HuffPo on CFK

[sesamosinsal]

The following from you is merely speculation I'm afraid

You're pointing out symptoms of the problem. As far as the trade imbalance and account deficits, they are not speculation; they are based on public data. Some European countries have maintained trade and account deficits since the early 90s. Is it surprising that countries like Spain are in crisis today after maintaining such imbalances for decades?

Trade and account deficits are detrimental in the long-term. As I've said numerous times, if a country is spending more money than its earning, that, at some point, will result in severe consequences. We're seeing them in Europe now. It's either austerity or default.

The only country where this is a debate is the United States. The U.S. prints the currency of international trade, so in theory it can go into debt, print to pay it off, and devalue until the world stops pricing their exports in dollars. That's already happening. However, for the world to use the dollar as the reserve currency, it has to be available. In other words, the U.S. has to run trade deficits.

If the United States isn't sending more dollars abroad than it is taking in, there wouldn't be enough dollars to go around. The U.S. trade imbalance, for example, decreased immensely in 2009. This contributed to the lack of dollar liquidity at the time. The Federal Reserve, as a result, established swap lines with numerous central banks around the world to ensure dollar liquidity.

But most countries can't print dollars, and increasing the balance sheet at the European Central Bank can only be done with the blessing of Germany. (Why is Germany so powerful in the EU? Think about it..)

 

[nicoenarg]

You're pointing out symptoms of the problem. As far as the trade imbalance and account deficits, they are not speculation; they are based on public data. Some European countries have maintained trade and account deficits since the early 90s. Is it surprising that countries like Spain are in crisis today after maintaining such imbalances for decades?

Trade and account deficits are detrimental in the long-term. As I've said numerous times, if a country is spending more money than its earning, that, at some point, will result in severe consequences. We're seeing them in Europe now. It's either austerity or default.

The only country where this is a debate is the United States. The U.S. prints the currency of international trade, so in theory it can go into debt, print to pay it off, and devalue until the world stops pricing their exports in dollars. That's already happening. However, for the world to use the dollar as the reserve currency, it has to be available. In other words, the U.S. has to run trade deficits.

If the United States isn't sending more dollars abroad than it is taking in, there wouldn't be enough dollars to go around. The U.S. trade imbalance, for example, decreased immensely in 2009. This contributed to the lack of dollar liquidity at the time. The Federal Reserve, as a result, established swap lines with numerous central banks around the world to ensure dollar liquidity.

But most countries can't print dollars, and increasing the balance sheet at the European Central Bank can only be done with the blessing of Germany. (Why is Germany so powerful in the EU? Think about it..)

I think you and I need a translator between us to help us understand the other party. I never said trade deficits were speculation. This is what I said:

The following from you is merely speculation I'm afraid:


Quote:
After more than a decade of spending more abroad than they earn, the party is coming to an end for most of Europe, except those countries that didn't drink the unfettered free trade Kool-Aid.

The fact that you point at free trade or trade imbalance as THE reason for the crisis in Europe is pure speculation. I can't get clearer than that.

I have nothing more to say about the reasons that COULD be a factor in the crisis in Europe than I already have. So me repeating myself is basically a moot point.

The fact that you and I fail to understand each other is also a little frustrating because both of us are left explaining what we meant in the previous posts and so we never move on or GET what the other person is saying.

So I'm going to (EDIT: Heh, didn't mean to write "bail" out) bow out of this discussion, you can have the last word.

 

[lovinit]

"At the end of it all, it is not one economic system or another that results in economies not doing so swell. It is the government, and the people. It is the culture that is followed by these people."

First, thanks Nico. Well said.

For me it's the last sentence of your post that gets to the core of Argentina's troubles. It's the culture. How could things possibly go well in a country where citizens from the lowest to the highest so often behave less like responsible adults and more like petulant two-year-olds?

Daily life in BsAs is full of examples. They ignore the rules of the road jeopardizing the life and limb of everybody around them (me). They routinely don't keep agreements, commitments or appointments and then lie (chamuyo) about why not, if they bother to explain at all (and often don't and if confronted don't see a problem or see the problem as you). They deny their faults, distort their virtues and want to avoid personal responsibility whenever and however they can. They yell, they accuse, they blame. They often act like predators at every level from the personal to the commercial, to the governmental. And if you complain about any of it you who is the problem.

What they call pride everybody else calls arrogance. What they call asserting their rights everyone else experiences as ignoring and trampling theirs. What they call their personal warmth is often little more than their cover for all the callous selfish behavior they prefer that you not notice.

What was interesting to me traveling in Brazil, Ecuador, Peru and Chile was how consistently the people of those countries expressed a low opinion of Argentina and Argentines. The most common complaints were arrogance, dishonesty and loudness.

That's my experience too.

And of course that's not the whole story. Argentines have their virtues and there is much that I love about them and their country. That's not what this thread is about. Denying an unflattering reality is the best strategy I know to perpetuate it.

Good luck Argentina. You're a nice place to visit. Briefly.

 

[Parvati]

Nico,
Great analysis and it applies to most Lat Am. Yes, it is all about the people and people being responsible for all they do. From picking up their dog waste, to paying their taxes, etc. I think in Latin America we find it easy to say "no me corresponde" all the time and we avoid our responsibilities all the time at all levels of society. It drives me insane everyday.
You should write an opinion piece for Clarin

 

[mjackson1946]

I dont see it as posible to be competitive with anyone when you allow 25% pay raises every 6 to 8 months, and inflation that matches. Despite what Cristina says, I know what I experience here. Part of the problema is the power the unions have but a lot is a lack of backbone to stand up to the unions and say NO

 

[camberiu]

What was interesting to me traveling in Brazil, Ecuador, Peru and Chile was how consistently the people of those countries expressed a low opinion of Argentina and Argentines. The most common complaints were arrogance, dishonesty and loudness.

Brazilians complain and criticize Argentineans. A lot. Honestly, I don't think we Brazilians are any better.

 

[lovinit]

I agree Camberiu, Brazilians also have their faults, of course, as do we all, and some of them are the same as Argentines' (no surprise...they are both latin cultures after all).

And yet my experience of the cultural tone and emotional ambiance of Brazil contrasts starkly with what I found in Argentina.

So I'll take Brazil with it's smiles, openness, informality, upbeat and communal music and general lack of self-importance over Argentina with its hostile, agressive, brooding, whining, blaming, melodramatic self-absorption every time.

For me, the cultural and emotional tone of each of these two societies is both symptomatic and predictive. It is symptomatic of the basic social health of the culture. And it is predictive of the likelihood of success of that society in more ways than the economical.

Witness Brazil's rapid forward movement on many fronts domestic and foreign compared to Argentina's inability to do the same.