Cristina continues to sell Argentina down the river

[GS_Dirtboy]

With all of the econ wizardry, political smoke screens, and and crystal balls aside it's kinda hard to argue that Argentina is doing well say, against Brasil. Brasil's economy is booming and their middle class is expanding at a rapid rate. It seems that Argentina can learn something from them. If I'm mistaken, I'd be interested in perspectives more educated than mine.

 

[camberiu]

Peter WHO??? Don't make me laugh that is very early in the morning and my kids are still sleeping. Whoever predicted the crisis is now a millionaire as he/she could have shorted the market on billion of dollars like Soros did in one day on Sept 16, 1992 when he made US$1 billion by short selling the British pound.

Peter Shiff did quite well in terms of predictions. Better than your Krugman or any other mainstream economist that I know off. Since you charge consulting fee, let me ask you: What were you saying to your paying clients about the economy back in 2006? This is what the guy you are laughing at was saying back then. BTW, many people on the video, like you, were laughing at him. I really would like to know what your paying customers were hearing from you about the economy back in 2006.

http://www.youtube.com/watch?v=2I0QN-FYkpw

Now, if because you are a Brazilian, you felt offended that PK compared and showed a better performance of the Argentine economy than the Brazilian one... there is nothing I can do on my side.

Yeah, you nailed me there. I am a HUGE supporter of the current Dilma administration and her policies, and certainly think that Brazil is a role model for all of LATAM. I was just offended by the author comparing Brazil with Argentina. You have me all figured out.....

The funny thing is that you call Peter Shiff a "nobody" but like it or not, he was right about everyhting back in 2006 when your "smart" nobel prize winner Paul Krugman was CLUELESS about everything. Again, I'd love to see any economical analysis you wrote back in 2006 and compare it with what Peter "nobody" Schiff was saying and writing during the same period.
Just to make it more fun, let's add novel prize winner Krugman into the pool too.

 

[expatinowncountry]

With all of the econ wizardry, political smoke screens, and and crystal balls aside it's kinda hard to argue that Argentina is doing well say, against Brasil. Brasil's economy is booming and their middle class is expanding at a rapid rate. It seems that Argentina can learn something from them. If I'm mistaken, I'd be interested in perspectives more educated than mine.

I tell you my quick take on this cause the kids are now up and running. PK graphs somehow masks that Argentina was coming from a lower base (recession started in 1997/8 in Argentina), so it is not surprising it grew faster than Brazil since 2000 (some of the growth is just recovery and use of install capacity).

Argentinean economy is doing relatively well despite CFK because of the amazing term of exchange (very high export prices). Brazilian growth is also partially due to commodity prices. Brazil has an industrial complex Argentina lacks but Brazilian industry is only competitive in South America... they cannot even compete with Mexico (there are tensions between Brazil and Mexico at the moment because Brazilian authorities has put restrictions on Mexican imports).

The increase in the middle class in Brazil is a fact but... it comes from a very low base (it almost did not exist in comparison with Argentina) and there are some measurement issues as the Real is appreciated (so Brazilian salaries look artificially high in dollars). It is important to keep in mind that income inequality in Brazil is one of the largest in the world (South Africa is one of the few countries were it is larger).

How sustainable are the growth path of Argentina and Brazil? It is hard to predict as they depend very much on international commodity prices and therefore on the dynamics of the largest emerging economies (China, India, etc). If you take into account only domestic factors there are pros and cons for both countries: (1) Brazil investment rates are horrible, even smaller than the Argentine and half of countries like China. Low investment means low capital accumulation and therefore (keeping everything constant) future low GDP (2) Brazilian domestic market is way larger than the Argentine and therefore could sustain further expansion (3) The real is more appreciated than the peso and that is serious problem for Brazilian competitiveness (4) Government policies in Brazil while not top notch are far from the schizophrenic psycho policies implemented by CFK government (5) Brazil debt sustainability position is slightly worst than the Argentine but Brazil has access to international markets and Argentine doesn't (6) Brazil has two potential black fiscal holes in the horizon... they are organizing the Olympics and the World Cup... if properly done it could be great for image and treasury of the country but if they are mismanagement and they lose money in both events, I would like you to remember that Greece fiscal problems started with the 2004 Summer Olympic games (7) Inflation rate is not a serious issue in Brazil while in Argentina is out of control and who knows when Argentine will decide to act upon that and the consequences it could have

So as you can see, it is not easy to predict.

Part of the perception that Brazil is booming is due to (1) Good image campaign and the pleasant surprise Lula was for the international community (2) Size: Brazil has almost 200 million people (5 times more than Argentina) so even if the per capita GDP is not that high when you multiply it by the number of people it gives you the 6th or 7th largest world economy.

 

[camberiu]

How sustainable are the growth path of Argentina and Brazil?

Brazil's growth is completely unsustainable. No major structural changes happened in the country since the implementation of the Real back in 1994. The growth we saw was a pure consequence of temporary factors such as the booming commodity demand in China and the fact that Brazil was able to tap excess liquidity in the world's market to fuel a credit based consumption boom.

