Crisynomics At Work: Argentina Is Low Debt Superstar

[camberiu]

Think you may have to eat those words. One thing for sure, you do not want to piss the Brazilians off. They have a very good memory.

Specially towards Argentinians.

 

[trennod]

Probably I expressed myself wrong.

You have a strong demand, and the price goes up because of that. this is what you dont understand?

The internal demand of argentine economy has been growing unstoppable for ten years, with expanding internal market policies (which basically means giving people money to spend), social plans, inclusion policies, etc. Before 2003 we had almost half of the country totally excluded of formal economy, with no weight in it, without counting, without money to spend, without rights (for example without DNI) without subsidios of any kind. In these past ten years, that situation changed a lot, lots of them bought a moto, for instance, this is the typical product this people got in the last past years. Another example are laptops, 7 or 8 years ago you had BsAs full of locutorios with internet, a bussiness that did work (charging 1 peso per hour) but now you have a lot less, it is hard to find some one sometimes, and they are also much more expensive (since there are a lot less, more demand, prices go up). This is because gradually lot of people bought their laptops, lower middle class I mean.
Lots of people now have a job, lots of people now have vacation... the internal market grew up a lot, we dont have anymore a depressed economy. Jubilados, pensionados, Asignacion Universal por hijo, other social plans, etc, that gives a lot of money to new people that now consume. That is demand, and since there are almost no competition (there are lots of fields with monopolies, or big enterprizes controlling more than 80% of the market) the supply can put the price they want.

For instance, Sancor y La Serenisima have 85% of the milk market. In the past year, they increased prices for 42%, with the most pessimistic inflation data in 30%.

So when you have a strong demand, the supply controls the price. Its a demand inflation.

Blah, Blah, excuse, excuse. This is a common response. I am not interested in how great this country this country is economically and what a great standard of living everyone has, because its a lie. It improved due to these factors:
1) coming off an absolutely low base, it was always going to recover. Nothing to do with good economic management by the Kirchners
2) record soy and grains prices (again totally out of the governments control)
3) low prices/no debt (due to the fact the country had tanked) and these investment opportunities that were presented

Lets talk about outcomes and solutions,to the inflation, to attack inflation the government needs to be fiscally responsible and turn off the money printer. But, it flies in the face of their popular politics. That is the primary reason why inflation is still high in this country. Its the fault of this government because it doesnt interest them in stopping it.

 

[sleslie23]

Whether it makes sense or not, that's officially what it is. I'd have to dispute your statement that China is "fully-entrenched" in capitalism and free markets. After all, it has a fixed exchange rate, among other anti-free market policies in place. From previous threads on this forum, it would seem that a floating exchange rate was the be all and end all of a truly free market. Now, China—with its one child policy, one apartment policy, fixed exchange rate, state-owned banks, etc, etc.—sets the example as a capitalist, neoliberal economy.

This forum is nuts.

Ha ha, fair enough. I stand corrected about the PRC being fully enrtrenched in the free-market. But it's a bit assinine to try to argue that it is still a "communist" country. Especially when you are accusing Joe of not knowing the definition. Not that Joe needs me to defend him.

 

[sesamosinsal]

The origin of this is debate is that many associate a market friendly economy with being a "Yanqui Client State". Bradly, Matias, et. al. are scared shiftless of the Neo-Liberals and falling under the iron grip of the Yanqui Capitalists. That is the reason they look to Venezuela and Cuba for economic models.

My point is that you can have a market friendly economy WITHOUT being a Yanqui Client State - e.g. China.

Sigh. I've never supported Cuba or Venezuela as economic models. The origins of this debate have to do with you suggesting that everyone model themselves off of China, a pretty funny suggestion from the forum's resident neoliberal. It's even funnier that you, as a (self-titled) neoliberal, defended China's fixing of its exchange rate.

Also, every country in the world is a "yanqui client state"—your words, not mine—and every country will be a "yanqui client state," whether it likes it or not, so long as the dollar remains the global reserve currency. The Chinese are very aware of this, and don't like it one bit. Just ask the head of the PRC Central Bank.

 

[sesamosinsal]

Ha ha, fair enough. I stand corrected about the PRC being fully enrtrenched in the free-market. But it's a bit assinine to try to argue that it is still a "communist" country. Especially when you are accusing Joe of not knowing the definition. Not that Joe needs me to defend him.

