In a recent interview, ex Argentine president Christina “La Penguina” Kirchner, claimed that her economic record in office merited the Nobel Prize in Economics.
And I say, why not? After all Henry Freakin’ Kissinger is a Nobel Laureate.
Here’s Chrissie now, showing how much she cares about your critiques of her administration:
Oh people, the plot thickens in Argentina. Our last story was about the ex cabinet minister throwing suitcases full of money over the walls of a nunnery.
In that story I speculated that the nunnery was a known money-laundering operation.
Now, thanks to a “dollar-smelling dog” named Jack, Police have discovered hidden chambers under the chapel of the convent that apparently smell like dollars.
I think I’ll set up a table down in the Santa Fe Plaza and start telling people their futures. Paco can be my dollar smelling dog.
PS: It’s a sad but true commentary on Argentina that they are not called “peso-smelling dogs”.
People, check out the amazing transformation of one Jose Lopez.
Here’s the before:
J-Lo was was public works minister under La pinguina.
But baby look at him now:
No he’s not a police officer now. He’s just taking a well-protected perp walk!
Well, it has something to do with $7 million in cash, a .22 rifle and a nunnery!
Phone call for Monty Python.
In a nutshell, J-Lo was caught tossing the cash over the walls of the nunnery while holding a rifle, when the nuns called the cops!
Not sure what his end game was going to be.
Is that nunnery a money laundering operation?
Was he planning on also climbing the wall and then screaming “SANCTUARY!!!”
Was he just tithing, like any good Catholic?
Argentine President Macri has a lot to smile about. He recently reached an agreement with foreign bondholders and Argentina might finally shed its pariah status in international markets. The Economist notes that “Argentina’s payment of $4.65 billion will be 25% less than they were claiming. With this agreement, Argentina has settled with creditors who hold 85% of the disputed debt.”
The negotiations have been going on for 14 long years, leading one negotiator to complain that “it seemed like a thousand years.”
Macri has already accomplished a lot of clean up from the previous administration’s economic mess. In addition to the bondholder settlement, he has also enacted sensible policies like the elimination of exchange controls and export taxes.
Paddy Carter (@CarterPaddy) has the best take away from this news though. He tweeted “Congratulations, Barry Manilow.” This does seem to be a separated at birth situation. Here’s Manilow (or is it…?)
Oh Argentina, where one of the few booming sectors is armored car services!
Why? Well it’s not mentioned in the article (which is a pretty confused piece), but Argentina is a pretty disintermediated country. People don’t trust banks (gee I wonder why) and lots of business is done in cash. Add to that the fact that years of high inflation have rendered Argentina’s largest denominated currency to be worth only $10 (and this is at the official ER) and you can see that cash moves around and these days it takes a LOT of cash to purchase major items.
In other words, purchasing power that used to fit in a wallet, now fits in a suitcase.
What used to fit in a suitcase, now fits in a wheelbarrow…..
As a famous man once said, solve for the equilibrium.
Here’s some free CG investment advice: short wallets, long Brinks trucks!
Hat tip to the inimitable Boz.
Loyal CG reader behiker57w gives us this stunning update on “mutilated” Bolivia:
Yes, Bolivia is again a sea-faring nation thanks to Argentina’s transformation into an ocean of tears following their defeat in the Copa America finals!
The Lord works in mysterious ways.
(note that the map comes from eldeforma.com the Mexican equivalent of The Onion!)
Douglas Farah has a fascinating piece in Foreign Policy detailing the latest on Argentina’s financial follies. I’ve heard of many ways that governments have tried to acquire foreign currency, but I didn’t realize that Argentina had turned to encouraging money laundering in their quest for dollars.
Having suffered a 20% fall in foreign exchange reserves in recent months, the Argentine government passed a law last week that essentially “invited money launderers from around the world to put their dollars in Argentine banks with no questions asked.”
Not everyone was in favor of such a drastic move. The auditor general, for instance, urged the Senate not to pass the law and “called the measure a huge invitation for criminal groups to have their money “legitimized through fictitious companies.” Indeed.
Apparently, there have already been money laundering concerns about the country. Farah notes that the “State Department had already expressed concern that “money laundering related to narcotics trafficking, corruption, contraband, and tax evasion occurs throughout the [Argentine] financial system” and that “Senior members of the Fernández de Kirchner government are currently involved in a widely reported roiling money laundering scandal in which the president’s deceased husband and predecessor as president, was allegedly involved.”
There is much more reason for pessimism though–definitely check out the original piece because it has lots of interesting details about the group of young Peronists known as “La Cámpora,” (whose leader is Maximo Kirchner, the president’s son) who are the proud “architects” of great policies such as this.
Argentina has an unfortunate monetary history and an unfortunate way of repeating their monetary mistakes. There are Argentine critics from the late 1800s bemoaning Argentina’s inflationary ways and the complaints sound like they could have been taken straight from the 1980s.
I teach Latin American Economic Development and Argentina is the gift that keeps on giving, still managing to surprise me every once in a while. For instance, I’ve been amazed (as have my students) at the stories about fines and prison time for economists that dare to publish alternative (read: accurate) inflation statistics.
Now, government restrictions on the holding of dollars has turned people’s demand for foreign exchange into a cat and mouse (and dog) game.
A WSJ article (gated, here is an ungated version) documents how Argentines looking to buy dollars must do so on the black market in transaction locations metaphorically called cuevas (or caves). The sellers of foreign exchange are called cavemen.
The government bans people from saving money in dollars and travelers are allowed very little foreign exchange for travel. The author notes that, “Travelers must submit an online request to the national tax authority just days before leaving, and they usually receive approval for much less than they requested.”
Businesses that need to buy foreign imports must get the government’s permission to do so before being granted access to buy foreign currency at the official rate.
But of course, this just results in black markets and corruption. The government has a strong weapon in their arsenal however, namely the dollar-sniffing dog. My question is, do dollars smell different than pesos? Are they especially stinky? Is this all a ruse to cause people to think twice before smuggling dollars? It all sounds pretty suspicious.
They just unveiled the 100 peso bill though with Evita’s portrait so I guess they have their economic priorities straight.