rid of the corrupt mafia yet? That those you have elected now are the same ones who squandered and/or stole all those assets back in the 1990s?

Anyway, about the nationalization of the oil industry: I saw nothing in your links that indicates there are plans to re-privatize it afterwards. The plan I've seen is a nationalization where the central government gets 50.01% and the provincial governments split the rest.

What I did see in your link was a lot of fear-mongering about how mighty Spain and European dis-Union would retaliate against poor defenseless Argentina. Hah, the spanish can't even protect themselves from being raped by the Germans and the French. The European dis-Union is in shambles begging around the world for money to shore up its Euro just a little longer. If there's any occasion to do this, it is now while they're down.

Oh, and about the book import "banning" law... I've done some research. It wasn't an attempt at censorship - as I pointed out that would be unrealistic, any regime aiming at censorship knows to attack Internet access first. It was a stupid trade policy aimed an online book shopping (from Amazon et al) that would still allow books to be imported, just make them so expensive going through customs that few people would bother. Hell, high costs of telecommunications since Argentina sold its infrastructure to Telefonica must have caused far worse disruption in access to information that this would cause. But how many people decry telecommunication costs as censorship?

Looks like the argentinian government is really desperate about capital flight, I do wonder why? This move to re-nationalize YPF seems to fit into the same logic, only tacking a sizable problem (fuel imports vs. local production) instead of a financially small and increasingly irrelevant one (printing industry).

 

[Takhisis]

Aren't we supposed to be discussing ChaVenezuela?
It's still a good comparison, but if we keep at this any longer we'll have to get our own thread.

I posted the same article twice and now can't find the one I've accidentally posted over.

Interesting. So what you are saying is that despite everything Argentina went through you have not managed to get yourselves rid of the corrupt mafia yet? That those you have elected now are the same ones who squandered and/or stole all those assets back in the 1990s?

They never left.
Back in the '90s, Menem was President, Mr. Kirchner was governor and his wife was in Congress.
In 2003-07 Mr. Kirchner was President, in 2005 Menem got into Congress (he hasn't left yet) and Mrs. Kirchner was a Senator, performing the dubious move in 2005 from the post of Senator for Santa Cruz province for the same post in Buenos Aires province as a test for the 2007 election. In 2007 Mr. Kirchner gave up the post for his wife to take it, and then in 2009 he got into Congress, switching from Santa Cruz to Buenos Aires just like his wife had done.

Anyway, about the nationalization of the oil industry: I saw nothing in your links that indicates there are plans to re-privatize it afterwards. The plan I've seen is a nationalization where the central government gets 50.01% and the provincial governments split the rest.

That's the article I can't find right now. But it did mentione that there's 'friendly businessmen' aiting to re-buy shares -it might be that they'll just take them from the present owners at firesale prices as was done in the past.
Manwhile YPF loses value all the time so the government will pay even less for it. Still, from this article we get that it's u$s10.400 milion for the company, but the government says it cannot afford to pay pensions.

What I did see in your link was a lot of fear-mongering about how mighty Spain and European dis-Union would retaliate against poor defenseless Argentina. Hah, the spanish can't even protect themselves from being raped by the Germans and the French. The European dis-Union is in shambles begging around the world for money to shore up its Euro just a little longer. If there's any occasion to do this, it is now while they're down.

Oh, it's certainly very opportunistic. But Mrs. Clinton herself is now railing about this, it wouldn't be unreasonable to expect trade santions.

Spain will be pushing at this for years and they have long memories whereas Argentine governments tend to have extremely short-term memories. As you point out, Telefónica still have control over both the land-based and mobile phones markets. They are not as harmless as they seem, especially since the EU will back them against outsiders, even if it's jsut to be able to get their money back.

Oh, and about the book import "banning" law... I've done some research. It wasn't an attempt at censorship - as I pointed out that would be unrealistic, any regime aiming at censorship knows to attack Internet access first. It was a stupid trade policy aimed an online book shopping (from Amazon et al) that would still allow books to be imported, just make them so expensive going through customs that few people would bother. Hell, high costs of telecommunications since Argentina sold its infrastructure to Telefonica must have caused far worse disruption in access to information that this would cause. But how many people decry telecommunication costs as censorship?

It wasn't just a 'policy aimed at online book shopping'. You see, anything coming in has to have a permit signed by the Trade Secretary Guillermo Moreno (A real power behind the throne). Universities are feeling the grip of not being able to do proper scientific research because they don't have the adequate material from overseas.
Telecommunications aren't that expensive. Cellphones are dirt cheap, Skype also helps. But during the thankfully short-lived censorship, everyone had to personally come to Customs and do a lot of paperwork, provided they could prove their books weren't subversive didn't have too much lead in their ink and they paid a bribe tariff. Imagine a bookseller having to come to Buenos Aires every single time he had a shipment due, again and again. This effectively shut down a lot of the book trade.

Looks like the argentinian government is really desperate about capital flight, I do wonder why? This move to re-nationalize YPF seems to fit into the same logic, only tacking a sizable problem (fuel imports vs. local production) instead of a financially small and increasingly irrelevant one (printing industry).

