Archivo de Autor

La obsesión por la igualdad

29 enero, 2014

http://opinion.infobae.com/adam-dubove/2014/01/29/la-obsesion-por-la-igualdad/ Parece  comunista o estr  atrapada por ellos al asumir que su modelo bolivariano fracasó y su Presidencia termina antes de lo que desea, al igual que su impunidad

SERGIO MASSA ¿LOGRA ENGAÑAR?

28 enero, 2014

invitamos a leer http://www.perfil.com/politica/Para-Sergio-Massa-el-problema-central-sigue-siendo-la-inflacion-20140128-0016.html

Asi, se comprobará que la inflación argentina había terminado a los seis meses de implantarse la ley de convertibilidad, y tuvimos estabilidad respecto del dólar hasta el 1 de enero de 2002, día en que Duhalde ( sin votos del pueblo) ungido Presidente por el Congreso luego de lograr derrocar al constitucional pero fascista inventor del criminal corralito bancario el 1 de diciembre de 2001, el quizás enfermo Presidente  Fernando de la Rúa. El objetivo era terminar con la estabilidad monetaria, porque el peronismo utiliza sistemáticamente  la inflación para robar a los argentinos procurando que no nos enteremos, tal como hacía Perón desde su primera Presidencia a partir de 1946. Pero las cosas cambiaron, el pueblo argentino mayoritariamente cambió, y en octubre 27 votó contra Cristina, que ya no puede volver a la Presidencia por tercera vez, al menos hasta el año 2019.

Los números desenmascaran las mentiras de Sergio Massa y todos los demás peronistas (menos CarlosMenem, que supo reinventar la estabilidad monetaria que terminó siendo destruida por otro peronista, Duhalde, autoritario y no electo popularmente. Analicemos cifras a ver si acertamos:

Entre el 1 de enero de 2002 y el 31 de diciembre de 2013 el precio del dólar pasó de un peso a doce pesos en doce años calendarios. Los gobiernos fueron todos peronistas: Duhalde, Nestor Kirchner y Cristina F. de Kirchner. Haciendo las cuentas, el peso se depreció un mil doscientos % en una década, y anualizando (para poder comparar los horrores y errores de los tres presidentes), la inflación  implica  un cien por ciento anual cada uno de los doce años peronistas. Aunque Duhalde superó  a los Kirchner como destructor de la convertibilidad e inventor político de Néstor, no tiene motivos para quejarse. Ergo, a cada Presidente Peronista le corresponde su porcentaje en forma prorrateada al tiempo que desadministró Argentina. Duhalde no llegó a dos años, Néstor estuvo cuatro años y medio, y Cristina es la mayor inflacionista de los tres: desgobierna desde el 2007,  y esto significan mas de seis años al 100% anual, es autora de un 600% de inflación NEGADA por ella.

Como Sergio Massa fue Jefe de Gabinete del gobierno peronista, no puede ignorar estas cifras. El problema no es la inflación, SINO QUIEN LA PROVOCA EN FORMA INTENCIONAL PARA DESTRUIR LAS INSTITUCIONES Y ROBAR MEJOR A LA SOCIEDAD, al estilo de los gobiernos fascistas autoritarios. Tampoco pueden culpar a la inflación los otros peronistas que apoyaron a estos desgobiernos, comenzando por Capitanich como Jefe de Gabinete de Duhalde, pasando por varios otros que ocuparon el cargo, Massa incluido, y volviendo a Capitanich. ¿Porqué creerle mas a Massa que al tercero  Cristina, Duhalde, Nestor, o cualquier otro dirigente importante que aplicó dirigismo económico para enriquecer al Gobierno y empobrecer a la sociedad?

Debiera existir en la Constitución Argentina la prohibición de emitir dinero inflacionario, para terminar con ese mal peronista. Conste que en 1853 el papel moneda inflacionario prácticamente no existía, por “moneda” la constitución se refería a piezas metálicas y se establecía que correspondía al entonces Honorable Congreso Nacional fijar el valor de la moneda. Hoy, el Congreso no es honorable, sino mayoritariamente corrupto, y obedece servilmente al Presidente de turno, a cambio de buena paga y otros beneficios ilícitos. La Justicia es fiel a quien la designa, y la Corte Suprema mayoritariamente fue designada por Néstor Duhalde, por eso su viuda goza de impunidad porque la Justicia Suprema agradece a la viuda de quién designó a cuatro de siete miembros. Dudo alguno de los Supremos Jueces sea marxista o bolivariano, pero actúan como tales, porque se sienten inferiores a ELLA, la viuda de quién les otorgó el puesto. ¿Que sucederá cuando Cristina termine su mandato el 10 de diciembre del año próximo? ¿La fidelidad seguirá con ella en el llano, sin poder manejar Argentina como si fuese su propio rancho?

CRISTINA reposa en Cuba

28 enero, 2014

http://opinion.infobae.com/carlos-mira/2014/01/28/estan-contentos-ahora-muchachos/

los sirvientes cristinistas también disfrutan

CRISTINA: ¿comunista ó desubicada?

28 enero, 2014

http://www.infobae.com/2014/01/27/1539808-el-independentismo-puerto-rico-ha-sido-alimentado-la-dictadura-cubana  pone en evidencia que la Jefa del Estado Argentino aparenta ignorar que Puerto Rico no puede declararse libre de la Unión Norteamericana. Al contrario, pueden sus ciudadanos votar por ser el Estado 51 de la Unión, o seguir con su real status de Estado Libre Asociado. Y punto.

Los comunistas venezolanos y cubanos estarían felices si los portorriqueños fueran tan estúpidos para aliarse al movimiento bolivariano, si Cristina de buena fe se suma a esta payasada bolivariana, significa que no está en su sano juicio, y nuestro Congreso Nacional podría desplazarla de la Presidencia por razones de salud para que sus médicos intenten curarla. Quienes creen que los Jefes  de  tres paises desadministrados como Cuba, Venezuela y Argentina pueden lograr que Puerto Rico se separe de la UNIÓN,  imagino están locos. Pero  Fidel,  Maduro y  Cristina ni queman dinero ni comen mierda, así que no son dementes, según el hoy desaparecido abogado penalista Luis María Rizzi. Fingen nacionalismo para intentar engañar a la gente de  sus tres países.

El peronismo ha muerto, los peronistas no lo quieren enterrar, pero esta Presidenta lo terminó para siempre, porque odia a Perón. ¿Buscará para su retiro asilo en Cuba y Venezuela como ciudadana honoraria de ambos paraísos socialistas? Porque allí, cuando habla mal de USA y el capitalismo, es seguro que reciba aplausos. En Argentina, no somos mayoritariamente comunistas ni socialistas ni bolivarianos y creo la mayoría prefiere una República en serio, cosa que el peronismo siempre impidió.

Sue Littleton from Tex

28 enero, 2014

Bronca contra Kicillof

27 enero, 2014

Calla y viaja al exterior la Presidenta Cristina, para  intentar olvidar el hundimiento de su  modelo socialista marxista bolivariano que nuestra Constitución no acepta?   ¿Fuerza  a sus incondicionales a intentar engañar a la gente, para evitar que el peronismo la suba a un helicóptero, por fracasada? ¿Cuanto cobran sus funcionarios por mentirnos luego de su fracaso electoral y la imposibilidad de re-elección? Leer   http://www.perfil.com/economia/Pignanelli-Me-da-mucha-bronca-lo-que-esta-haciendo-Kicillof-20140127-0012.html

ARGENTINE UPDATE – Jan 24 & 25, 2014

27 enero, 2014

 