Well, it is governed by the Communist Party. Clearly, there are some differences between what it is and isn't. I emphasized this point when I said, "at least officially".

Clearly, now I know that China is actually a neoliberal paradise. Who knew? Has Ron Paul heard the news? Floating exchange rates within a band para todos! (That was good, Joe. I'm still laughing. )

 

[sleslie23]

Every expat I`ve met has gone a little bit kooky along the way (myself included). Add in the anonymity of the web and you`ve got the workings for a full on mental asylum

The fact that I am even posting in this thread makes me realize I have gone batsh** crazy.

 

[Dipoots]

Anyone that thinks the PRC is communist hasn't read much and has definitely NOT been there. They don't have a fixed exchange rate - it trades within a band. And there is no black market for currency that would exist in a fixed rate system. China doesn't have a significant social safety net - and that is why the personal savings rate is so high. No social security. In many ways the PRC is LESS socialist than the USA.

Bradley things have changed there. You might think you could go there in your Mao Suit and Little Red Book and be a superstar but people would just laugh at you. The old communist dogma is a joke to the average city dweller.

Bradley enjoying the Fruits of Communism in his Fantasy World.

somehow, I am wondering what are those good looking chinese people in the painting looking at.... I am betting the giant michelin baby

 

[AmigoArtistico]

Probably I expressed myself wrong.

You have a strong demand, and the price goes up because of that. this is what you dont understand?

The internal demand of argentine economy has been growing unstoppable for ten years, with expanding internal market policies (which basically means giving people money to spend), social plans, inclusion policies, etc. Before 2003 we had almost half of the country totally excluded of formal economy, with no weight in it, without counting, without money to spend, without rights (for example without DNI) without subsidios of any kind. In these past ten years, that situation changed a lot, lots of them bought a moto, for instance, this is the typical product this people got in the last past years. Another example are laptops, 7 or 8 years ago you had BsAs full of locutorios with internet, a bussiness that did work (charging 1 peso per hour) but now you have a lot less, it is hard to find some one sometimes, and they are also much more expensive (since there are a lot less, more demand, prices go up). This is because gradually lot of people bought their laptops, lower middle class I mean.
Lots of people now have a job, lots of people now have vacation... the internal market grew up a lot, we dont have anymore a depressed economy. Jubilados, pensionados, Asignacion Universal por hijo, other social plans, etc, that gives a lot of money to new people that now consume. That is demand, and since there are almost no competition (there are lots of fields with monopolies, or big enterprizes controlling more than 80% of the market) the supply can put the price they want.

For instance, Sancor y La Serenisima have 85% of the milk market. In the past year, they increased prices for 42%, with the most pessimistic inflation data in 30%.

So when you have a strong demand, the supply controls the price. Its a demand inflation.

Matias, exactly which planet are you living on?

 

[scotttswan]

http://en.mercopress.com/2013/06/05/uruguay-can-t-ignore-mercosur-reality-and-is-applying-for-full-pacific-alliance-membership

With Uruguay looking for full membership of the Pacific Alliance and Paraguay becoming an observer (with plans to join fully too). How long will it be until Brazil looks to join too?

 

[nickname303]

The neo liberal model that today leads economics says that taking debt must be the rule. Thats how we have the majority of countries with big debts. The trick is that once you have the debt they (the international bank) can totally manipulate you with interests, so there you have easy money. Its basically a rentistic financial model, based on especulation, and clearly managed for very few people. Basically, they say that taking debt is good. That was the speech we heard in the 90s, an economic model based in taking lot of debt "so that makes the country grows". So, as I said before, we have that the 2008 interests of debt we took in the 90s was the equivalent of the total budget for education for 1 year.
This government believes that taking debt is no good. I think the same. The enormous mass of money destinated for social plans that are attacking poverty is the money we used to pay interests. Fact. Period.

I agree with the few voices on here that question the shibboleth that "access to credit markets"= "good economic policy". Larger countries, like France or the USA are able to take on heavier debt loads because they wield much greater financial clout, and receive much more favorable loan terms. As others here have mentioned, the 80's ad 90's speak volumes about the punitive nature of loans to the third world. As one other poster stated, it is a rigged-rentier system, and in some respects the criticism of the Kirchner government belongs in the other camp- with their reluctance to take on foreign capital in key areas.