The only money printing company nationalized

[sesamosinsal]

On Ciccone, it's completely politics. My summary of the events goes as this: AFIP declared Ciccone bankrupt in 2010. In August of that year, an Argentine court rents out the Ciccone facilities to a company by the name of Boldt. Boldt, which owns several casinos in the Province of Buenos Aires, is not on good terms with CFK. (Boudou said that Boldt is allied with former President Duhalde who opposed CFK in 2011.) The Central Bank decides to print new bills in Brazil, so that Boldt doesn't get a lucrative government contract. In December of 2010, just as the new bills were arriving from Brazil, Guillermo Moreno declares the Boldt contract to rent Ciccone's facilities null and void. Through a series of events in 2011, Mr. Vandenbroele, a "businessman" with ties to Vice President Boudou's best friend (Carmona) from his days in Mar del Plata, somehow becomes the "owner" of Ciccone. In early 2012, the government went ahead with the $50 million USD contract that would see Ciccone (which was called Compania de Valores Sudamericana before this nationalization) print the bills. Now, after a growing list of circumstantial evidence that makes Boudou appear really guilty (there is no direct evidence that links Boudou to the corruption scandal, just several coincidences), the government wants to nationalize the company because it's a "public good."

If this company was so important, why didn't the government nationalize it in August of 2010?

Slightly off-topic: When Governor Scioli announced that he was going to raise taxes on the casinos last month to pay the aguinaldos, CFK's government responded the next day saying that they were going to loan him the money. In my view, this was a way to keep Scioli under CFK's thumb, instead of having him rely on obscure political interests (Boldt) that oppose the Casa Rosada. Furthermore, he also recently announced that he would be extending the licenses for the casino companies in the province. Boldt owns about five different casinos. Now the government wants to nationalize them as well, surely to prevent people from gambling, blah, blah. Make no mistake.. It's politics.

 

[nicoenarg]

Going back to econ 101, though we say in the context of inflation that the government is just "printing money", the truth is that governments are always printing money. In the US the reserves that are collected by the Fed are burned and reprinted. The monetary system is not the gold standard - governments print and also take money out of the market in order to achieve a desired money supply. And anyone familiar with the ideo of the money multiplier of banks, a US institution, knows that it goes beyond this yet the US still has very low rates of inflation. So printing money does NOT cause inflation and is an every day affair... printing too much money: yes, it is inflationary. Furthermore, these crazy allegations of Kristina trying to print more money to buy votes is more than a bit outlandish. The government, while trying, at times via coercion (= not cool), is trying to downplay inflation, as speculation and distrust plays a huge role in increasing inflationary tendencies, but also has obviously realized that its a huge problem and are attempting to do what they can, in line with their economic model, to safeguard the future - cutting state subsidies, etc... But at the core of it, the omnipresent idea on these boards that the government whore themselves out for votes is very very offensive to the argentine people. when you spend time in temperly or lomos de zamora - outside of recoleta and palermo - you see that people don't get on buses to go to kirchnerista rallies for a choripan or a stipend, like everyone ALWAYS insinuates here, but because they are animated by the political movement. I imagine that a lot of people on this board hire cleaning ladies - why don't you ask them what they think of the government, and then refrain from attributing it to uneducation or misunderstanding. And lets face it, class interests are different throughout the country. Can we drop the "christina buying votes" thing, because if we follow that line of cynisism we're going to have to start saying, obamacare was simply buying votes and political pandering and, on the other side, saying that bush and the wars abroad weren't genuine and were only to buy votes. Or that politicians who oppose abortion in the US don't care about the subject but instead recognize the popular sentiment and capitalize on the electoral pool. Its too simple to reduce it to such an extreme - "the Kirchners have no political or ideological values and simply do what is most pragmatic to stay in power" - its absurd.

Having said all of this, I by no means am convinced by the Kirchnerist movement, but we have to try to understand it as what it is in its full extent - not using cynicism and class interests to completely negate or nullify it.

How about English 101 and breaking your monolith into paragraphs?

We'll agree to disagree on the aspect of the motives behind why Cristina and her administration do what they do.

Everyone is entitled to their opinions (not to their own facts) and I don't have a shred of evidence to prove that she and her cronies just want votes, its merely an observation. So please don't get your panties in a twist about that.

As for offending Argentines. Spare me the BS, I have spoken to plenty of Argentines and usually get two reactions: 1) Cristina is a saint (literally or figuratively). She and Nestor saved the country after Menem and the foreign forces tried to destroy it. 2) Cristina and her cronies are destroying the country and lining their own pockets. They offer figures on Cristina's personal income and "stash" however I have not seen any actual bank statements to be able to say, "I've seen evidence".

I tend to agree with the latter opinion more so than the former. If it offends people, so be it. Unlike a lot of expats, I am not here just to "experience the culture and art". I am here with my Argentine spouse and am involved with her family.

