Following up on last Friday's post, Argentine President Fernandez held a cabinet meeting over the weekend in which she made what Clarin calls "a rare self-criticism." She admitted that the billion dollar bond sale to Venezuela had a negative effect on the perception of the Argentine economy and worked with her ministers to find a solution. There was real fear in the Argentine government that they would face a major economic crisis this week if they did not act.
And act they will. According to the media, Argentina will be buying back $250 million worth of debt this week and over $1 billion before the end of the year to reassure investors. It's not an ideal situation for the government, but the move will hopefully calm the markets over the short term and give the government some breathing room to sort out its debt problems.
Argentina insists that its inflation statistics are reliable and its debt to GDP ratio is the same as many other economies in the region including Brazil. Still, analysts who watched last week's events know that there is some underlying weakness to the system about which the government remains in denial.
Contra-Cronkite
2 hours ago
12 comments:
some underlying weakness to the system about which the government remains in denial.
What weakness? Argentina remains one of the strongest economies in the world. Weakening maybe. But the rest of the world and region are getting hit harder than Argentina right now. This pesimistic view by Boz seems awfully political. You know, sometimes bond traders are wrong.
This move is aimed at showing the markets how wrong they were. It is even likely to turn out to be a money making deal for Argentina. But I agree that the Government should have seen the sharks circling and probably not have done the last deal with Venezuela. I wish I would have bought some bonds at where they were selling at on Friday...
What weakness?
I guess I could change that line to "...about which the government and Leftside remain in denial."
This move is aimed at showing the markets how wrong they were.
Haha. The Argentine government doesn't correct errors, it teaches the market a lesson in humility by doing exactly what bond traders want it to do. Those sorts of comments are Colbertesque.
The bond market malfunction last week presented an opportunity for the Argentine Government to capitalize. It did, thereby displaying its confidence that the market had indeed made a mistake and proving skeptics in the market wrong. Today's big rebound shows the Government made the right bet. Bond dealers that bought low last week lost their shirts today. How was this "exactly what the bond traders wanted it to do?" Twisted logic like that is why we can't trust a word you say Boz.
"Haha. The Argentine government doesn't correct errors, it teaches the market a lesson in humility by doing exactly what bond traders want it to do. Those sorts of comments are Colbertesque."
Hey Boz...I take this opportunity to point out that I was the first to notice the extraordinary likeness between leftside and Stephen Colbert...
I was the first to notice
Indeed you were. I almost credited you in the comment.
Also entertaining, just in this comment thread, he says:
I wish I would have bought some bonds at where they were selling at on Friday...
and
Bond dealers that bought low last week lost their shirts today.
Buy high, sell low.
Boz, you know exactly what I meant in those 2 seperate comments. Taking them out of their context is rather pathetic. Obviously it depends when and if one is able to re-sell bonds at today's higher price. If you are stuck with them at the lower price or are betting long-term against Argentina - like the traders who bought last week - you are more likely to have gotten screwed.
As for the lazy comparision with the Colbert character, I am sure he would be offended. My personality could not be more different. And he could care less about facts and I live for them... they are just facts neoliberals are not used to hearing.
Leftside: The point that you fundamentally fail to recognize--as a young leftist ideologue parachuting into decades-long issues completely devoid of context and knowledge--is that Argentina's commodities-based undulations date back as far as Peron, and possibly longer.
Peron rode high on the crest of a post-WWII commodities boom, and when European markets for Argentine agriculture dried up, Peron was shown the door. It happened again in the early 70's and early 90's.
You are right to give the Kirchners credit for currency reserves, but for us Argentina-watchers, what is happening now is a part of a very long, uninterrupted pattern of futility that will not change until Argentina finally decides to add to its game.
Commodities boom, Argentina ramps up spending, borrows against the boom to finance it, boom disappears, Argentina collapses, repeat. Same tango, different day.
"Twisted logic like that is why we can't trust a word you say Boz."
&
"And he could care less about facts and I live for them..."
A note to all: This is the same Leftside I busted last week doctoring information he was quoting for one of his lameass Cuba defenses.
How caring that Paul feels the need to warn unsuspecting readers about me... Of course, his charge is both meaningless and nonsense, as I showed at the time.
And thank you wise Fabio for the tutorial. Now I know the importance of commodities to Argentina... If you knew as much as you claimed, (or looked at the CEI link more closely) you would know that most of the non-commodity economic sectors have been expanding at a torrid clip since the the neo-liberal ideology got kicked to the curb (industry, chemicals, automobiles, services, tourism, bio-diesel, nuclear, textiles, construction, etc). Plus recent commodity gains were not just b/c prices but also due to expanded production.
But wait, by calling on Argentina to "add to their (export) game" aren't you implying the need for some sort of wicked statist strategic planning? I agree with the notion that further diversification is needed, buy you can't ignore the huge progress that has been made since 2002. Of course there will be an end to the economic run. But we will see if the landing is as hard has Boz thinks.
What would be defined as a "hard landing"? A recession or crash to 1-2% growth? Unemployment to where it was a few years ago? Inflation rising significantly from where it is now? Give us a real statistic or two. But not what bond prices or markets say.
"How caring that Paul feels the need to warn unsuspecting readers about me... Of course, his charge is both meaningless and nonsense, as I showed at the time."
Uh, no you didn't. You deleted a sentence, from the middle of a block quote, that undermined your entire argument, and you didn't even bother with an ellipsis(which would still have been shameful). In other words, you're a proven liar.
C'mon Boz, define a "hard landing" in Argentina. What would that look like?
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