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**Bengal_Tiger** · 03-30-2014, 05:06 PM

What is That Smell in Argentina?

Added by Jerry Nelson on March 30, 2014.
Saved under Argentina, Editorial, Jerry Nelson, World

Tension is building here in Argentina. The muffled conversations on the street and in the cafes swirl around one question, how much longer can (President Cristina) Kirchner hang in.

If this is what a brewing revolution smells like, it’s not pretty. It’s not the smell of coffee brewing or bacon and eggs on the stove.

A brewing revolution is more like the rotten-egg smell of a gas leak. You know there’s a problem. You know if you don’t find it and fix it, a spark will happen at the wrong place and at the wrong time and the explosion happens.

Metaphorically, Argentina has that rotten-egg smell. It’s had that smell for decades. It’s gotten worse as the years have gone by. The government’s answer to the problem, up until now, has been akin to spraying more and more air freshener in a futile attempt to cover up the odor and ignore the real problem.

This time though, the country might blow.

This past week, Kirchner lit the fuse when she announced that she was cutting subsides by 80 percent. In the finest of corrupt-government-traditions, Argentine presidents have long paid out more and more in “entitlements” to the country’s poor. As the leaders of South America’s second largest nation piled on the dollars and kept throwing cash around, people became like insatiable meth addicts. It was taking more and more of the drug peso to keep them happy.

Now the cash spigot is being slowly turned off. The path that was set by Greece, Egypt and other countries is now being followed here in Argentina. Austerity measures being put in place to “save” the government may very well be the thing that destroys the government. People here have grown accustomed to two things, and they can’t imagine life without either one.

The first thing is corrupt government. In America, politicians are seen as basically good people. As a group, American politicians are among the lowest of the low, but individually, they can be pretty decent folk. People who work hard and try to do the right thing. Every so often a Gary Hart or a Rod Blagojevich, and the corruption hits Americans and it makes the front page for 24 hours, or until attention is drawn to the shiny new gadget.

In Argentine, corruption is the order of the day. When the President is found to have been smuggling money out of the country in her private jet, people don’t bat an eye. When Kirchner removes the border guards along the what country here border, people don’t ask questions. Corruption is a way of life here in politics and government agencies. The president is corrupt, the police are corrupt, everyone that is in any position to get their fingers into the battered gray money box, is corrupt.

And Argentines are shocked when a politician does the right thing. An honest politician here makes the news just like a crooked one in America makes the news.

The other thing to which Argentines have grown accustomed is entitlements. Money is not handed out here like it is in America. In America someone has to least least go through the motions of proving they are needy. Here someone just has to profess a love for the president and the money starts flowing their way.

When Kirchner announced she was cutting those subsidies by 80 percent, she lit the fuse.

The dynamite might be exploding here on April 10. That’s the day that a national protest has been called. The busses will be shut down. The subways won’t run. The cab drivers will park their yellow and black cars. No one will move. Except the protesters.

100,000 of them.

In America an organizer can work for a year to plan a protest at The White House. Exercising the best advertising skills, tweets will be sent out along with Facebook postings, emails, flyers and signs. Talking heads will show up on the news to talk about the protest and why people are needed.

Bill McKibben organized a protest a few years ago at The White House to protest the XL Pipeline. He and his organization spent hundreds of thousands of dollars to bring out the people. They worked on the demonstration for over two years to get as large a crowd as possible.

When the protest happened, 13,000 people showed up. McGibbon and his crew bragged, boasted, crowed and twittered about what a grand turnout it was.

Yesterday, March 29, the demonstration was announced. There will easily be 100,000 people showing up.

What is that figure and prediction based on? In November a demonstration was announced. The protest was against corrupt government, inflation and crime. One hundred and ten thousand people showed up one week later.

110,000 in one week. That figure comes from the government. Casa Rosada has all the reason to downplay the numbers, so the actual figure might even be higher.

The intersection of massive subsidy cuts, extreme unrest might just finally have been reached.

People have been smelling the tell-tale odor of rotten-eggs for awhile.

The explosion might clear the air. Argentina needs more than air freshner.

http://guardianlv.com/2014/03/what-is-that-smell-in-argentina/

* Argentina (along with Uruguay) is the only majority-white country in the world to be classified as "third world".

- It was one of the richest countries in the world before the second world war.

- It is now a country with lots of economic and social (e.g. crime) problems.

**Bengal_Tiger** · 04-02-2014, 05:41 AM

Argentina inches toward economic crisis, again

David Agren, Special for USA TODAY 6 a.m. EDT April 1, 2014
AP Argentina Economy

BUENOS AIRES — People may pack the pews at St. Benedict the Abbot parish in the upscale Belgrano district of the Argentine capital, but that doesn't translate into demand for the images and statues of saints that Pedro Atencio sells outside the church.

"Sales are down due to the economy," he says.

