email at 47west63rd@gmail.com

Wednesday, November 26, 2008

Argentina and its government living on fantasy island

It is remarkable watching the Argentine government under the Kirchner government... Lets review some of their actions over the past few years: 1) decision to offer argentine debtholders (i.e. creditors) lowball repayment offer on take it or leave its all you're going to get terms, 2) what essentially amounts to a confiscation of a private company with the argentine flagship carrier, 3) what essentially amounts to a forcible conversion of private pension plans into a public pension program, 4) increasing confiscation of rents derived from agricultural exports (to call these taxes seems a bit rich given that the money actually is taken before it even makes it into the pocket of the farmers). Against this backdrop and with a historical context wherein the argentine government has repeatedly not honored its obligations with respect to creditors (this is a story that goes back to the 19th century), and has confiscated people's bank deposits as in the case of the famous 2001 "corralito" (corral) where people were suddenly told they could not take out their dollar bank deposits which were forcibly converted to argentine pesos rendered worthless by the accompanying loss of faith in the local currency. With this backdrop and in this context the government is now encouraging people to bring their money- which people took out of the country to protect themselves from what in essence is outright theft- back to argentina. It is unbelievable that with the one hand the government is busy stealing the private property of its citizens and corporations and with the other its telling people to bring their money back. It remains to be seen but one really has to question whether people are going to in effect repatriate their capital in this scenario. I don't see it..

No comments:

Blog Archive