Friday Clips —–
1. ARGENTINA PESO SUFFERS STEEPEST DROP SINCE 2002 (The Washington Post)
January 23, 2014
BUENOS AIRES, Argentina — The peso is suffering its fastest fall since Argentina’s 2002 economic collapse as dwindling reserves keep the Central Bank from trying to prop up the currency by intervening in the foreign exchange market.
The 16 percent loss in the peso’s official value against the dollar over Wednesday and Thursday could worsen the country’s inflation, which is among the worst in Latin America, analysts said.
The peso fell from 6.88 per dollar on Tuesday to 7.14 on Wednesday. By Thursday’s close, it was at 8 to the dollar. On the black market, where Argentina’s currency is even weaker, the peso dropped 6 percent Thursday to 13 per dollar.
The sharp depreciation is likely due to a new government strategy of seeking a sudden devaluation instead of a gradual one, said Juan Pablo Ronderos of economic consulting firm abeceb.com.
“There was a first sign of this change on Tuesday because the Central Bank didn’t show up (to intervene) until midday, and on Wednesday and today it just disappeared from the market,” Ronderos said. “The gradual devaluation wasn’t working because the Central Bank kept on sacrificing lots of its reserves and it kept on being reflected on consumer prices.”
Analysts expect Argentina’s inflation to reach more than 30 percent this year, the second highest rate in Latin America after Venezuela.
“The sharp drop will aggravate inflation, although the impact may be mitigated by the fact that some imports will already be purchased at the much weaker black market exchange rate,” Neil Shearing, chief emerging market economist at Capital Economics in London, said in a research note.
“The bigger picture, though, is that the economic mismanagement of the past decade has once again pushed the country to the brink of a balance of payments crisis,” Shearing wrote.
Critics of the left-leaning government blame economic problems on its higher spending on social programs, expansion of business regulation and nationalization of some companies.
Argentina has been kept from global credit markets since defaulting on its debt during its 2001-2002 financial crisis. So officials have been trying to keep dollars in the country for the Central Bank to use to pay off government debts.
But the bank’s reserves have plunged to $29 billion, the lowest level in more than seven years despite increasingly restrictive currency controls meant to stem capital flight.
The controls make it nearly impossible to legally trade pesos for dollars, but many Argentines have turned to black market money changers to obtain dollars.
Many in the country are haunted by memories of the financial crisis, when banks froze deposits and the currency lost value, and they want dollars to keep in emergency stashes.
 