Times have turned tough in Argentina, where vendors such as Atencio blame old economic issues such as inflation and devaluations for sinking sales. Pessimism is rife as prices rise, purchasing power erodes and people prepare for the possibility of another economic crisis — in a country once among the wealthiest in the world, but better known now for recurring crises and calamities.

"This is a country that is constantly on the road to the next crisis," says Luciana Carcione, economist with Orlando J Ferreres & Asociados in Buenos Aires. "Every 10 years or so, we end up in some sort of crisis, large or small."

Economists such as Carcione see worrying signs, though she says "this won't be a disaster" like 2001, when the currency collapsed and Argentina defaulted on debts of approximately $95 billion — leaving it frozen out of international credit markets.

Still, inflation is accelerating and projected to hit 40% in 2014, according to Sergio Berensztein, director of Poliarquía Consultores. Unofficial estimates put the inflation rate at above 25% in 2013, much higher than the official government rate of 10.9% — a figure few believe, Berensztein says.

A study from consultancy Estudio Bein estimates inflation has eroded wages nearly 10% over the past four months. The Argentine peso was devalued nearly 20% in January, further diminishing purchasing power and making imported items more expensive.

"The government was able to successfully stop the exchange crisis with a devaluation and raising of interest rates," Berensztein says, adding the "fiscal deficit" and government spending are still high.

Outside investors remain skeptical. Moody's downgraded Argentina's sovereign rating March 17 to Caa1, seven levels below investment grade status, Bloomberg reported.

Rising incomes, along with inflation, spurred consumer spending during the past decade. Robust sales of soybean crops brought in badly needed foreign reserves, which were used to pay debts. Those reserves have dropped below $30 billion, prompting the devaluation.

"For nearly a decade, (reserves) were nearly $50 billion. … That gave the government an, 'I don't need the world' attitude," says Fernando Farías, radio host in Buenos Aires. "They have had to do something to bring Argentina back to the world financial markets."

Inflation started increasing in recent years, prompting Argentines to spend instead of save, or move their money out of the country.

Automobile sales reached record levels in 2013, while Argentines traveled abroad like never before — both symptoms of high inflation, which has outpaced interest rates.

"There's an incentive to spend that money now, whether in a restaurant or on a trip or on a flat-screen TV, rather than keep it in a bank and see it lose 30% of its value after a year," Farias says.

The spending even reached the shanties of Buenos Aires, where the poor attempted to preserve their patrimonies by purchasing small cars — which tend to maintain their value in Argentina — or bricks to build additions to their homes.

"We now have traffic jams" in the shanties, says Father Carlos "Charly" Olivero, one of the parish priests Pope Francis sent to work in poor areas — places he made a priority of his ministry in Buenos Aires.

Amid rising inflation and devaluation, Father Olivero reports an increase in the demand for social services, such as parish food and clothing banks.

Under the constant threat of such crises, people take creative precautions. Oswaldo Peñalosa is an engineer by training, but he bought a taxi license 25 years ago and keeps renewing it annually, even if he isn't driving his cab. "It's been a life preserver," he says.

Argentines traditionally have bought greenbacks as a safeguard against instability at home, but the government imposed restrictions in recent years as its reserves began to decline.

Saving in U.S. dollars is illegal in Argentina, and those traveling abroad pay a 35% tax on credit card purchases made outside the county. That doesn't stop people from purchasing greenbacks on the black market.

"Argentines don't invest," says Máximo Merchensky, a former official in the Buenos Aires municipal government and critic of President Cristina Fernández de Kirchner. "They take (their money) out of the country or hide it under the mattress or in a safe, after first converting it into dollars."

Fernández dismisses any talk of crisis in Argentina but has hit back against critics and business owners she accuses of improperly raising prices. Billboards encourage people to denounce stores and supermarkets not respecting price freezes ordered by the government.

A smartphone app developed by university students allows customers to check stores' compliance. The president's policies of cash transfers and subsidies have found favor with the poor — a group more likely to vote for her, according to polls done by Poliarquía Consultores — and groups such as students, who receive stipends to attend school.

"Even with inflation, wages have always kept up," says Juan Manuel Estévez, a social worker and supporter of the president. "The problem is the distribution of wealth."

Fernández promoted prosecutions of people publishing unofficial inflation figures, and the International Monetary Fund censured Argentina for its shoddy statistics. She promised no devaluations of the peso.

Since the president's popularity has fallen and Fernández is unable to run again in 2015, analysts see opportunity for change in the coming years.

"It's a pragmatism that's late and incomplete," Berensztein says. "Due to problems with reputation and communications, the magnitude of the change coming isn't being appreciated."

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http://www.usatoday.com/story/money/2014/04/01/argentina-economy-inflation/7011063/

Poverty in Argentina, in what was once one of the richest countries on earth.

Skyscrapers and shanty-towns in Buenos Aires, capital of Argentina.

Over 10 years ago Argentina and Turkey had similar economic problems.

Turkey however is much stronger whereas Argentina is pretty much the same.

Brazil however is progressing and will be a major world power in the next decades to come.

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