Argentina is the very definition of economic schizophrenia. People are put in jail for reporting the actual inflation rate (instead of the "official" inflation rate). The Economist magazine recently published a story that they are no longer going to lie to their readers and report the official rate and instead will report unofficial, private estimates. Argentina's real inflation rate has been running at about 25% per year.
Having just lived there for a couple of months I can attest to the insanity of whats going on there right now. The country is going to explode before the end of the year.
First of all, a disclaimer, cuz everything about Argentinean politics tend to get ugly fast:
I'm not a fan of this government, but I just have to intervene here...
I think there are A LOT of things that could be better (corruption scandals, the whole mining business, poverty in the northern provinces, etc).
But still, I think that it's much much better than the previous ones that had taken us to the worst crisis of our history, while selling half of the country to foreign companies. And of course, the alternatives in the opposition are not better yet (Macri is just like Berlusconi without the sex scandals... unlike his father Franco, lol... and the ones frome the UCR are a joke. Binner may be an option though, but he has to prove it).
Now, Having said that:
YES, the government is not telling the real inflation rate but given that the salaries are raised a 25-30% each year, for most of the population, there's really no difference. - If you have an inflation of 25%, but your salary raises 26%, you can buy the same amount of things, even when the crude numbers are higher -. The main objective of doing this, of course, is to react and counter the vulture funds who bought up a relevant part of the country's external public debt at extremely low prices (20-23%), a minimum portion of their nominal value and later attempted to cash them at nominal prize when the economic crisis devastated the country in 2001.
There has not been a single case of someone sent to jail, for saying that the real inflation rate is 25% per year. Everyone says that in TV and other media (read right-wing newspapers like Perfil, Clarin, La Nacion, or watch almost any news channel, with the exception being Canal 7 -the state owned channel- but, hey... few people watch Canal 7).
Yesterday, there was somebody in a TV program ( in channel 26 ) calling the president literally "crazy" and worse, and nothing happens. Even other woman from the opposition, debating with him, was surprised with the aggressive tone, telling him to respect at least the charge, if not the person. And he can say that in TV, simply because this is not a dictatorship, and there's free of speech.
There's A LOT of exaggeration in the international mass media, because their main sources of information are the local mass media agencies, who happen to be "at war" with the government.
If you still think otherwise, please, quote a case of someone being sent to jail for that.
Exactly! This is why a lot of people, like say my father, who hate the government policies otherwise kind of agrees with them on this: "hey, we got fucked by the IMF 20 times already, let them get fucked for once!"
I'm sorry but Argentina got f'ed by the IMF because the country keeps voting in incompetent yet flamboyant idiots who buy votes with money they don't have.
Not really, most of the governments were led by competent people. Unfortunately, they also happened to be either extremely corrupt (Carlos Menem) or blinded by their own ideologies (Carlos De La Rua). The current government sits somewhere there in the middle.
Things have gotten better for most people in Argentina, but at the cost of another of those 'boom for 10 years, then bust' cycles we are so used to. You can't argue inflation is rampant, I still recall the first time I came back from Brazil a pizza was about AR$10. Today the same pizza (maybe with a fancier name) starts at AR$40.
But then, 'eating out' doesn't reflect the real inflation. In that period, pizzas increased 400% in value, alfajores (a local sweet) had a similar increase from (AR$1 to AR$5), while a coffee at any bar in Buenos Aires increased around 1000% (from anywhere around AR$2 to a starting value of AR$17, most commonly AR$20+). Nice wines on the supermarket only increased about 200% in that period. Buy the same wine in a bar and you'd think you are at some fancy spot in San Francisco, they are so expensive. So it's all over the freaking shop (no pun intended).
Intelligence and competence are two very different things. You have to go back probably 100 years to find a relatively competent government.
The current government is at least as incompetent from an economic point of view as the policies of both Peron and the generals that came after him. Cristina is only in power because her husband died. It is very rarely I have seen anyone even in Latin America as incompetent as her.
While I'm not Argentinian, I truly love the country and it's people. It saddens me no end to see it and to see very intelligent people talk conspiracy theories and spew idiotic economic theories that the rest of the world got rid of decades ago.
"It saddens me no end to see it and to see very intelligent people talk conspiracy theories and spew idiotic economic theories that the rest of the world got rid of decades ago."
How's that working for the rest of the world?
If you have the time, some food for thought. This is a Greek documentary on the Argentinian crisis and recovery:
There are no "conspiracy theories", but a big economic war going on here between a few extremely wealthy groups, fighting to get the power. You just have to read the newspapers to see it happening.
And those governments of a 100 years ago, were mainly plutocracies, where the aristocracy exploited the rest of the population to a level incredibly hard to imagine today. Peron was the result of that situation. And the coups that followed were the bloody attempts of returning to that model. But of course, neither model is the right one... but society here is so polarized that it's just SO hard to find a point in the middle... Maybe some day... =(
Sorry, I happen to be living temporarily in Argentina (after growing up here, moving abroad for almost a decade) and, while surely the government numbers are made up, I don't recall anyone sent to jail for reporting a different number.
If you have links to the piece of news, I'll be more than glad to see them. If you have not, then please stop making shit up.
An empty threat, yeah. As scary as it is (and, admittedly, this is a government that is known to push buttons and pull threads whenever it wants something done, whether good or bad) it'd still be unconstitutional. That's exactly why they didn't stop publishing those figures.