2. ARGENTINA REELS: A POPULIST FORMULA GOES FLAT (The Wall Street Journal)
By Ken Parks, Taos Turner and John Lyons
24 January 2014
BUENOS AIRES — Argentina devalued its peso Thursday in a move that raised fears of a financial crisis in South America’s second-biggest economy and recalled the meltdown a decade ago that sent the country on its long decline from a darling of global capitalism to economic pariah.
A slide of more than 15% in early trading Thursday forced Argentina’s central bank to step in by selling dollar reserves. The intervention narrowed the peso’s loss to 8%, but that was the biggest one-day decline since Argentina defaulted on its public debt and devalued its currency in 2002.
“The market is exploding,” said Francisco Diaz Mayer, a currency trader at ABC Mercado de Cambios.
The increasing strains in Argentina’s economy are the result of populist policies by Nestor Kirchner, the country’s late president, and his successor and wife, Cristina Kirchner. Their blueprint was simple: Use the boom in rising commodities prices for Argentinian exports like soy — and ramp up government spending to stoke the economy.
Argentina’s leaders also refused to submit their economic policies for review by the International Monetary Fund, which once saw the country as a poster child for free-market policies but was blamed by many Argentines for the peso’s collapse.
For years, the formula led to rapid growth and re-election for the Kirchners. But the strategy also resulted in inflation that is among the highest in the world, as well as unorthodox policies to contain the damage, such as price and currency controls. Argentina’s central bank tightly controls the peso.
The devaluation was a dramatic about-face for Mrs. Kirchner, who had vowed not to lower the peso, saying anyone who wanted to profit from such a free-market policy would have to wait for another government.
On Thursday morning, though, her cabinet chief, Jorge Capitanich, signaled that the administration had stepped out of the market. “It wasn’t a devaluation caused by the state. For free-market lovers, the supply and demand of foreign currency expressed itself yesterday,” he said.
The peso tumbled to 8.50 per dollar from 7.14 per dollar. The central bank then reversed course and ended up selling $100 million in reserves to stem the slide, a person familiar with the matter said Thursday.
Venezuela partially devalued its own currency on Wednesday, weakening the bolivar to about 11.3 per dollar for certain transactions, including tourism and remittances, compared with the official exchange rate of 6.3 per dollar.
Few economists expect Argentina’s move to take pressure off the peso, mostly because a weaker currency could stoke inflation further by making imports more expensive and prompting ordinary Argentines to try to get their money out of the country by any means possible.
The devaluation was a risky gambit by Mrs. Kirchner to bolster the peso and stem a sharp decline in the stockpile of dollar reserves, which the central bank has been using to buy up the currency at fixed prices that are far higher than what the peso trades for on the black market.
Argentina is starting to face a dollar crunch. Central-bank reserves fell to $29 billion at the start of this year, down from $52 billion in 2011. Even before Thursday, the central bank had been burning through an estimated $100 million a day to defend the currency, according to Elena Castro, a vice president at brokerage firm Auerbach Grayson & Co.
“The big question is if the devaluation feeds into higher prices and leads to more social tensions. Annual wage talks will start soon, and the big question is what increase the unions will ask for. That is probably going to create political and social problems,” said Carlos De Angelis, a professor of social sciences at the University of Buenos Aires.
Another sign that the move might backfire was the response on the black market, where the peso fell to 13.1 per dollar from 12.2 at the start of the session. The drop suggests that the official rate still overvalues the currency.
The devaluation could hardly come at a worse time for Mrs. Kirchner, who succeeded her husband as president in 2007. He died in 2010. Mrs. Kirchner underwent brain surgery last year. The devaluation came a day after her first public speech in six weeks.
The country was rocked by widespread looting and violence that left around a dozen dead in December. The looting started after a police strike in an interior city, but it spread to other provinces. Scenes of crowds stripping store shelves bare were reminiscent of looting during the last economic crisis.
For ordinary Argentines, the market turbulence of the past few days has revived memories of past crises and made Argentines even more wary of Mrs. Kirchner’s ability to fix the problems.
“My salary is worth less every day and inflation is unstoppable,” said Carlos Delia, a 45-year-old bank employee. “If the government doesn’t do something fast . . . we’re going to have a problem similar to the one we had in 2001.”
The Argentinian peso was one of several emerging-markets currencies hit Thursday after weak economic data out of China heightened worries about the developing world’s ability to weather the end of easy-money policies.
But the flare-up in Argentina’s currency market was the most dramatic — and serves as a warning that conditions for many developing countries have worsened since commodities prices ended their decadelong climb.
The shift is particularly dangerous to Latin American countries like Argentina and Venezuela that used the boom to embark on a spending spree, allowing inflation to surge and adopting currency controls and other unorthodox economic policies.
The Kirchners came to power in 2003 after the last economic crisis brought down former President Fernando de la Rua and set off a chaotic period that at one point saw five presidents in about a week.
Nestor Kirchner’s policies helped the economy recover and made him enormously popular. He was barred by law from seeking another re-election in 2007, so Cristina ran instead. She won election handily.
But the turnaround in commodities prices and growing strain from years of overspending that stoked inflation have gradually weakened Argentina’s economy — and Mrs. Kirchner’s grip on power.
Her ruling coalition failed to pick up enough seats in October’s midterm congressional election to change the constitution so she could seek a third term in 2015. While she still wields considerable power, her lame-duck status leaves her open to challenges from rival politicians in the ruling Peronist party.
This week, the government continued to crack down on imports and the online purchase of foreign goods in a bid to prevent a scarce supply of U.S. dollars from leaving Argentina. On Tuesday, the government started requiring people to submit tax forms before making online purchases at foreign retailers. The government then limited such purchases to two a year.
“They don’t have much of a choice any more because they’ve been burning their foreign-exchange reserves for some time and the capital flight hasn’t really stopped,” said Caglar Somek, a portfolio manager at New York frontier-markets fund manager Caravel Management.
“With limited foreign-exchange reserves, they can’t afford to keep defending the currency. They just can’t sustain it,” he added.
Critics said Argentina’s government has been slow to respond to the crisis, especially given Mrs. Kirchner’s recent absence from the public spotlight. That is a sharp turnaround for a president known for flamboyant speeches and constant Twitter messages, even about the television series “Game of Thrones.”
After a big drop in the peso Wednesday, many Argentines hoped that Mrs. Kirchner would address growing concerns about the currency and other economic problems. Instead, in her first speech since early December, the president avoided mentioning the economy and defiantly defended her policies, including the state’s role in redistributing wealth.
And rather than take steps to cut government spending and reduce inflation, Argentina has tried to underreport price increases, according to economists. The government says the inflation rate was 10.9% last year, but economists estimate it was closer to 25% to 30%.
3. ARGENTINA’S CURRENCY FALLS SHARPLY AGAINST THE DOLLAR, STIRRING INFLATION FEARS (The New York Times)
By Simon Romero
January 23, 2014
RIO DE JANEIRO — Argentina’s currency, the peso, plunged more than 8 percent on Thursday against the dollar after the country’s central bank tried to stem a decline in international reserves. The sharp decline, with the peso dropping the most since Argentina’s 2002 financial crisis, raises concerns that inflation could accelerate even further.
Since the start of the year, the Argentine peso has weakened 18 percent, ranking it among the world’s worst-performing currencies against the dollar. President Cristina Fernández de Kirchner’s cabinet chief, Jorge Capitanich, insisted on Thursday that the plunge was not a devaluation but the result of the forces of supply and demand.
Still, local news media said the peso closed at 7.75 to the dollar, after weakening earlier on Thursday to about 8.24, with the central bank intervening late in the trading session. Argentina’s international reserves have been tumbling, hitting a seven-year low last week of about $29.5 billion.
Though Mrs. Kirchner has vowed not to devalue the peso, the central bank has let the currency slide gradually in recent months. But there was a change in approach this week, said Gastón Rossi, a former deputy economy minister under Mrs. Kirchner.
“Depreciating in stages was causing the reserves to contract further,” Mr. Rossi said. “The government has said, ‘We’re deliberately not going to sacrifice the reserves anymore.’ ”
With the authorities tightening currency controls in an effort to reduce capital flight, Argentines have resorted to buying dollars illegally, in the black market. The so-called blue dollar rate reached 13 on Thursday, according to the Argentine news media.
With Argentina’s currency weakening, concern is growing that inflation could climb as imported goods become more expensive. The authorities in Argentina say inflation in 2013 was 10.9 percent, while private economists contend that consumer prices actually climbed more than 28 percent last year.
The prospect of abrupt shifts in Argentina’s economy sent tremors into the financial markets of other Latin American countries. In neighboring Brazil, which has the region’s largest economy, the currency weakened more than 1.2 percent to 2.40 reals to the dollar, and the country’s main stock index fell almost 2 percent.
4. OVERHEARD (The Wall Street Journal)
24 January 2014
Argentina is going from bad to worse. Again. The peso slid Thursday as traders said the central bank stopped defending it — a sign foreign-currency reserves may be running low.
Carmen Reinhart and Kenneth Rogoff’s history of booms and busts shows most Argentine recessions since the late 1800s were linked with financial crises rather than being part of the normal business cycle.
Exactly what Argentina’s economy looks like now is unclear. Official data show gross domestic product adjusted for inflation rose 5.6% year on year in the third quarter. But few people believe official price data. Those put year-over-year inflation in December at 10.9%. The Billion Prices Project, which collects prices from online retailers globally, says inflation was more than twice that. Another crisis-induced recession already may be well under way.
5. ARGENTINA’S CIRCULAR RUINS (WSJ Blog)
By Justin Lahart
23 January 2014
Argentina is going from bad to worse. Again.
The peso slid sharply against the dollar Thursday, as traders said the central bank stopped defending the currency – a sign it may be plumbing the bottom of its foreign-currency reserves.
It’s familiar ground. Harvard University economists Carmen Reinhart and Kenneth Rogoff’s history of booms and busts shows most Argentinian recessions since the late 19th century were associated with financial crises rather than being a normal part of the business cycle.
Exactly what Argentina’s economy looks like now is unclear, thanks to uncertainty around its economic statistics. Official figures show real gross domestic product –adjusted for inflation — was up 5.6% versus a year earlier in the third quarter. But few people believe government inflation statistics.
Those pegged the year-on-year increase in consumer prices in December at 10.9%. According to the Billion Prices Project, which collects prices from online retailers globally (and which was co-developed by the son of a former Argentine central banker and finance minister), prices were up more than twice that. Another crisis induced recession may already be well under way.
6. ARGENTINA: BAD TO WORSE (WSJ Blog)
By Chris Dieterich
23 January 2014
Trouble is brewing in Argentina, and some are wondering about the potential for the country’s woes to spill outside its borders.
Worries about the country’s thinning foreign-exchange-reserves helped spark a more than 15% decline in Argentina’s currency, the peso, on Thursday.
Turbulence in the currency market spilled over into stocks. U.S.-listed shares of energy giant YPF SA tumbled 12% Thursday, adding to an 8.9% decline on Wednesday.
“Things are rapidly coming unglued,” says Dave Lutz, head of trading at Stifel Nicolaus.
Marc Chandler, global head of currency strategy at Brown Brothers Harriman, voiced worry that Argentina’s woes may spread across the developing world:
While many investors have stayed clear of these two problem countries, we highlight the risk of contagion.
Brazil is the most exposed to Argentina with regards to trade flows, but those risks have declined. Argentina is Brazil’s third largest trading partner behind the US and China, in both exports and imports. Through 2005, Argentina was Brazil’s number two trading partner but was then supplanted by China. As a side note, China supplanted the US as Brazil’s number one trading partner in 2009. So, any collapse in Argentine GDP and/or equities should not have a huge spillover on Brazil. However, given the overall negative bias on EM in general, there will likely be some collateral impact on EM as a whole.
BBH also notes that the MSCI Argentina stock index was the best performer in the emerging world in 2013, up 64%. But things have taken an abrupt turn lower:
With a big devaluation in the works as well as a potential debt crisis, we do not see how Argentine equities can continue to perform well. We see a sharper and deeper correction ahead for this market.
Rising inflation and government controls have stirred social unrest in the country in recent months. President Cristina Kirchner failed to assuage those concerns on Wednesday, sidestepping the growing economic problems in her first public comments in six weeks.
7. ARGENTINE PESO FALL THREATENS GOVERNMENT (Financial Times)
By Jonathan Wheatley
January 24, 2014
Argentines will await the opening of currency markets on Friday with more nervousness than usual after Thursday’s 10 per cent fall in the peso against the US dollar. Analysts said the central bank appeared to have abandoned the currency to its fate and that the episode could hasten the end of the government of president Cristina Fernández de Kirchner.
“The chickens of populism have come home to roost,” said Arturo Porzecanski of the American University, a former head of emerging markets research at ABN Amro. “This is the beginning of the end of Kirchnerism in my view.”
The peso fell as much as 15 per cent in thin trading on Thursday after the central bank suddenly and silently removed its support. It recovered to close down about 10 per cent after the bank reappeared towards the close, selling about $100m, analysts said.
The bank’s late intervention left investors in the dark about how it would behave when trading reopened on Friday.
“That’s what happens in markets,” said Siobhan Morden, Latin America strategist at Jefferies in New York. “Pressure builds, and when the central bank backs away, everyone starts to panic.”
She said investors would look to data on monetary deposits in Argentine banks, due to be published on Friday with a one-week lag, for any evidence of capital flight.
The peso has come under mounting pressure since November, when Mrs Fernández announced cabinet changes that undermined confidence in her government’s ability to address problems including runaway inflation and a sharp deterioration in public finances. The currency, already struggling under a worsening trade account, has lost about a quarter of its value against the US dollar since then.
Argentina has been criticised by the International Monetary Fund for the unreliability of its data on inflation, which the government says is about 10 per cent a year but which private economists say is closer to 25 per cent.
The government is faced with either a further confidence-shattering loss of reserves or a further confidence-shattering devaluation of the peso. All the good options are gone
- Arturo Porzecanski, the American University
The country has been able to weather such high rates of inflation thanks to a comfortable trade surplus generated by exports of commodities such as wheat. Until recently, the private and public sectors were able to grant pay rises big enough to more than compensate for rising prices and the central bank’s main task was to buy dollars entering the country, printing pesos to do so and in the process expanding the money supply by more than 30 per cent a year for the past four years.
But faced with rising imports and falling exports, coupled with a surge in demand for dollars among a population that appears to have lost faith in the peso, the bank has had to defend the currency by selling dollars, running down its foreign exchange reserves to dangerous levels. Meanwhile, the government has introduced unorthodox measures to try to stop Argentines buying dollars, including restrictions on purchases by tourists, credit card purchases and, this week, internet purchases.
“It’s become clear that all those fingers in the dike are not enough,” Mr Porzecanski said. “The government is faced with either a further confidence-shattering loss of reserves or a further confidence-shattering devaluation of the peso. All the good options are gone.”
He said losing control of the currency, after the government appeared to lose control of the streets during nationwide protests last month, was a “very significant moment” for the Fernández administration.
 
