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Old 04-19-2012, 08:44 AM   #26 (permalink)
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Believe it or not, Richie, I really am laughing when I've been clicking the laugh button in this thread. I'm not surprised that FT is giving a better account of this than I am. My public policy professor in college always carried the distinctive pink pages with him whenever I saw him, and he had extensive experience in international finance and investment before semi-retiring to teach.
If I was being flippant I'd of said the economist.
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Old 04-19-2012, 09:05 AM   #27 (permalink)
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[...]And also Argentina's government will put all the benefits into research and development instead of giving the money to the shareholders.
ok, now you're just being silly.... I haven't seen a corporation or world government yet that didn't line it's pockets given the chance.
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Thanks for being passive agressive.
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Old 04-19-2012, 10:12 AM   #28 (permalink)
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Sounds like they sold the company, the company did all the work, found a larger than expected petroleum reserve, the President realized that there was a lot of money to be had, and figured stealing the cmpany back would make her and her friends very rich. Even if they're forced to pay for the company they stole, they're thinking they'll get more in the long run if that 23 billion barrels is correct.

And besides, the 10 billion that they'll be askdd to pay won't be coming fromnthe President's pockets, but from her country's treasury. And if you believe the bullshit about investing the profits in R&D....well, it might be true in the sense that she'd install relatives, friends, and political allies into the R&D division, sure.

Meanwhile, the Spanish company might, after a long court battle,nreceive about the same amount that they'd paid for the company 20 years ago. Technically that would mean a fairly serious loss, accounting for inflation and whatever various investment's they'd made into the company.

So, when Argentina needs new power plants, hopefully they've got the money to do it themselves, because no company outside Argentina will touch that sort of project, knowing that the government will just steal the plant if it becomes profitable. And who's to say it would stop with natural resources? When car companies want to open plants in South America, they'll be thinking about this.

Ironically, there will be no neednfor an embargo, companiss will just avoid doing business there. This is fine for Argentina's neighbors, most countries try to be competitive to attract international investment...that includss the USA by the way, we benefit when Toyota or Honda or Kia opens a plant in the USA. And in addition to the jobs that will be lost, this will wind up driving their current account deficit (ie trade deficit) even higher, as they will continue to need to rely on foreign imports and have more difficulty boosting domestic production for exports. This in turn willndrive inflation and create further risk of default again.

On the bright side, this is bringing back memories of International Politocal Economics classes.
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Old 04-19-2012, 12:52 PM   #29 (permalink)
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I at least will openly admit I'm taking an Ideological stand on this, for better or for worse. I doubt you, Jaher, would even admit that your yourself.

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It has nothing to do with any "Washington" consensus either.
LOL!

Must have been great Political Economic classes.
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Old 04-19-2012, 12:56 PM   #30 (permalink)
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Don't get me wrong, Argentina is going into the wall either way, at least this way they are going with style. ,This shale oil is not good at all.
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Old 04-19-2012, 02:51 PM   #31 (permalink)
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I at least will openly admit I'm taking an Ideological stand on this, for better or for worse. I doubt you, Jaher, would even admit that your yourself.
It's not really an ideological stance to say "hey, I don't think those people are going to want to invest their money here if you do that." Or, for that matter, to point out that what the Argentine government has done woukd be considered illegal if it had been done by an EU nation.


As for any Washington consensus, I'll go check the atlasnfor Washington, Spain, but I doubt I'll find it.
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Old 04-19-2012, 04:28 PM   #32 (permalink)
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It's not really an ideological stance to say "hey, I don't think those people are going to want to invest their money here if you do that." Or, for that matter, to point out that what the Argentine government has done woukd be considered illegal if it had been done by an EU nation.


