September 16, 2012

ARGENTINA’S MIDDLE CLASS IS FED UP:

Thousands of people took to the streets across Argentina on September 13 to protest generalized insecurity, heavy handed state intervention and a looming threat of constitutional reform that could pave the way for the re-election of President Cristina Fernández de Kirchner in 2015. Temperatures have hit a boiling point after a very long simmer heated by years of government-denied inflation, nationalizations, import restrictions, and now talks of constitutional reform. . . . Adding insult to injury, the Kirchner government denies the over 25 percent inflation affecting the country since about 2004. Consumers are dizzy and concerned. Their potential for savings has been eroded by run-away prices and a drastically weakened peso. One older woman said to me recently that it reminds her of the 1980s under President Raúl Alfonsín when prices were changing constantly, in some cases before you made it to the check-out counter.

Moreover, the government has flashed back to another draconian measure reminiscent of the 2001 bank restrictions. Argentines can no longer access dollars. The government claims that they can so long as they justify their tax-paying income, but the reality is much more complicated. Argentines can now only access $100 a day for international travel at the official exchange rate of nearly 4.5 pesos per U.S. dollar. These restrictions, of course, do not apply to government officials. Considering that Argentina’s real-estate market is largely dollar-based, these restrictions don’t just impact on well-heeled travellers but have broad sweeping implications for the domestic economy.

Related: “Indec’s economic data have been suspect ever since a staff shakeup at the agency in early 2007 resulted in long- serving civil servants being replaced by political appointees. Last year, President Cristina Kirchner’s government levied heavy fines, and in some cases criminal charges, against numerous economists for publishing inflation estimates that were higher than what Indec reported. Since then, opposition members of congress have released a monthly survey of inflation provided by anonymous private- sector research firms to protect them from prosecution by the government.”

Happily, such things are unimaginable here.