8. CARRY THEORY STEAMROLLERED IN ARGENTINA (Financial Times)
By James Mackintosh
January 23, 2014
Peso plunges more than 15% in a few hours.
Argentina is a throwback to the glory days of emerging market investing. On Thursday its peso plunged more than 15 per cent in a few hours after the central bank appeared to withdraw support for a currency plagued by exchange controls, runaway inflation and made-up government statistics. Yes, it was 1997 all over again.
This time the rest of the emerging world is in a better situation. However, the Turkish lira continued falling and is down more than 6 per cent this year, with South Africa’s rand off 5 per cent. Emerging markets and the closely-linked commodity currencies of Canada and Australia were the worst performers on Wednesday on the foreign exchanges.
The intriguing question is whether investors willing to close their eyes to politics and volatility should play the carry: buy riskier currencies in the hope of pocketing enough interest to more than cover exchange rate losses.
In 2013 this carry trade worked beautifully with the peso. Argentina had the worst-performing currency, falling a quarter against the dollar (next worst was Indonesia’s rupiah, down 21 per cent). Yet, the equivalent of interest on the non-deliverable forwards used to trade pesos offshore would have more than offset the loss, leaving a total return of 20 per cent, according to Bloomberg data. Even after Thursday, interest still more than offset peso losses over 12 months.
Carry theory says countries that need to attract foreign capital have to pay a risk premium, generating a return for investors, on average.
Carry traders aim to diversify enough not to care too much when one trade goes sour. Yet, since 2007 carry has been disappointing. The FTSE FRB5 index of carry trades among the five main currencies earned 8.4 per cent a year from 2000 to 2007. Since then it has lost 4 per cent a year. What carry traders discovered over the past five years, and anyone focused on the peso has just found out, is that carry trading is like picking up pennies in front of a steamroller: every now and then you get flattened.
9. ARGENTINE GOVERNMENT ADOPTS HANDS-OFF APPROACH AS PESO SLIDES (Financial Times)
By John Paul Rathbone in London and Jonathan Gilbert in Buenos Aires
January 23, 2014
It is getting hot in Buenos Aires, and not just because the temperature is a steamy 44 degrees centigrade. On Wednesday, the Argentina peso fell to a record low; on Thursday it took another dive, dropping 15 per cent against the dollar in a day.
The sudden drop has unnerved citizens of a country with a history of abrupt devaluations and hyperinflation. Indeed, Thursday’s intra-day fall is the steepest single-day decline since the country’s 2002 economic crisis, a moment seared into the Argentine consciousness.
Nonetheless, any worries about the peso’s fall are being trumped by greater government concerns: Argentina’s fast declining international reserves. To stop an outflow of dollars that has totalled more than $1bn this year, bringing reserves at the start of the week to $29bn, the Argentine authorities appear to prefer to let the peso slide.
“This is not a devaluation initiated by the government,” said Jorge Capitanich, cabinet chief. “For those who love the market, what you [have seen] in the market is the result of the offer and demand for dollars.”
Traders corroborated the stance. “The orders to purchase dollars are the same as those over the past few days,” one trader said. “The difference is that if the central bank doesn’t appear [to supply dollars] there’s nobody who can put the brakes on.”
The government’s hands-off approach seems clear from the top down. On Wednesday, Cristina Fernández, the Argentine president, made her first public appearance in six weeks, when she unveiled a back-to-work programme for unemployed youth and defended her government’s record.
However the 60-year-old head of state, who underwent surgery in October to remove a bloodclot from her brain, made no mention of the problems more pressing on many Argentine minds, the falling currency, Argentine inflation – privately estimated at 28 per cent a year but officially recorded at 11 per cent – or a recent spate of blackouts and police protests over pay.
The following day, Mr Capitanich defended Ms Fernández’s speech, saying: “A president cannot cover all topics in one speech . . . She also didn’t speak about the record levels of tourism . . . or the automotive industry . . . or the new trains that will improve the railway network.”
All but cut off from international financial markets following its almost $100bn sovereign default 12 years ago, Argentina desperately needs to conserve its foreign reserves to make debt payments on its restructured bonds, fund public spending and pay for imports.
In that vein, the government this week continued its crackdown on imports by limiting the online purchases of foreign goods.
Although the devaluation will increase the peso value of Argentina’s agricultural exports, economists are dubious that the policy of letting the peso slide will work in isolation.
If the flight to dollars is being caused by high inflation, cutting inflation means also cutting public spending and the money-printing used to finance it – which Ms Fernández’s left of centre government is loath to do.
The steps taken so far “can give the impression that the authorities do not have a clear picture of how to manage the situation”, Luis Secco, a Buenos Aires-based economist, said.
Ms Fernández’s popularity has suffered but not collapsed. Her approval rating stands at 44 per cent, according to a Poliarquia poll released on Thursday, versus 75 per cent after she won a landslide re-election in 2011. Ratings for economic management stand at 35 per cent, versus 60 per cent in 2011.
Many economists have wondered how the Argentine economy would fare should commodity prices fall and western central banks tighten monetary policy. The strains seem to be making themselves apparent now.
Only a year ago Ms Fernández firmly rebutted calls for a weaker exchange rate. “Anyone who is hoping to make money via a devaluation whose costs the people will have to pay for are going to have to wait until the next government,” sh said. The next presidential election is in October 2015.
10. ARGENTINA DEVALUATION SENDS CURRENCY TUMBLING MOST IN 12 YEARS (Bloomberg News)
By Katia Porzecanski
January  23, 2014
Argentina devalued the peso the most in 12 years after the central bank scaled back its intervention in a bid to preserve international reserves that have fallen to a seven-year low.
The peso has plunged 12.7 percent over the last two days to 7.8825 per dollar at 3:45 p.m. in Buenos Aires, after falling to as low as 8.2435, according to data compiled by Bloomberg. The decline in the peso marks a policy turn for Argentina, which had been selling dollars in the market to manage the foreign-exchange rate since abandoning a one-to-one peg with the U.S. dollar in 2002.
President Cristina Fernandez de Kirchner, who said May 6 that the government wouldn’t devalue the peso, is struggling to hold onto dollar reserves which have fallen 31 percent to $29.4 billion amid annual inflation of more than 28 percent. Reserves are the government’s only source to pay foreign creditors. Since changing her economy minister, cabinet chief and the head of the central bank on Nov. 18, the peso has fallen 25 percent, the most in the world, according to data compiled by Bloomberg.
11. SPECTER OF DEFAULT STALKS ARGENTINA (Business Week)
By Charlie Devereux and Camila Russo
January 23, 2014
For Dominga Kanaza, it wasn’t the soaring inflation or the weeklong blackouts or even the fear that looting would spread from the outskirts of Buenos Aires that frayed her nerves. It was all of them combined. At one point, the shop owner refused to open the shutters protecting her corner grocery more than a few inches—just enough to sell soda to passersby on a sweltering summer day.
“It was scary,” says Kanaza as she yells out prices to customers. The looting broke out days earlier after police went on strike in the nearby province of Cordoba. The walkout left Cordoba to criminals, who spread mayhem all the way to Buenos Aires. Kanaza says it was like nothing she had seen since the rioting that followed the nation’s record $95 billion bond default in 2001.
President Cristina Fernández de Kirchner is running out of time to avert another crisis. The policy that Fernández and her late husband and predecessor, Néstor Kirchner, used to propel 7.2 percent average annual growth over the past decade—higher government spending financed by printing money—is unraveling. An official spokesman turned down a request for an interview with Fernández.
nflation climbed to 28 percent last year, according to opposition lawmakers who broadcast findings of economists operating clandestinely. These academics have been cowed into silence by Fernández’s crackdown on price reports that clash with government figures. The official data collectors say inflation last year was only 11 percent. The peso has fallen 26 percent in the past 12 months, its worst rout since the devaluation that followed the 2001 bond default.
Power outages like the one that plunged Kanaza’s shop into darkness have become more frequent. The power grid was starved of investment as the government kept electricity prices low to contain inflation. The International Monetary Fund, which censured Argentina for misreporting inflation, predicts the economy will grow 2.8 percent this year, about half the 5.1 percent average for developing nations.
The biggest financial problem is the loss of foreign reserves. They’ve dropped 44 percent in the past three years, to $29.5 billion, as prices for soy and wheat exports slumped and Argentines changed pesos to dollars and stashed them abroad. The government says it will shore up reserves in 2014.