They're desperate about capital flight because people take their money off Argentine banks whenever they can. There's a history of this government confiscating as much as possible from anyone. Farmers, industries, confiscation of pension funds, now the oil companies (which I predicted a year ago, Kirchnerists called me a traitor and everyone else called me a paranoid lunatic). My other prediction was taking over control of mining which is already underway in a stealthier fashion.

 

[ParkCungHee]

Ah, so North korea must be doing something right then, by yoru logic.

For the record private industry loves North Korea, so at least their motives can be different.

 

[rollo1066]

Isn't Ellias Jaua the Vicepresident? Why should we assume that if Chavez was to die that the sucession to the Presidency would be different from the USA? What would happen with regards to the election if the death occured first is another question.

 

[luiz]

Oh, and about the book import "banning" law... I've done some research. It wasn't an attempt at censorship - as I pointed out that would be unrealistic, any regime aiming at censorship knows to attack Internet access first. It was a stupid trade policy aimed an online book shopping (from Amazon et al) that would still allow books to be imported, just make them so expensive going through customs that few people would bother. Hell, high costs of telecommunications since Argentina sold its infrastructure to Telefonica must have caused far worse disruption in access to information that this would cause. But how many people decry telecommunication costs as censorship?

As I said to think the book banning law is about trade is ridiculous. Books represent precisely nothing of Argentinean imports, so banning them would make precisely zero difference. It's crazy to even think otherwise.

As for the technicalities of the law, it was much worse than just making them prohibitively expensive. All the books would have to be shipped to customs in Buenos Aires, and the person who ordered them would have to personally collect them onsite! Imagine someone living in Mendoza or Cordoba, hundreds of kilometers away, being forced to drive to Buenos Aires to collect a 15 dollars book (which of course was already made several times that price by the tariffs)!

The goal was transparently to stop Argentinians from buying foreign books. Whether it was done so as a stupid attempt at censorship or as a way to insult/annoy the middle and upper class, who are the ones who read foreign books and also the ones who oppose the most the K regime (except for the new upper class, including the K family, all who suddenly became gazillionaires), is hard to tell.

 

[uat2d]

Ah, so North korea must be doing something right then, by yoru logic.

You're implying there's any logic other than irrational fear of the free market and letting supply and demand rule over than the economy other than governments.

Also, I find it odd how these people are so supportive of government regulation because business enterprises can't be trusted with such power and fail to realize that governments can be just as much if not more shady, not to mention that at least you know a businessman is out looking for profit and you can't say the same about a politician.

As of right now, Industries are not allowed to pay dividends to their shareholders.

Wait, what??



Good luck in getting out of whatever hole you're burying yourselves into, when the monetary incentive to create employment, new services and develop your country's economy is absolutely zero!

I mean, the USSR collapsed on its own and now South America wants to go down the same path? What's next, forbidding firing people or increasing the minimal wage to arbitrary values higher than those of the market (like old man Chávez is doing) whose only practical result is increased uncompetitiveness and entire factory plants shutting down, sending everyone straight to unemployment and investors back to their countries?

South America's socialist dream, you have to be asleep to believe in it!

 

[Takhisis]

Let's follow the oil arguments here lads! This thread isn't really about Argentina. Or shouldn't be, at any rate.

For the record private industry loves North Korea, so at least their motives can be different.

Well, some industries do love Venezuela as well.

Isn't Ellias Jaua the Vicepresident? Why should we assume that if Chavez was to die that the sucession to the Presidency would be different from the USA? What would happen with regards to the election if the death occured first is another question.

Let's see, if Chávez dies while in office Jaua takes his place and I'm pretty darn sure that his running mate should take the Presidential nomination.

You're implying there's any logic other than irrational fear of the free market and letting supply and demand rule over than the economy other than governments.

Also, I find it odd how these people are so supportive of government regulation because business enterprises can't be trusted with such power and fail to realize that governments can be just as much if not more shady, not to mention that at least you know a businessman is out looking for profit and you can't say the same about a politician.

What do you mean, politicians are not out to make a profit? Skanska paid a lot of bribes to get contracts here, it was never prosecuted, but the same applies to all spheres of government.

Wait, what??



Good luck in getting out of whatever hole you're burying yourselves into, when the monetary incentive to create employment, new services and develop your country's economy is absolutely zero!

I mean, the USSR collapsed on its own and now South America wants to go down the same path? What's next, forbidding firing people or increasing the minimal wage to arbitrary values higher than those of the market (like old man Chávez is doing) whose only practical result is increased uncompetitiveness and entire factory plants shutting down, sending everyone straight to unemployment and investors back to their countries?

I said, 'right now'. In the next quarter it'll be reallowed, if all goes well.

And it's not a 'real' ban, you can if you must but you'll then incur the wrath of Customs and good luck trying to import or export anything for a long, long while.

South America's socialist dream, you have to be asleep to believe in it!

Not really Socialist, militants and trade unionists from the Socialist Party and Workers' Party have a curious tendency of getting shot during demonstrations by unknown assailants eventually revealed to be mobsters with dubious links to the government.