As for any Washington consensus, I'll go check the atlasnfor Washington, Spain, but I doubt I'll find it.
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The term Washington Consensus was coined in 1989 by the economist John Williamson to describe a set of ten relatively specific economic policy prescriptions that he considered constituted the "standard" reform package promoted for developing countries by Washington, D.C.-based institutions, such as the International Monetary Fund (IMF), World Bank, and the US Treasury Department.[1] These economic reforms, popular from the late 1970's to mid 1990's, are generally described as a form of economic liberalism, which seeks to emphasize the efficiency of private enterprise, liberalized trade, and the opening of markets.[2] The adoption of these policies was often a precondition to receiving aid from the World Bank and IMF.[
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Old 04-20-2012, 01:59 AM   #33 (permalink)
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Yeah, not sure how it's connected to the World Bank or IMF. Well, other than the concern that they'll be the only ones willing to invest in Argentina in a few years.

But speaking of Washington, the Washington Post's editorial board weighs in on the Argentine decision in Saturday's paper. Perhaps they do a better job of explaining why this is a problem for Argentina:

Argentina’s president rejects stepping into the future - The Washington Post

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This week Ms. Fernandez made her choice clear, by nationalizing the country’s largest oil company. Like her recent renewal of Argentina’s claims to the Falkland Islands, the measure won her cheap domestic applause — and ensured that Argentina’s isolation from the world, and from the economic progress of its neighbors, will continue to grow.……

In addition to causing a rift with Spain and with the European Union, the nationalization will merely ensure that Argentina is unable to attract the foreign capital and expertise necessary to exploit its large reserves of oil and gas, including substantial shale deposits……

Since the election the government has continued to attack independent media, including the country’s two most important newspapers, Clarin and La Nacion. Economists who dare to report the true rate of inflation — upward of 20 percent — are subject to prosecution, while the official figures are doctored.
They also mention her claims of sovreignty over the falklands, which I hadn't realized was serious (I thought the earlier post about it was exaggerating), and have links to previous editorials about her attempts to nationalize the newspapers in Argentina that disagree with her, and claiming thslat 80% of news media in Argentina are controlled by the government. As a newspaper that was a party to a massive lawsuit brought by the American government over the Pentagon Papers case, and as a newspaper that played a role in bringing down Nixon, I can understand why the Post feels strongly about the dangers posed by governments that attempt to silence unfavorable news media.

Honestly, the more I read about Kirchner Fernandez, the more I worry about the sort of state Argentina is going to become. Populist leaders combined with extreme inflation and economic meltdown are are a disaster waiting to happen.

I wasngoing to make a snarky remark, but I really don't think you really want to see that sort of thing happen there. I think you just see it as a political game and aren't stepping back to see the lkkely outcome.

Last edited by Jahar Aabye; 04-20-2012 at 02:05 AM. Reason: Whoops, forgot about Spanish naming traditions, Fernandez de Kirchner would be President Fernandez not President Kirchner
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Old 04-20-2012, 02:06 AM   #34 (permalink)
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Well I'd love to have a stupid president like her, cause her country had 8% growth last year (and since 10 years) while mine with a very smart president had under 2% in 2011.
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Old 04-20-2012, 02:26 AM   #35 (permalink)
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Well I'd love to have a stupid president like her, cause her country had 8% growth last year (and since 10 years) while mine with a very smart president had under 2% in 2011.

Her country is pretty much still recovering from bankrupcy...

It doesn't really matter agreeing or understanding what Argentina did...In the end, they will most likely become a Venezuela II in the international scene...And we all know how that is turning...

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Old 04-20-2012, 02:37 AM   #36 (permalink)
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Well I'd love to have a stupid president like her, cause her country had 8% growth last year (and since 10 years) while mine with a very smart president had under 2% in 2011.
Ummm, are you confusing growth andninflation? The official inflation rate was 8%. That's the rate that journalists have to report if they don't want to be prosecuted. The actual inflation rate is closer to 20%. It doesn't matter how fast your economy is growing if your inflation rate causes you to lose 20 cents on the dollar every year!