STORY: Argentines Hold More Than $50 Billion in U.S. Currency. Here’s How We Know
The country remains locked out of international debt markets as it haggles with billionaire hedge fund manager Paul Singer over lawsuits stemming from the 2001 default. Argentina’s attempt to link its currency to the dollar in the 1990s throttled the economy, leading to its default. Singer wants full reimbursement on the defaulted debt his fund holds, having rejected restructuring terms that other creditors accepted. Foreign exchange reserves are the government’s main source of dollars to pay holders of $50 billion in bonds.
The country’s average bond yield of 12 percent is the highest among major developing nations after Venezuela. Trading in swap contracts that insure bonds against nonpayment shows a 79 percent probability of default over five years. “We’re seeing some sort of day of reckoning,” says Diego Ferro, co-chief investment officer in New York at Greylock Capital, which has invested in the country’s debt. “The adjustment will have to happen if Argentina doesn’t want to hit a wall before 2015.” He foresees a run on deposits, hyperinflation, and a steep drop in reserves if the government doesn’t change its policies.
In her first day back on the job in November after surgery to remove a blood clot near her brain, Fernández replaced most of her cabinet. The new cabinet has pledged to work with the IMF to improve the quality of economic data. It has started talks to settle $6.5 billion of overdue debt with key creditor nations and unveiled plans to compensate Spain’s Repsol (REP:SM) for the seizure of its local oil business in 2012.
Ferro doubts any of this will be enough to avoid another crisis. Bolder measures, such as reaching a deal with Singer to regain access to overseas markets and lifting currency controls, are needed to win back investor confidence, he says. Fernández hasn’t signaled her next move. She gave a radio address on Jan. 22, breaking a silence that began on Dec. 19.
That’s what angers Argentines like Miguel Llanes the most. While looting spread across the country and the blackouts in Buenos Aires dragged on day after day, Fernández was nowhere to be seen. Llanes, forced by the blackout to keep his curtain shop in downtown Buenos Aires closed for more than a week, finally joined protesters burning tires and garbage in the streets. “Where was the president?” he shouted. And then he raised a question that holders of $50 billion of Argentine bonds are asking, too. “How long will this last? They’ve spent all the money.”
12. ARGENTINE PESO SUFFERS STEEPEST DAILY FALL SINCE 2002 (Reuters News)
By Walter Bianchi
January 24, 2014
(Reuters) – Argentina’s exchange rate on Thursday suffered its steepest daily decline since the country’s devastating 2002 financial crisis, extending the previous day’s losses as the central bank gave up its battle against the peso’s decline.
Having shed more than 30 percent of its reserves last year, the central bank this week abandoned its policy of supporting the peso by intervening in the foreign exchange market.
The new policy set the stage for Thursday’s loss in the value of the currency and increased worries about what is already one of the world’s highest inflation rates.
The peso-dollar interbank exchange rate hit the 8 mark, down 11 percent on the day following a 3 percent decline on Wednesday. Argentina’s black market peso fell 7.25 percent on Thursday to close at 13.1 per dollar.
“Yesterday the central bank neither bought nor sold dollars, which tells you what its position is with respect to the exchange rate,” cabinet chief Jorge Capitanich told reporters on Thursday.
Central bank reserves stood at $29.44 billion.
On Thursday the bank intervened but by an inconsequential $100 million, according to local foreign exchange traders.
Due to local currency controls, the black market is the only way for many Argentines to get their hands on dollars as confidence in Latin America’s No. 3 economy falls and inflation soars. Given the country’s history of repeated financial crises, Argentines like to save in dollars.
According to private analysts, consumer prices rose more than 25 percent in 2013, although discredited official data clocks inflation at less than half that.
Unorthodox policies, from currency controls meant to stop capital flight to heavy stimulus spending unencumbered by inflation targeting, have made Argentina a no-go zone for all but the most risk-hungry investors.
Argentina’s key grains sector has cut exports as farmers hoard their crops rather then expose themselves to the swooning local currency. This has contributed to the scarcity of dollars that is debilitating the peso.
Every time President Cristina Fernandez tightens capital controls in a bid to shore up the country’s wobbly balance of payments, it increases the scramble for dollars. This in turn contributes to the fall in the value of the black market peso and higher inflation.
The new year has begun with analysts expecting a 30 percent rise in consumer prices in 2014. That would be the highest rate since 2002, when millions of middle class Argentines were pushed into poverty by a crisis punctuated by a sovereign bond default and 41 percent inflation.
13. DON’T CRY JUST FOR ARGENTINA (The Economist)
By P.W
January 23, 2014
TODAY’S plunge in the Argentine peso was the biggest since the devaluation of 2002 following Argentina’s debt default. The peso fell from 6.92 per dollar yesterday to 7.88, a decline of 12%; and at times today the fall was even bigger, with the peso at one point reaching 8.24, according to Bloomberg.
The collapse came as Argentina’s central bank stopped intervening in the currency markets.  According to Neil Shearing of Capital Economics, a London-based consultancy, the country’s foreign-exchange reserves fell from a peak of $47 billion in March 2011 to a seven-year low of $25 billion in November 2013. He says that the price of defending the peso had become too great and that the Argentine authorities “have bowed to the inevitable”.
Argentina’s plight has been largely self-inflicted. The government has mismanaged the economy. Rather than tackle inflation it has sought to fiddle the figures. Rather than deal with the causes of capital flight it has tried in vain to suppress it.
But Argentina is not alone in feeling the hot breath of the currency markets. The bond vigilantes may have given up the ghost, certainly in advanced countries where, to the surprise of many, bond markets have rallied this year, especially in the once shunned euro-zone countries of southern Europe. But currency traders remain on patrol.
Emerging economies are their main target. The Turkish lira fell again today, to a new low. The South African rand also declined sharply. Both countries have big current-account deficits, estimated by the IMF to run at 7% of GDP in the case of Turkey in 2013-14 and 6% for South Africa. Turkey has appeared especially vulnerable given the stubborn reluctance of the central bank to raise interest rates and the general loss of credibility of the government.
But the resource-rich advanced countries that did so well out of the commodities boom are also suffering. For example the Canadian dollar has been pummeled this year. Worries about slackening Chinese growth – there was a gloomy report today about the state of China’s manufacturing sector – are reinforcing the aversion to the commodity exporters that once carried all before them. One reason why Argentina did so well for a long time after its trauma of 2001-02 was that its economy was buoyed by global demand for its commodities, such as soya.
Earlier this week the International Monetary Fund issued new forecasts showing a pick-up in global growth from 3% last year to 3.7% in 2014. That was a tonic, but renewed currency turbulence suggests that all is not well in many parts of the world economy. Using the Big Mac index, we explore in more detail which currencies may be particularly vulnerable in an article in this week’s print edition.
14. ARGENTINA’S PESO: FIRST DECLINE, NOW FALL (The Economist Online)
By H.C.
Jan 23rd 2014
ON JANUARY 22nd Argentine President Cristina Fernández de Kirchner appeared in public for the first time in over a month. She may wish she had stayed out of sight. Earlier that day the official exchange rate of the Argentine peso had weakened by 25 cents to 7.14 pesos to the dollar, its biggest daily decline since the crisis of 2002. Since then things have got even bumpier. On January 23rd the peso fell by over 86 cents to 8 pesos to the dollar in the retail market, and by even more in the wholesale market. The Central Bank eventually intervened to stabilise the currency at 7.79 to the dollar, but Argentina has still seen a devaluation of more than 15% in just 48 hours.
The Argentine peso has long been heading for a fall. It has looked overvalued since at least 2011, when the government clamped down on all foreign-currency transactions in an attempt to stem capital flight. With inflation running at 25%, Argentines are desperate for access to dollars. The black-market exchange rate has at times exceeded the government’s artificial rate by as much as 70%.
In a bid to close that yawning gap, the government has been allowing the peso to devalue. The authorities allowed the peso to depreciate by only 12% in 2012 but let the currency drop by 33% in 2013. The rate of decline picked up noticeably towards the end of last year. But this strategy has not worked. The black-market rate has crept higher and higher as Argentines continue to seek out dollars to safeguard against what might come. At the beginning of this year, the gap between the official and unofficial rates remained stubbornly high.