Productivity per worker in Brazil is the the 3rd lowest in Latin America, behind only Bolivia and Ecuador http://goo.gl/0SSEf

Brazil has a lousy education system, a byzantine tax system and a level of bureaucratic burden that makes it very hard to start any new business over there.

A dramatically low savings rate. All investment is being done by tapping foreign savings.

A massive real estate bubble that is about to burst http://goo.gl/oPpzR

A state sponsored development policy that is provoking a massive amount of malinvestment. http://goo.gl/QgMNb

Brazil is a massive disaster waiting to happen.

 

[expatinowncountry]

Peter Shiff did quite well in terms of predictions. Better than your Krugman or any other mainstream economist that I know off. Since you charge consulting fee, let me ask you: What were you saying to your paying clients about the economy back in 2006? This is what the guy you are laughing at was saying back then. BTW, many people on the video, like you, were laughing at him. I really would like to know what your paying customers were hearing from you about the economy back in 2006.

http://www.youtube.com/watch?v=2I0QN-FYkpw



Yeah, you nailed me there. I am a HUGE supporter of the current Dilma administration and her policies, and certainly think that Brazil is a role model for all of LATAM. I was just offended by the author comparing Brazil with Argentina. You have me all figured out.....

The funny thing is that you call Peter Shiff a "nobody" but like it or not, he was right about everyhting back in 2006 when your "smart" nobel prize winner Paul Krugman was CLUELESS about everything. Again, I'd love to see any economical analysis you wrote back in 2006 and compare it with what Peter "nobody" Schiff was saying and writing during the same period.
Just to make it more fun, let's add novel prize winner Krugman into the pool too.

Still not acknowledging the point that attacking the person and not the argument is not the way to go.

I do know what Krugman was saying about the economy in 2003/4 (not sure in 2006) because he was teaching me at Princeton a graduate course on financial crisis and let me tell you he was quite pessimistic about the US and European economy back then. I apologize for not knowing your Peter but I can assure you also that my grandpa was also predicting that crisis and many other things back then (and be careful about the Mayas prediction for Dec 21st 2012). Again, all this is unrelated to the argument that no one is right or wrong because he may be or not a Keynesian.

As for my consultancy fee, I was kidding. I am an academician, I do not do consulting work. I have been paid to write a few papers and books but it was on issues I liked and I would have done it for free.

Now, try to put your ego aside, and lets discuss the issues properly with arguments instead of personal attacks.

 

[expatinowncountry]

Brazil's growth is completely unsustainable. No major structural changes happened in the country since the implementation of the Real back in 1994. The growth we saw was a pure consequence of temporary factors such as the booming commodity demand in China and the fact that Brazil was able to tap excess liquidity in the world's market to fuel a credit based consumption boom.

Productivity per worker in Brazil is the the 3rd lowest in Latin America, behind only Bolivia and Ecuador http://goo.gl/0SSEf

Brazil has a lousy education system, a byzantine tax system and a level of bureaucratic burden that makes it very hard to start any new business over there.

A dramatically low savings rate. All investment is being done by tapping foreign savings.

A massive real estate bubble that is about to burst http://goo.gl/oPpzR

A state sponsored development policy that is provoking a massive amount of malinvestment. http://goo.gl/QgMNb

Brazil is a massive disaster waiting to happen.

You see, you can give a lot of good solid arguments and we even agree. Argentina and Brazil are not doing anything to profit in the long term of the current economic bonanza. Brazil portrait in the media as the new good kid on the block is very much like the Argentine portrait in the 1990s by the IMF, the WB, the media, etc as the role model to follow by other South American economies.
When China stops growing and commodity prices come back to their long term trend, Argentina and Brazil will have little to show for the recent years. Sad that history keeps repeating itself.

 

[davonz]

I actually think this whole YPF thing is going to turn out to have been a bad decision by the Gov.

I do like the idea of the gov being in control of some important and strategic industries. Electricity generation being one, and water supply etc. However i also think that when you have total state control, that the gov companies become big and lazy with none or little innovation, cost reductions, development etc.

The biggest problem for YPF is that the arg gov is in control, and with their record i wouldnt be trusting them in any business relationship. So this is why if the news paper article is correct they are paying more. Respol is a global company, and with that size/reach can probably get better deals on gas/fuel supply.
They probably also have some lines of credit. Maybe freight contracts also. So their costs would be cheaper.

This is going to turn into another aerolineas, just a big hole to pour money into without any improvement in costs/service etc...

 

[camberiu]

Mike "Mish" Shedlock (another nobody) has a great analysis on Krugman and his references on Argentina. His conclusion on Krugman is spot on.

http://goo.gl/yhDui

 

[GS_Dirtboy]

I would seriously be interested in having a once-per-week or once-every-other week informal coffee discussion on current events in economics and business in Arg. I would think others on this forum would be interested as well.

 

[camberiu]

I would seriously be interested in having a once-per-week or once-every-other week informal coffee discussion on current events in economics and business in Arg. I would think others on this forum would be interested as well.

Just schedule it. I will attend.