Tuesday, 29 May 2012

Argentina is the next to fall

Little has been or is being reported about this in what passes for our local news media, but it looks like the next economic domino to fall is Argentina, which government borrowing and printing has helped transform from emerging giant to incipient basket case.

In reaction to money fleeing the economic destruction of her government, President Cristina Kirchner has imposed controls against the movement of money that would have morons like Bernard Hickey dribbling with delight, freezing bank accounts, setting dogs loose at borders to sniff out and arrest any travellers foolish enough to try to take their own money across the border, and prohibiting the sale of the peso for US dollars at any price other than the government’s officially declared rate of 4.48 to the dollar—three-quarters of the black market rate of 6.05 to the dollar, which is the rate  at which people actually value the ever-diminishing peso today.

As the black-market value continues to reach new heights (reality refusing to be faked), the leader of the local libertarian party headed to Buenos Ares’ biggest public square, megaphone in hand, to protest the controls, offering dollars to the public at 5 pesos. [The report from La Nacion has been translated from Spanish]:

imageGonzalo Blousson, presidente del Partido Liberal Libertario, told La Nacion that the protest is against "corralito verde" [“corralito was the term for the 2001 bank freeze.] "This is a new corralito. We are doing what none of the opposition is saying. This government is not letting people make use of the fruits of their labor," said the leader, who sold one dollar per person, 5 pesos each, well above the official rate, although far from the 5.92 that was the so-called "blue" or parallel.
"What is happening is illegal and immoral. For 20 years it was not legal to get divorced and in the nineteenth century slavery was legal. We must rebel against the immorality of the law," said President of the Liberal Party Libertarian, while he called out to bystanders "dollars at 5 pesos."
Blousson began selling about $300 at 1pm and, after the first half hour, had handed over more than 150.
Before starting the sale, he said, "If Cristina is concerned that we save in dollars, she should stop printing colored paper or sell theirs."
When asked by La Nacion about the illegality of his action, he replied: "Never mind if it is legal because if the laws are immoral, you have to rebel."
Moments before the commencement of protest, the
Argentine Treasury began a strong control operation of the selling of dollars on the parallel market, which has grown since the heavy restrictions on the official market. But when attracted by the action of the Liberal Party Libertarian and the presence of television cameras, the officers retreated.
A few people tried to take advantage of the dollar at 5 pesos, but Blousson did not allow the sale of more than one or two dollars per person, as a symbolic stance.
The reaction of passersby was immediate: many expressed support while others described it as a "payadsada" (bunch a clowns). Meanwhile, a citizen called to Blousson as "traitors" and accused him of wanting to "go back to 2001."


  1. Bloody hell. When I was there a few years ago it was US$1.00 per Peso.

    No wonder we've been getting some decent Argentinian red wine on our shelves.

  2. Argentina is an interesting case study at the moment. You are correct - the government is stopping citizens from buying dollars on the black market (read free market ) and also restricting and in most cases making it impossible to buy US dollars legally with the local peso.

    The politicians are claiming that only a small group of people have anything to do with the dollar, all other Argentines don't have anything to do with it. True patriots use the peso, "we have to support Argentina at this difficult time" they say.

    Well in today's edition of La Nacion, they investigate the peso and dollar holdings of the each of the leading politicians in Argentina.

    The chart in the La Nacion shows that most of these politicians hold their cash in US dollars not pesos. You should be able to figure out how the chart works and what it means.

    The people are very unhappy!!

  3. And now the infamous Cacerolazos are beginning through Buenos Aires as Argentines start protesting the currency controls and the restrictions placed on them by hypercritical politicians. The movement is growing and shows that despite the wishes of the politicians you cannot evade economic reality for long. Here are two clips from today:


    La Boca


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