Without any official explanation for the dramatic moves in the peso over the past two days, observers are left to guess what is going on. It is too early to say whether the sudden slump signals a real change in government strategy. But economists agree that there are two likely explanations for this week’s sell-off. The first is that government is making a more aggressive attempt to close the gap between the official and black-market exchange rates. The second is that Argentina’s dwindling Central-Bank Reserves mean that the authorities can no longer spend dollars to support the peso.
For the past two years the Central Bank has consistently liquidated reserves in order to prop up the official exchange rate. Add in the cost of energy imports and debt payments, and foreign-exchange reserves plunged by nearly $13 billion in 2013. Since the beginning of 2013 they have dipped below $30 billion to their lowest levels in seven years. In order to pay for this year’s $15 billion energy bill and settle nearly $10 billion worth of debt, the Central Bank simply cannot afford to maintain the same level of intervention it has in the past.
Although devaluation is necessary, the government’s handling of events is deeply flawed. “The government has made the grave error of devaluing without implementing a comprehensive plan to reduce inflation,” says Luis Secco of Perspectiv@s, a consultancy. Without any transparency about the government’s intentions, or any sign of tighter monetary policy, an accelerated devaluation risks only increased inflation and even greater demand for dollars on expectations of further falls in the peso.
Sergio Berensztein of Poliarquia, a polling firm, believes another risk could be that farmers will sit on their crops in anticipation of further devaluation instead of exporting them—an especially big risk for soy, which is easily stored. Tariffs on agricultural exports contributed nearly $7 billion to government coffers last year, a vital source of dollars.
Josh Rosner of Graham Fisher & Co, a research firm, does not foresee the government revealing its plan (if it has one) any time soon. “When a government is going to intervene aggressively in the economy, it is in its interest to keep people in the dark to avoid speculation.” For now all Argentines can do is sit tight and hope that Ms Fernández and the Central Bank know what they’re doing.
15. ARGENTINA ECONOMY: QUICK VIEW – THE PESO WEAKENS SHARPLY (Economist Intelligence Unit – ViewsWire)
23 January 2014
Event
With reserves dropping below US$30bn, the Banco Central de la República Argentina (BCRA, the Central Bank) decided not to intervene in the foreign-exchange market on January 22nd, and allowed the peso to depreciate by a nominal 7% in one day-the largest daily fall since the 2001-02 crisis.
Analysis
The authorities are desperately trying to stop the foreign reserves from continuing their fall. In 2013 the reserves dropped from US$43.3bn to US$30.6bn amid a weakening current account and continuing capital flight. Under its new Central Bank president, Juan Carlos Fábrega, the monetary authority appears to be changing tack. Controls are still being tightened (the government recently announced cumbersome restrictions on international internet purchases), but the Bank is clearly more prepared now to accept a more rapid nominal depreciation of the peso under the heavily managed float in order to protect the reserves from falling to dangerously low levels (import cover has already fallen from over 11 months in 2009 to 3.9 months in 2013). From Ps6.5:US$1 at the end of 2013, the exchange rate has weakened to Ps7.14:US$1 on January 22nd.
At this rate, the peso is finally also weakening in real terms, and could begin to provide a boost to manufacturing export competitiveness. However, it will also pass through into inflation, which is already above 20% and rising. A renewed weakening of the economy evident in the latest available indicators could help reduce demand-side price pressures and contribute to a much-needed adjustment. However, it will be politically difficult for the government to negotiate through a period of still-high inflation and weak (or negative) GDP growth, and there is a strong chance the government will backtrack on adjustment.
To help bolster the reserves and preclude the need for a harsh adjustment, the government is now trying to make amends rapidly with international investors and creditors. Most recently, Argentina has reopened talks with Paris Club creditors with a view to obtaining dollars in the form of new bilateral credits. But the latest negotiations will be difficult and probably lengthy, and any new credits will not come in time to reduce speculation of a sudden sharp currency devaluation, which is now rife.
16. LA SALADA: STALL STORIES (The Economist)
25 January 2014
Inside South America’s largest informal market
Ii is five o’clock in the morning, but shoppers in La Salada market in Buenos Aires are already going home. They drag rubbish sacks full of T-shirts, trainers and pirated DVDs across the car park to board waiting coaches. Some have come to stock their shops, others to fill their wardrobes. They started shopping when the market opened at 3am, and have travelled from as far as Neuquén, a Patagonian city 15 hours away.
La Salada is thought to be South America’s largest informal market. Around 30,000 wire-mesh stalls spill out of three warehouses in an unsavoury neighbourhood on the outskirts of the capital. Its administrators reckon that on Tuesdays, Thursdays and Sundays, when the market is open, more than 250,000 shoppers browse its stalls. Tens of thousands of people help keep La Salada running–selling, protecting, cleaning and supplying the market. At the Punta Mogote warehouse, where most stalls are underground, so many people faint that an ambulance is kept on site.
Hard numbers are impossible to come by but administrators estimate that vendors sell 150m-300m pesos ($22m-$44m) of goods every day La Salada is open. According to Jorge Castillo, who manages Punta Mogote, vendors pay up to $100,000 in cash for a stall measuring four square metres–more than they would for space in a former Hermès store on Avenida Alvear, the main shopping street in Buenos Aires.
La Salada has its murky side. In one bizarre case a man who bought a poodle puppy at La Salada claimed he was duped into bringing home a fluffy angora ferret on steroids. Nacho Girón, a journalist who has written a book on the market, insists that this story is itself one of La Salada’s fakes. Piracy is undeniably rife. Stalls in Punta Mogote sell copies of Tommy Hilfiger shirts for 110 pesos. At street level, vendors hawk Nike knock-offs and flimsy “Ray-Ban” sunglasses.
Mr Castillo is engagingly open about the dubious merchandise sold by some of his vendors. La Salada’s merchants, he acknowledges, may not follow the rules when it comes to intellectual property “but this is Argentina. Nothing is ever just black or white.”
Taxes are certainly a grey area. All shopping is done in cash, leaving ample room for fudging the accounts. Tax officials have trouble enforcing their writ: in one 2009 tax raid vendors from Punta Mogote lobbed thousands of eggs at agents until they fled. The police are reckoned to be more complicit, demanding bribes in exchange for ignoring contraband goods.
Given La Salada’s popularity among Argentina’s poor, the government has long understood that attacking it would be politically risky. According to Mr Girón’s book, Néstor Kirchner, a former president, privately described the market as “a social phenomenon of Argentina in crisis”. “Shoppers love us because we allow them to buy what they need and also have a little left over to treat themselves,” says Mr Castillo. “Vendors love us because we don’t take their hard-earned cash.”
That ethos stretches back to the market’s foundation in 1991 by a bunch of struggling Bolivian clothing producers. Sick of being exploited by factory bosses who paid them poorly and late, the manufacturers gathered enough money to buy the site of abandoned thermal baths. The market was an immediate hit. Mr Castillo, who had been a women’s shoemaker, began buying stands in La Salada’s second warehouse in 1994, before leading the way in opening Punta Mogote in 1999.
Ferreting out the bargains
Competition is at the heart of La Salada’s model. When the market was founded the Argentine peso had just been pegged to the dollar, making imported textiles far cheaper than Argentine-made fabrics. To succeed, vendors had to cut prices right back. Competing with imports is no longer a problem, thanks to currency controls and heavy taxes: the government’s latest wheeze is to require shoppers to pick up goods bought from foreign websites at customs offices so taxes can be collected. But with so many stalls next door to one another, competition at the market remains cut-throat. “The good and the bad of Argentina are embodied by La Salada,” Mr Girón reflects. “It is at once a display of Argentine creativity, intelligence, resilience and grit, and an exhibit of Argentine cunning and corruption.”
17. ARGENTINA’S DECEMBER TRADE SURPLUS $272 MLN VS $835 MLN (Dow Jones Institutional News)
By Ken Parks
23 January 2014
Argentina’s Trade Surplus Drops 67% in December on Lower Exports
BUENOS AIRES–Argentina’s trade surplus fell 67% on the year to $272 million in December amid a plunge in exports that month.
Exports decreased 13% to $5.45 billion last month, due to a 10% drop in volumes shipped and a 4% decline in prices, the national statistics agency, Indec, said in a report Thursday.
Imports fell 5% to $5.18 billion, as a 7% drop in volumes offset a 2% rise in prices.
The trade surplus for the full year fell to $9 billion, from $12.4 billion in 2012 partly due to rising fuel imports, Indec said.
The energy deficit–the difference between Argentina’s energy exports and imports–more than doubled to $6.2 billion in 2013.
Argentina relies heavily on exports of farm products like soybeans and soyoil to earn the foreign currency it uses to pay creditors and purchase imported goods ranging from sports cars to natural gas.