Also, you have to understand something about Argentine politics right now: it's a very polarized country, with two massive interest groups trying to take control of it. I'm not saying the government figures are real, most probably they aren't, but I'm very doubtful of these other claims, specially when these 'think tanks' don't really specify what they are measuring.
This is a horrible game these two interests groups are playing, with everyone standing to lose except a few fuckers on top.
"Also, you have to understand something about Argentine politics right now: it's a very polarized country, with two massive interest groups trying to take control of it. I'm not saying the government figures are real, most probably they aren't, but I'm very doubtful of these other claims, specially when these 'think tanks' don't really specify what they are measuring."
I am Argentinian and you are joking. It is obvious that the government is lying. There is not doubt about this, it is not an opinion.
Yep, that's obvious. But as I wrote above, it's also true that the salaries are being adjusted accordingly. That's why is so incredibly hard to foreign people to see a 25% inflation rate and not say "This country is going to explode in a few months". But they have being saying that for a few years now... while the country keeps growing it's GDP, the salaries are being adjusted to counter the inflation, and so on.
I think the main problem in the short term is the growing fight between the gvt and the unions (mainly Moyano's group), asking to raise salaries well above the inflation, which may seem to be good for their workers, but its going to be bad for the economy, because the costs will raise even more to produce goods, the competitiveness will fall, and the whole system may eventually crash.
How do you determine GDP is growing, when the official inflation is much below 25%? Wouldn't you need for real GDP growth subtract the real inflation number? Is GDP growth above (25%-Gov Number)?
I love that the Argentinian government was worrying about their (mostly) tongue-in-cheek ranking in the Economist's big-mac index. It makes me feel like they're run by the Bluths from Arrested Development or something.
The biggest burger bubbles I've ever seen are in Mc Donnald's ads. But then... you see their thin burger patty's (at least here) and that bubble plops. Lol!
I was just in Hong Kong and the Big Mac there is noticeably cheaper than every other meal at McDonald's. I was wondering if it might be to manipulate the index?
Argentina was already close to the top, with a Big Mac going for $US4.94, not entirely crazy by any means. (On the other hand, given that you can get a full three-course steak dinner with wine in a nice restaurant for $US20 in Argentina I wonder who is eating these Big Macs). A 25% increase will take it up to something like $6.25, a little above Sweden.
The fact that the official exchange rate is 4.2 pesos to the dollar but Argentinians are willing to give you at least five pesos to the dollar in informal exchanges seems like a pretty bad sign.
The other interesting thing about that Big Mac index is that Argentina is one of the world's largest beef producers. So are Uruguay, Brazil and Australia, all clustered up there in overpriced burger land.
Something you may not realize from there.
Surprisingly, in Argentina, Mc Donnalds is not targeted to the lower classes, - a cheap lunch in a fast food. It's targeted to the middle and higher classes (mainly teenagers and young office workers).
I've been in Spain, England, France, and a few other countries, and I noted that their target there was certainly different. My explanation for this (I belive), is that here, teenagers just LOVE Brands (to the point that I think is crass).
Maybe an aftertaste of the nineties and the neoliberal movement.
McDonalds (and other burger chains for that matter) has always been extremely expensive in Argentina, even during the 'golden age' of Carlos Menem (golden age from the American/globalized/free-market perspective). For the same money you could eat a McDonalds burger you can eat a 3 course lunch menu in Puerto Madero (one of Buenos Aires nicest parts).
But... kids love brands. That's why you see suckers using MacBook Pros to browse Facebook in the big malls, even when they cost about 3x what they cost in the US. Go figure. Maybe advertising works?
> That's why you see suckers using MacBook Pros to browse Facebook in the big malls, even when they cost about 3x what they cost in the US
Exactly, it just seems so incredibly dumb from the government to block or put VERY high taxes to imported products that WILL NEVER be produced here (they make them in Brazil, to cover the whole region, they will not start to produce them in an adjacent country). They're begging for contraband. And I bet that a nice percentage of those boys who you see, using those MacBook Pros bought them from someone who sold it without paying the proper taxes...
Actually, I apologize for replying to myself, but I couldn't resist going off and coming up with some numbers. There's a pretty darn strong and unexpected correlation between the price of a Big Mac and the number of cows per head population.
I could only get good cows-per-person numbers for the big beef producers, but here goes:
Country Cows per person Big Mac Price
Australia 1.28 $4.94
Argentina 1.26 $4.64
Brazil 1.07 $5.68
Colombia 0.59 $4.54
USA 0.31 $4.20
Mexico 0.29 $2.70
Pakistan 0.18 $2.89
Russia 0.15 $2.55
India 0.15 $1.62
China 0.06 $2.44
So there ya go, the more plentiful cows are the more it costs to get one cut up and put on a bun. (Or, perhaps, the more you can sell your beef for, the more likely you are to be a cattle rancher.)
Something that will also affect these numbers from my country: minimum wage. Minimum wage in the US is $7.50(ish). Minimum wage in Australia is $15, which wasn't so ridiculous before our dollar soared in the past couple of years. For quite a while, the $AU was $.50-60US, but is currently equal.
This means the burger costs more to make here due to labour costs, but also that people have higher numbers of dollars to spend on their burger.