Me, I'd rather not have to worry about being arrested for reporting the news. Even if they were experiencing actual economic growth, you couldn't pay me enough to live in a place like that. I guess I just don't see what's attractive about proto-totalitarian populists, but you go right ahead. When the purges happen, maybe you'd be lucky enough to escape.

Official statistics: Don

Doctored Data Cast Doubt on Argentina

Argentina threatens inflation analysts with fine - FT.com


http://www.nytimes.com/2011/02/06/wo..._r=1&src=twrhp

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Old 04-20-2012, 02:44 AM   #37 (permalink)
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Her country is pretty much still recovering from bankrupcy...

It doesn't really matter agreeing or understanding what Argentina did...In the end, they will most likely become a Venezuela II in the international scene...And we all know how that is turning...

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I agree, but I suspect that Richie and Twisted think Venezuela is a great place to live too. It reminds me a bit of Christopher Hitchens' story about how he had travelled to Castro's Cuba when he was young and idealistic. He said his first realization that reality might not match his idealism was shortly after arrival, when the government official said "I'll keep your passport for you. Don't worry, you won't be needing it for a long time."
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Old 04-20-2012, 02:59 AM   #38 (permalink)
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I caught the tail end of this report the other morning and it didn't surprise me, I gotta say. I'm also kinda smiling about it.

Argentina only started showing more than a passing interest in reclaiming the Falkland islands again once it surfaced that a couple of exploratory oil drillings around the islands coast/waters had come up with positive results. I'm no expert and have no idea what sort of reserves their talking about but I guess it shows that natural resources and the terratories that harbour them are drawing attention. Up till then, all the Falklands had going for them was "Sheep Production" and a great layover point for those destined to the south pole Halle stations etc...

We'd started to see a general sympathy begin to develop across the world stage for Argentina, with Clinton actually calling for both parties to sit down and talk about it. This after Argentina had decided to close a couple of ports to UK-related shipping traffic. The uk's always maintained that it was up to the people that live there, with them resolutely wanting to stay British.

Now though.. I'm hoping that sympathy for the Argies might start to Eb away. There's no guarantee we could win a second "War". Sure, they have pretty much the same military hardware as they had thirty years ago, but we have less. Albeit slightly more modern, and no aircraft carrier... and I'm not sure anyone would be interested in lending us one.
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Old 04-20-2012, 04:19 AM   #39 (permalink)
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Honestly, the more I read about Kirchner Fernandez, the more I worry about the sort of state Argentina is going to become. Populist leaders combined with extreme inflation and economic meltdown are are a disaster waiting to happen.
Erm... could we brits borrow an aircraft carrier please ? we seem to have misplaced ours...
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Old 04-20-2012, 04:28 AM   #40 (permalink)
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Ummm, are you confusing growth andninflation?
Nope



Argentina GDP Growth Rate

Argentina to take over Spanish oil company-argentinagrowth.jpg
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Old 04-20-2012, 04:55 AM   #41 (permalink)
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Inflation...
Well who cares about inflation? It's only interesting relatively to credit, which is not going to happen, you already explained that.

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I agree, but I suspect that Richie and Twisted think Venezuela is a great place to live too.
Any place is great to live, as long as I get Internet access, food, water and not too much pollution.
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Old 04-20-2012, 08:09 AM   #42 (permalink)
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Well who cares about inflation? It's only interesting relatively to credit, which is not going to happen, you already explained that.
Ah, this would be the Zimbabwe Consensus? Here's a picture of actual Zimbabwean currency. I doubt anyone usesntheir $1 bills, although they might make good toilet paper, and certainly would be cheaper:




In searching fornthis image, I found that it isnactually out of date. It only goes up to the $250 million dollar bill. In 2008 they began printing the $500 million dollar bills. Thisnis not a joke. A few years ago, before they started printing the really big bills, inflation was making things so bad that you had to begin counting the bills to pay for your lunch whe you were still eating...for the few who could afford to do so. Oh dear...that was 2008, now they're printing $100 billion notes, which will buy you three eggs. I am not making this up.