However, inflation north of 25% has spurred some Argentines to seek the safe haven of the U.S. dollar. President Cristina Kirchner has managed to stave off a full blown run on the central bank’s foreign currency reserves by limiting imports and rationing dollars for travel and trade.
Even so, reserves dropped to $29.4 billion Wednesday, their lowest level since November 2006.
18. ARGENTINA IMPOSES HEFTY TAX ON INTERNATIONAL ONLINE SHOPPING (NPR: Morning Edition)
By Lourdes Garcia-Navarro
23 January 2014
STEVE INSKEEP: Although, maybe not so many people subscribing in Argentina, that country has just imposed a heavy tax on international online shopping and it is restricting international online purchases to two per year.
NPR’s Lourdes Garcia-Navarro reports on the government’s attempt to shore-up dipping reserves of foreign currency.
LOURDES GARCIA-NAVARRO: Online shopping is supposed to be about convenience – order by your computer, sometimes tax free, and bam, it’s delivered straight to your door. But in Argentina, new rules have put in place a whopping 50 percent tax on orders above an annual $25 allowance. And you’re only allowed to order internationally twice a year. To make sure you pay what you owe the government, your goods won’t be delivered to your home, but rather to your local customs office, where it can take hours and lots of paperwork to get your boxes out.
Add this to the other economic restrictions already in place and you have an economy that analysts say is struggling. Argentines already have a quota for buying dollars that has given birth to a currency black market. Inflation has also skyrocketed, so many Argentines are struggling to even buy basic goods. Foreign credit card transactions, too, face a 35 percent tax.
Argentina though says it’s been forced to take drastic measures. The country’s hard currency reserves have fallen 30 percent in a year.
In 2001, its economy crashed and the government had to devalue the peso resulting in $200 billion default. Since then Argentina has had trouble securing international loads. It’s used its foreign reserves to service its debts.
19. ARGENTINA’S PETCHEM SECTOR INVESTING IN SHALE PLAYS TO BOOST FEEDSTOCK SUPPLIES (Platts Commodity News)
By Charles Newbery
23 January 2014
Buenos Aires (Platts)–23Jan2014/205 pm EST/1905 GMT   Argentina’s petrochemical sector plans to step up investment in developing oil and natural gas supplies from shale plays like Vaca Muerta, helping to boost feedstock supplies to expand production capacity, a senior government official said Thursday.
“This sector is getting involved in the investment process of Vaca Muerta to secure the resources that they need as raw materials,” Industry Minister Debora Giorgi said in a televised press conference.
Of the six biggest polymer and plastics producers, “at least two” have started investment plans for shale development, she said after meeting with sector representatives.
The first was Dow Chemical. It entered a partnership in September with Argentina’s state-run YPF to develop a pilot production project for shale gas on the El Orejano block. They will invest a combined $188 million in the first year to drill 12 wells for shale gas resources, targeting the Lajas, Sierras Blancas and Vaca Muerta plays.
The companies estimate peak production could surpass 3 million cubic meters/day.
With the additional supplies of gas, Giorgi said petrochemical companies would be able to increase production and expand capacity at their plants, helping to reduce imports of gas, gas-based feedstock and petrochemicals. Polymer producers, for example, have been increasing imports of ethylene as feedstock, in particular during the May-to-September cold season when gas shortages peak.
Dow plans to use the additional gas supplies from its partnership with YPF to boost gas feedstock supplies at its plants in Bahia Blanca, which have capacity to produce 700,000 mt/year of ethylene and 600,000 mt/year of HDPE, LDPE and LLDPE.
Dow buys gas-based ethane feedstock for these plants from Compania Mega, in which Dow, YPF and Brazil’s state-run Petrobras are the main shareholders. Mega processes the gas at a plant in Bahia Blanca and sells the ethane as well as supplies of butane, propane and natural gasoline to makers of petrochemicals and other finished products.
Giorgi said another two petrochemical companies are in talks to launch shale development projects, without naming them.
The target is Vaca Muerta, which holds the largest chunk of the country’s 802 Tcf of shale gas resources, according to estimates by the US Energy Information Administration.
State-run YPF has started producing the first supplies from the play, with output running at 13,000 b/d of oil equivalent, most of it light crude, in third-quarter 2013. YPF has teamed with Chevron on a $1.5 billion pilot production project, while other companies like ExxonMobil, Shell and Total are starting to drill for supplies.
YPF has said shale development will help turn around a decade-long decline in oil and gas production.
The decline coupled with rising demand has sparked shortages in a country that relies on oil and gas to meet about 90% of its energy needs.
Faced with the shortages, petrochemical producers have had to scale back production even as the country has ramped up imports of Bolivian gas and LNG, which averaged 30 million cu m/d in 2013. Argentina had been exporting as much as 20 million cu m/d of gas as recently as 2004.
Giorgi said the lack of gas and other feedstock has prevented petrochemical companies from running plants at higher capacity.
According to analysts, Brazil’s Braskem hasn’t been able to build a polyethylene plant in Argentina because of the lack of gas feedstock. Dow Chemical and Basell Polyolefins’s Petroken face the same problem for polyethylene and polypropylene products, respectively, analysts have said.
“Argentina is importing nearly $900 million worth of petrochemical products a year,” she said.
By developing Vaca Muerta and other shale plays, the petrochemical companies will have more feedstock to increase production, helping to reduce the imports, Giorgi said.
She said that by 2020 the production of shale gas should be sufficient to replace imports of gas and some petrochemical products.
20. ARGENTINA NOV OIL OUTPUT FELL 1.7% YEAR, GAS PRODUCTION SLIPS 2.1% (Platts Commodity News)
By Charles Newbery
23 January 2014
Buenos Aires (Platts)–23Jan2014/1106 am EST/1606 GMT   Argentina’s oil production fell 1.7% and natural gas output dropped 2.1% in November compared with the year-earlier period, an industry report showed Thursday.
Crude production dropped to an average of 543,218 b/d in November from 552,376 b/d in November 2012, and was down 0.6% compared with 546,753 b/d this past October, the Argentine Oil and Gas Institute (IAPG) said without specifying reasons for the changes.
Part of the year-on-year decline was a response to changes in the calculation of crude production. By government orders, natural gasoline was stripped out of the calculation of total crude production, effective January 2013. The industry group has not adjusted prior data.
Argentina’s state-run YPF produced 38% of the crude in November, trailed by BP-controlled Pan American Energy with 18%, Argentina’s Pluspetrol with 7.1%, China’s Sinopec with 6.9% and Brazil’s Petrobras with 6%, IAPG said.
Gas production, meanwhile, dropped 2.1% to 114.7 million cu m/d in November compared with 117.2 million cu m/d in the year-earlier period, and was up 0.1% compared with the 114.6 million cu m/d produced in October, IAPG said.
France’s Total produced 29% of the gas in November, followed by YPF with 26%, Pan American with 11% and Petrobras with 8.6%.
REFINING ACTIVITY
IAPG said crude processing rose 2.7% to 534,754 b/d in November from 520,911 b/d in November 2012.
Of the supplies processed in November, 9,090 b/d was imported, equivalent to 1.7% of the total processed that month. That compares with imports of 6,281 b/d in the year-earlier period.
Output of RON 95 gasoline rose 11% to 102,353 b/d in November on the year while that of RON 98 gasoline fell 11% to 29,485 b/d over the same period. Production of fuel oil rose 32% to 11,755 mt/d, while that of diesel dropped 2.1% to 202,021 b/d over the same period, IAPG said. Naphtha production fell 5.3% to 44,759 b/d over the same period.
The leading refiners are state-run YPF trailed by Shell, Axion, Oil Combustibles and Petrobras.
21. NOTICE OF AVAILABILITY OF EVALUATIONS OF THE FOOT-AND-MOUTH DISEASE AND RINDERPEST STATUS OF A REGION OF PATAGONIA, ARGENTINA (Department of Agriculture Documents)
23 January 2014
Animal and Plant Health Inspection Service
SUMMARY: We are advising the public that we have determined that a region of Argentina, consisting of the areas of Patagonia South and Patagonia North B, is free of foot-and-mouth disease. We are making that determination, as well as an evaluation we have prepared in connection with this action, available for review and comment. In addition, we have prepared an evaluation assessing the rinderpest status of South America, which includes Argentina, and have determined, based on our evaluation, that rinderpest is not present in the entirety of Argentina. We are also making that determination, as well as our evaluation, available for review and comment.
DATES: We will consider all comments that we receive on or before March 24, 2014.
ADDRESSES: You may submit comments by either of the following methods:
* Postal Mail/Commercial Delivery: Send your comment to Docket No. APHIS-2013-0105, Regulatory Analysis and Development, PPD, APHIS, Station 3A-03.8, 4700 River Road Unit 118, Riverdale, MD 20737-1238.
Supporting documents and any comments we receive on this docket may be viewed at http://www.regulations.gov/#!docketDetail;D=APHIS-2013-0105 or in our reading room, which is located in Room 1141 of the USDA South Building, 14th Street and Independence Avenue SW., Washington, DC. Normal reading room hours are 8 a.m. to 4: 30 p.m., Monday through Friday, except holidays. To be sure someone is there to help you, please call (202) 799-7039 before coming.
