Sunday, April 22, 2012

The Argentine Way of Business

That's the title of Mary Anastasia O'Grady's column in today's WSJ. After reading it, I realized I didn't need to come to Argentina to find out what's happening here. Most Argentines seem clueless about the what the YPF seizure is really about, even though most of the folks we know agree that what Madame President Kirchner has done is really not right.

Here's the YPF story in a nutshell: after privatizing YPF in the late 1990s, the government imposed a price ceiling on the oil that YPF sold that ended up being way below the world price; that price ceiling greatly reduced YPF's incentive to find and produce more oil; finally, the government decided that since YPF was not finding and producing enough oil, it deserved to be once again nationalized. One suspects, thought there's no proof, that lots of money changed hands behind the scenes, and not in ways that disadvantaged Ms. K.

Most Argentines never hear this side of the story, however, and end up believing the government's spin—that YPF was a greedy multinational that only wanted to milk Argentina's resources for all they were worth, with no thought for the well-being of the country.

After a series of conversations with friends these past few days, in which I relate to them what has been happening in the U.S. under Obama, I have been struck by their almost universal response: Obama is doing the same things as the Kirchner administration! Rig the rules of the game, give handouts to favored industries, financial backers, and unions, blame the rich and the big corporations for the failures, pit the rich against the poor, make every attempt to tax the rich and redistribute the wealth, avoid all mention of the disastrous financial results (e.g., trillion dollar deficits in the case of the U.S., and capital flight and double-digit inflation in the case of Argentina), and meanwhile live like a King (or Queen in the case of Cristina).

We can't afford much more of this, and neither can Argentina.

10 comments:

Donny Baseball said...

Here is one way that Spain can deal with Argentina in re YPF:

http://442.perfil.com/2012-04-17-124165-espana-secuestra-a-messi-por-ypf/

Gloeschi said...

A refreshingly honest post. I wish you wouldn't turn every single US macro number into a bullish argument, no matter if the number is above or below expectations.

Benjamin said...

It seems a bit hysterical to compare Obama to Argentine leadership.

Benjamin said...

Lots of weakness showing up in Europe and even USA.

We are all turning into Japan.

Milton Friedman know that the money supply was exceedingly important, not just to keep inflation in check, but to spur growth.

Sadly, his instructions have been lost.

Squire said...

The problem with Japan is too much debt. There comes a point when people and companies are tapped out. Reducing the debt is what we should have done in the U.S. when we had a chance.

Obama is worse than Kirschner and the U.S. crony government is worse than Argentina. It is just more sanitized.

Donny Baseball said...

Benjamin-
On the contrary, if you adjust for poverty and culture and think of the dirigisme on a relative basis, Obama is worse than Kirchner. He is giving us far more dirigisme per unit of acceptability than Kirchner is giving Argentines.

Frozen in the North said...

Yeah CBP comparing America with Argentina is a bit of a stretch -- BTW we got it! You really hate Obama; how about you move on and discuss serious topics.

YOu're actually good at those -- this sounds like ranting, never productive no believable.

Benjamin said...

How weak is US economy?

Read this.

For first time since Depression, more Mexicans leave US than enter
Washington Post - ‎35 minutes ago‎

A four-decade tidal wave of Mexican immigration to the United States has receded, causing a historic shift in migration patterns as more Mexicans now leave the United States for Mexico than the other way around, according to a report from the Pew ...

Dr William J McKibbin said...

Like I keep saying, most Americans should be taking cover (from both Republicans and Democrats)...

Hans said...

"Obama is worse than Kirschner and the U.S. crony government is worse than Argentina." - Squire, I can not believe you said that!

Here is the real Gentina:

http://prudentinvestornewsletters.blogspot.com/2012/04/anatomy-of-economic-fascism-argentina.html