Now, why in the world would we have to start saying "Obamacare was simply buying votes and political pandering and, on the other side, saying that bush and the wars abroad weren't genuine and were only to buy votes."? Why do people feel that to be able to criticize anything about Argentina, whether warranted or not, you have to first criticize something in the US? The logic here escapes me. I find it, and again it doesn't matter if this offends you, idiotic seeing that this forum is for Buenos Aires (BAExpats) and not world politics.

Now, about your econ 101. No one says its only printing money that automatically drives inflation up. You gave an example of the US Fed collecting money, destroying and then printing. You yourself pointed out through that example that the money supply is not increasing.

Let's do econ 101: Demand and supply. When someone says "printing money will result in higher inflation". My assumption is that they are directly referring to the increase in money supply and not just the action of printing money. Increased supply of anything (if demand stays the same) will result in decreasing its value.

Now thats over-simplification of the issue and no its not the only reason for inflation. There are countless things you have to consider when considering inflation. Economics is not an exact science. And "ceteris paribus" clauses are heavily used.

 

[nicoenarg]

Don't know about the BoE but its funny when you and others like you create facts, then believe them and spread them around as if they were the eternal truth.

First of all, the Fed is both private and public. Second of all, apart from 6% or less in profits that are paid out in dividends, everything else goes to the US treasury. In 2010 for example, when the Fed had a profit of $82 billion, $79 billion went to the treasury department.

These numbers differ in the years of economic downturn.

Now one has got to be an idiot to not know that the treasury department is the government's.

I understand, from reading other posts by you, that you are against the Fed and think its all a Rothschild family conspiracy to control the world, but I think your BS would sell a little bit more easily if you actually did some research and put in some factual details and not just crap that you believe is true.

Here are some links on how the profits were distributed:

2009: http://money.cnn.com/2010/01/12/news/economy/fed_profits.fortune/

2010: http://www.nytimes.com/2011/03/23/business/economy/23fed.html?_r=1&ref=business

2011: http://money.cnn.com/2012/03/20/news/economy/federal_reserve_profit/index.htm

Anyway, I realize that conspiracy theory nuts won't change and won't let the facts stand in their way, so all of this might have been for naught, but I think there are others on this forum who are actually intelligent.

Woops, just realized it wasn't Jago who made the Rothschild family comment. Sorry about that Jago, it was a misplaced comment on my part. I stand by everything else though.

 

[jago25_98]

nicoenarg: I wrote a long reply here quoting occupy and various goldbugs without metal hats but I've decided not to bite and post for this thread.
I identify a lot with Argentina in the inflation issue. I think the west has a lot in common in that sense.

It's the Argentine setup that interests me in this thread. If we go to any currency exchange site, look at the historical section and compare with other currencies (or xau) we can get a relative comparison of inflation rates. While this is not absolute, you can at least compare currency to currency. I've posted the graphs from this so many times because to me this is a smoking gun with which you can quickly see the state of an economy, so vast the impact of inflation is. Input the swiss franc, Australian dollar the dollar and Argentine peso. Try whichever country you have visited and just think a bit about where that country comes in your comparisons and think about the economy there and what you saw.

The peso comes at the most inflating currency I've found so far. So high in fact that it seems testament to the resilience of the country to withstand it. I think this is a good thing. I think if inflation wasn't a problem even with all the bureaucratic and all the other problems Argentina would improve.
This is why I moan on about inflation.

Maybe that's why the nationalisation can be such a good vote winner. Not that it will change anything of course but the thought of inflation is foremost in everyone's minds and like it or not, it sends some kind of message.

Does anyone have very long term data for peso inflation beyond 5 years. I'm interested in comparing the figures for the various presidents.

Can we drop the "christina buying votes" thing, because if we follow that line of cynisism we're going to have to start saying, obamacare was simply buying votes and political pandering and, on the other side, saying that bush and the wars abroad weren't genuine and were only to buy votes. Or that politicians who oppose abortion in the US don't care about the subject but instead recognize the popular sentiment and capitalize on the electoral pool. Its too simple to reduce it to such an extreme - "the Kirchners have no political or ideological values and simply do what is most pragmatic to stay in power" - its absurd.

Having said all of this, I by no means am convinced by the Kirchnerist movement, but we have to try to understand it as what it is in its full extent - not using cynicism and class interests to completely negate or nullify it.

I think this is well said. It's good to be paranoid but not so much that it colours a decision before even giving it a chance which is something we see too much of on these boards.

I'm glad I've heard the impassioned peronismo speech from a drunk friend. I can see that way of thinking. I'm not sure I agree but I'm also not sure I disagree. Personally I don't think trade and markets can be handled manually with protectionism or liberal trade. I think problems are down to lack of competition or that the market isn't working properly.

Coincidentally, I've noticed that all the poor/employees tend to support Kirchner but the wealthy/business-people don't. If I see someone who argues the other way to their financial situation in any country that would be of great interest to me. Until now though all the political discussion I've seen has been self interest. La Nacion vs Clarin double bind broadly speaking of course.

