Scary Argentine Budget!

[EdRooney]

Bradly youre misunderstanding Somewhereinba.

Since the Government of Japan spends much more profligately than the Government of Argentina, Somewhereinba is obviously arguing that Argentina should imitate Japan by increasing expenditures and having much larger deficits.

Furthermore, it's not just Japan; most countries have for decades run much higher deficits than Argentina: Germany, the US, Canada, India, South Africa, Switzerland...

 

[Rich One]

Ed R- agreed the debt related to GDP or PBI is small BUT the country Risk is high ! Why ? Because of lack of confidence, which translates in almost no foreign investment needed for growth and employment generation!!

 

[EdRooney]

I'm not sure I understand your point Rich...

Are you suggesting Argentina should have a much lower Debt/GDP ratio than its already below average rate in the hopes that the confidence fairy will come and spur foreign investment?

 

[GS_Dirtboy]

The issue with Argentina is:

1. The only things it produces/exports that is substantial for Dollar income is Soy (commodity).
2. No one wants Argentine Pesos so the Republic has large debt obligations in Dollars.
3. The debt payment will rise dramatically in 2015.
4. IF they get access to debt markets it is only a stop-gap.

It's like lending your brother-in-law money over and over to pay his mortgage for his luxury house when all he can do is mow grass for a living.

 

[EdRooney]

Fantastic points GS.

Not sure how they relate to how the press covers the deficit, but then again we never were sticklers here for staying on topic

 

[Matiasba]

But I totally agree about journalism being atrocious. Still, the reason why so many dinner conversations are misinformed is that we have a press that utterly fails in its duty to inform.

There is of course an intention. Nothing happens by accident, economy works with expectations, and by lying they are trying to create some favourable scenario. They always miss in their predictions, they never hit the target, and always miss against the government. They just cant miss always and that bad, there is an intention.

 

[sesamosinsal]

There is of course an intention. Nothing happens by accident, economy works with expectations, and by lying they are trying to create some favourable scenario. They always miss in their predictions, they never hit the target, and always miss against the government. They just cant miss always and that bad, there is an intention.

Expectations are key.

If some hot shot economist says the dollar is going to be at 30 in June of 2015 and that inflation will be over 50 percent, and everyone repeats the same lines over and over and over in print, on the radio and on TV, what will happen?

At some point, you have to consider the possibility that all the money printing at the BCRA is more reactionary -- a defense mechanism -- than anything else. If they didn't print, the show would come to an abrupt end.

All of Clarin's doomsday coverage of economic issues makes total sense when we realize the expectations they are trying to create and what will happen if those expectations become reality.

 

[Pensador]

Well when you look at any reporting in Argentina or any place else in the world it can be like an enigma. Unfortunately what seems to be a large percent people tend believe the propaganda flying from both directions and in some cases all directions. And lets not forget the news agencies need drama to sell their wears and make money. One thing I have realized is that they have mastered mixing the truth with their agendas. For example they will report that there was a bus accident last night and so on which is all true and then they slip in some untrue relating to their objectives and of course they spice that up with a little drama so it tastes better going down and leaves a great impression.

 

[Redbeanz]

Here's an answer to budget woes!

http://www.nytimes.com/2014/12/14/business/some-of-the-rich-collect-art-others-collect-passports.html?mabReward=RI%3A8&action=click&contentCollection=Movies&region=Footer&module=Recommendation&src=recg&pgtype=article

 

[Rich One]

I'm not sure I understand your point Rich...

Are you suggesting Argentina should have a much lower Debt/GDP ratio than its already below average rate in the hopes that the confidence fairy will come and spur foreign investment?

Eddie thanks for the article on the Confidence Fairy.

Argentina could reduce the Debt/GDP ratio by 20 % or more below current levels but the Confidence Fairy will not Come to Argentina , and Foreign Investment would stay flat ...!! The Confidence Fairy visits require stability, predictability and Fair long term Business regulations.

Populistic Regimes like Venezuela scare away the Confidence Fairy Let's face it significant Foreign investment comes from a handful of countries , all present in Argentina and very aware of the repatriation regulations, inflation, subsidies, controlled prices , etc