I doubt that Argentina would experience that sort of hyperinflation, but it should serve as a cautionary tale. Massive inflation like that destroys savings, destorys commerce, destroys the country. It doss affect thingsnlike credit, sure, but the bigger effect is on the nation's own money supply. A "healthy" inflation amount varies depending on conditions, and deflation can be just as bad, but a healthy inflation.level might be 2-3%. Argentina's official rate is 8-10%, and that's figures from their government that nobody trusts. Unofficially, 20-25% is the generally accepted amount. From what I understand, this is accompanied (as onenmight expect) with a similar increase innprices for consumer goods. Probably the only good thing it might do is prevent people from saving their money and cause them to spend more, which is likely why you see those figures for economic growth.

The overallneffect would be as if someone cut your salary by 20-25% every year. This year you're making $40,000, life is good. Next year you're making $30,000 and things are still ok, just have to budget. Next year you're making $22,500 and you've really had to cut back. The next year you're making $17,000. And it keeps on sliding year after year.

Now imagine you're the President of a country with massove inflation. The people are getting restless. They're msrching in the streets. They want someone to blame. You're still popular, but it might not last very long. What do you do?

Maybe you can convince people that an unpopular minority group is responsible, shift their anger towards the scapegoats. Maybe there's an island offshore owned by an empire on the other side of the world, so you could blame that nation for your troubles and seize the islands, which shifts blame and makes you look like a successful leader. Oh, and you'll need to make sure you control the news sources so you can make sure that nobody prints anything critical of your rule, because that would make you look bad give aid and comfort to your the nation's the people's enemies.

Banana Republic, it's not just a chain of fashion stores.

On the bright side, so far at least Fernandez hasn't tried scapegoating any minority groups yet. She has done the other things, though, which is why our British friends are a little bit worried. It also demonstrates that she's fairly desperate, because unlike America, the British actually do have a lot of experience with the whole Empire business. Unfortunately, their navy has gotten to the point that if the Battle of Trafalgar had been fought today, it'd be won by Morrocan teenagers on jetskis, but the USA has 9 aircraft carriers and bills to pay (oh dear lord, I just had this mental image of Barak Obama as Alois Hammer).



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Any place is great to live, as long as I get Internet access, food, water and not too much pollution.
Wow. Well from what I understand, Zimbabwe doesn't have much pollution...
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Old 04-20-2012, 09:01 AM   #43 (permalink)
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You're overreacting, I'm sure people in Greece and Spain would trade some inflation in exchange for a job. And we're not speaking of 1000%, only 10%20%/year.
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Old 04-20-2012, 09:08 AM   #44 (permalink)
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Don't think I'd be listening to american media about this issue tbh. They reported Chavez's "crack down" on the media when what in fact happened was he closed a paper that aided the Coup in 2002. like a paper that did that would be left alone in America..
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Old 04-20-2012, 09:55 AM   #45 (permalink)
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Wow. Well from what I understand, Zimbabwe doesn't have much pollution...
Drop me a house with a view there (not too close because of the noise) and I come.

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Old 04-20-2012, 10:31 AM   #46 (permalink)
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... the British actually do have a lot of experience with the whole Empire business. Unfortunately, their navy has gotten to the point that if the Battle of Trafalgar had been fought today, it'd be won by Morrocan teenagers on jetskis, but the USA has 9 aircraft carriers and bills to pay...
I suspect that that would be the moment at which we would discover just how one-sided the much-feted (in the UK at least) 'Special Relationship' actually is...
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Old 04-20-2012, 11:48 AM   #47 (permalink)
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I suspect that that would be the moment at which we would discover just how one-sided the much-feted (in the UK at least) 'Special Relationship' actually is...
Could be worse, we could could offer you a foolproof plan: we'll trade weapons to Djibouti in exchange for money that we'll use to fund freedom fighters in Tierra Del Fuego to take back the Falklands for Britain. What could possibly go wrong?
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