Keep the discipline to not get drawn into the inflation argument. Use the forex graphs to pull out the data.

 

[Iznogud]

http://www.educativomodelo.edu.ar/boletin/Jun2010/LA_MONEDA_ARGENTINA.pdf

 

[trennod]

Going back to econ 101, though we say in the context of inflation that the government is just "printing money", the truth is that governments are always printing money. In the US the reserves that are collected by the Fed are burned and reprinted. The monetary system is not the gold standard - governments print and also take money out of the market in order to achieve a desired money supply. And anyone familiar with the ideo of the money multiplier of banks, a US institution, knows that it goes beyond this yet the US still has very low rates of inflation. So printing money does NOT cause inflation and is an every day affair... printing too much money: yes, it is inflationary. Furthermore, these crazy allegations of Kristina trying to print more money to buy votes is more than a bit outlandish. The government, while trying, at times via coercion (= not cool), is trying to downplay inflation, as speculation and distrust plays a huge role in increasing inflationary tendencies, but also has obviously realized that its a huge problem and are attempting to do what they can, in line with their economic model, to safeguard the future - cutting state subsidies, etc... But at the core of it, the omnipresent idea on these boards that the government whore themselves out for votes is very very offensive to the argentine people. when you spend time in temperly or lomos de zamora - outside of recoleta and palermo - you see that people don't get on buses to go to kirchnerista rallies for a choripan or a stipend, like everyone ALWAYS insinuates here, but because they are animated by the political movement. I imagine that a lot of people on this board hire cleaning ladies - why don't you ask them what they think of the government, and then refrain from attributing it to uneducation or misunderstanding. And lets face it, class interests are different throughout the country. Can we drop the "christina buying votes" thing, because if we follow that line of cynisism we're going to have to start saying, obamacare was simply buying votes and political pandering and, on the other side, saying that bush and the wars abroad weren't genuine and were only to buy votes. Or that politicians who oppose abortion in the US don't care about the subject but instead recognize the popular sentiment and capitalize on the electoral pool. Its too simple to reduce it to such an extreme - "the Kirchners have no political or ideological values and simply do what is most pragmatic to stay in power" - its absurd.

Having said all of this, I by no means am convinced by the Kirchnerist movement, but we have to try to understand it as what it is in its full extent - not using cynicism and class interests to completely negate or nullify it.

So you say, printing money as everyday business is fine as its not inflationary, but printing too much money is. If you want to define normal and abnormal printing that way, I think people that say the KKs print money would, referring to your definition suggest they print too much.

Anyway, definitions aside I dont think the average expat or citizen really knows, its just an assumption. An assumption that I tend to agree on, based solely these two factors 1) hearsay (yes okay a little weak but were all guilty of it) and 2) the fact that every time I go to the ATM and withdraw, I see fresh, new notes. Significantly more than the dozens of other countries I have travelled to and when I lived in both Australia and Canada.

Dont get me wrong, I dont think the inflationary effect of increasing the money supply is the only factor, but I do not agree this government have at the height of their priorities, decreasing inflation. What policies would have you suggest that? I dont know if cutting state subsidies was one, that to me appears more like a cash grab from the richer areas in order to "redistribute the wealth".

This clearly a Chavez style, socialist government that is strongly alienating the middle to upper class Argentines. The comparisons with Evita, currency controls, the handouts to the lower classes, taking away the subsidies from supposedly wealthier areas, nationalizing foreign companies etc etc. I think it would be hard to argue Kristina is not for the pueblo, I think thats clearly how she sees herself.

 

[sesamosinsal]

So you say, printing money as everyday business is fine as its not inflationary, but printing too much money is. If you want to define normal and abnormal printing that way, I think people that say the KKs print money would, referring to your definition suggest they print too much.

Anyway, definitions aside I dont think the average expat or citizen really knows, its just an assumption. An assumption that I tend to agree on, based solely these two factors 1) hearsay (yes okay a little weak but were all guilty of it) and 2) the fact that every time I go to the ATM and withdraw, I see fresh, new notes. Significantly more than the dozens of other countries I have travelled to and when I lived in both Australia and Canada.

On the second page of this PDF, the Argentine central bank lists the updated number of pesos in public circulation. The amount of pesos in public circulation has increased by approximately 25 percent in a year.

That's quite an expansion. The monetary base in the U.S. expanded by about that much between January 2005 and January 2009. I'm definitely comparing to apples and oranges in this case, but just to give you an idea.

 

[trennod]

On the second page of this PDF, the Argentine central bank lists the updated number of pesos in public circulation. The amount of pesos in public circulation has increased by approximately 25 percent in a year.

That's quite an expansion. The monetary base in the U.S. expanded by about that much between January 2005 and January 2009. I'm definitely comparing to apples and oranges in this case, but just to give you an idea.

Thats a lot! Its actually nice to see some evidence of what we all thought, all along. Must say, I am surprised a little at just how high it is.