FOR FURTHER INFORMATION CONTACT: Dr. Silvia Kreindel, Senior Staff Veterinarian, Regionalization Evaluation Services, National Import Export Services, VS, APHIS, 4700 River Road Unit 38, Riverdale, MD 20737-1231; (301) 851-3308.
SUPPLEMENTARY INFORMATION: The regulations in 9 CFR part 94 (referred to below as the regulations) govern the importation of certain animals and animal products into the United States to prevent the introduction of various animal diseases, including rinderpest and foot-and-mouth disease (FMD). The regulations prohibit or restrict the importation of live ruminants and swine, and products from these animals, from regions where rinderpest or FMD is considered to exist.
Within part 94, SEC 94.1 contains requirements governing the importation of ruminants and swine from regions where rinderpest or FMD exists and the importation of the meat of any ruminants or swine from regions where rinderpest or FMD exists to prevent the introduction of either disease into the United States. We consider rinderpest and FMD to exist in all regions except those listed in accordance with paragraph (a)(2) of that section as free of rinderpest and FMD.
Section 94.11 of the regulations contains requirements governing the importation of meat of any ruminants or swine from regions that have been determined to be free of rinderpest and FMD, but that are subject to certain restrictions because of their proximity to or trading relationships with rinderpest- or FMD-affected regions. Such regions are listed in accordance with paragraph (a)(2) of that section.
The regulations in 9 CFR part 92, SEC 92.2, contain requirements for requesting the recognition of the animal health status of a region (as well as for the approval of the export of a particular type of animal or animal product to the United States from a foreign region). If, after review and evaluation of the information submitted in support of the request, the Animal and Plant Health Inspection Service (APHIS) believes the request can be safely granted, APHIS will make its evaluation available for public comment through a notice published in the Federal Register Following the close of the comment period, APHIS will review all comments received and will make a final determination regarding the request that will be detailed in another notice published in the Federal Register
In 2003, the Government of Argentina submitted a request to recognize the region located south of latitude 42 [degrees] south, known as Patagonia South, as free of FMD. In 2008, Argentina expanded its request to include the region immediately north of latitude 42 [degrees] south, known as Patagonia North B. These two areas are referred to below as the Patagonia Region of Argentina.
In response to this request, APHIS has conducted a qualitative risk assessment to evaluate the FMD status of the Patagonia Region of Argentina. Based on this evaluation, APHIS has found that FMD is not present in the Patagonia Region and that the surveillance, prevention, and control measures implemented by Argentina in the area under consideration as a region free of FMD are sufficient to minimize the likelihood of introducing FMD into the United States via imports of FMD-susceptible species or products. However, because of its proximity to or trading relationships with FMD-affected regions, APHIS has determined that it is necessary to impose certain restrictions on the importation of meat of any ruminants or swine from the Patagonia Region of Argentina.
Rinderpest has never been established in South America. No South American country has ever reported the disease except Brazil, which had an outbreak in 1921 that was limited in scope and quickly eradicated. Furthermore, the global distribution of rinderpest has diminished significantly in recent years as a result of the Food and Agriculture Organization Global Rinderpest Eradication Program. The last known cases of rinderpest worldwide occurred in the southern part of the “Somali pastoral ecosystem” consisting of southern Somalia, eastern Kenya, and southern Ethiopia. In May 2011, the World Organization for Animal Health (OIE) announced its recognition of global rinderpest freedom.
Based on the foregoing conclusions, APHIS has found that the Patagonia Region of Argentina is free of rinderpest and FMD.
Therefore, in accordance with SEC 92.2(e), we are announcing the availability of our evaluation of the FMD status of the region under consideration, as well as an evaluation assessing the rinderpest status of South America, for public review and comment. We are also announcing the availability of an environmental assessment (EA) entitled “Recognition of Patagonia Region in Argentina as Free of Foot-and-Mouth Disease,” which has been prepared in accordance with: (1) The National Environmental Policy Act of 1969 (NEPA), as amended (42 U.S.C. 4321 et seq.), (2) regulations of the Council on Environmental Quality for implementing the procedural provision of NEPA (40 CFR parts 1500-1508), (3) USDA regulations implementing NEPA (7 CFR part 1b), and (4) APHIS’ NEPA Implementing Procedures (7 CFR part 372). The evaluation and the EA may be viewed on the Regulations.gov Web site or in our reading room. (Instructions for accessing Regulations.gov and information on the location and hours of the reading room are provided under the heading ADDRESSES at the beginning of this notice.) The evaluations, as well as relevant information used in the review process, are available by contacting the person listed under FOR FURTHER INFORMATION CONTACT. Information submitted in support of Argentina’s original request for recognition may also be viewed on the APHIS Web site athttp://www.aphis.usda.gov/import_export/animals/reg_request.shtml by following the link for “Previous regionalization requests and supporting documentation.” Information submitted in support of the expanded request may be viewed on the Regulations.gov Web site (see ADDRESSES above for instructions for accessing Regulations.gov).
After reviewing any comments we receive, we will announce our decision regarding the disease status of the region of Argentina under consideration with respect to FMD and rinderpest and the import status of susceptible animals and products of such animals in a subsequent notice.
Authority: 7 U.S.C. 450, 7701-7772, 7781-7786, and 8301-8317; 21 U.S.C. 136 and 136a; 31 U.S.C. 9701; 7 CFR 2.22, 2.80, and 371.4.
Done in Washington, DC, this 16th day of January 2014.
Kevin Shea,
Administrator, Animal and Plant Health Inspection Service.
Notice of availability.
Citation: “79 FR 3775″
Document Number: “Docket No. APHIS-2013-0105″
Federal Register Page Number: “3775″
“Notices”
22. CHANGE IN DISEASE STATUS OF THE PATAGONIA SOUTH REGION OF ARGENTINA WITH REGARD TO RINDERPEST AND FOOT-AND-MOUTH DISEASE (Department of Agriculture Documents)
23 January 2014
Animal and Plant Health Inspection Service
SUMMARY: We are withdrawing a proposed rule that would have added that portion of the Patagonia region of Argentina located south of latitude 42 [degrees] south (Patagonia South) to the list of regions considered free of rinderpest and foot-and-mouth disease (FMD). The proposed rule would also have added that region to the list of regions that are subject to certain import restrictions on meat and meat products because of their proximity to or trading relationships with rinderpest- or FMD-affected regions. We are taking this action because we have prepared an updated risk analysis relative to Argentina that is being made available in accordance with a newer process for recognizing the animal health status of regions.
DATES: The proposed rule published on January 5, 2007 (72 FR 475) is withdrawn, effective January 23, 2014.
FOR FURTHER INFORMATION CONTACT: Dr. Silvia Kreindel, Senior Staff Veterinarian, Regionalization Evaluation Services, National Import Export Services, VS, APHIS, 4700 River Road Unit 38, Riverdale, MD 20737-1231; (301) 851-3308.
SUPPLEMENTARY INFORMATION:
Background
On January 5, 2007, we published in the Federal Register (72 FR 475-480, Docket No. APHIS-2005-0096) a proposal /1/ to amend the regulations in SEC 94.1 by adding that portion of the Patagonia region of Argentina located south of latitude 42 [degrees] south (referred to below as Patagonia South) to the list of regions that are considered free of both rinderpest and foot-and-mouth disease (FMD). We proposed this because there had been no outbreak of FMD in the Patagonia South region of Argentina since 1976 and there was no evidence that there were any species infected with FMD in Patagonia South at that time. In addition, because rinderpest has never been diagnosed in Argentina and is not endemic to that region of the world, we also proposed to recognize Patagonia South as free of rinderpest. Finally, we proposed to amend the regulations in SEC 94.11 by adding Patagonia South to the list of regions that are subject to certain import restrictions on meat and other animal products because of their proximity to or trading relationships with rinderpest- or FMD-affected regions.
FOOTNOTE 1 To view the proposed rule and the comments we received, go to http://www.regulations.gov/#!docketDetail;D=APHIS-2005-0096. END FOOTNOTE
We solicited comments concerning our proposal for 60 days ending March 6, 2007. We received 45 comments by that date. Based on the comments we received and other considerations, we concluded that it was necessary to reexamine the risk analysis. We have completed an updated risk analysis covering the Patagonia South region, as well as the Patagonia North B region, in Argentina that we will be making available for review and comment. However, as discussed in more detail below, since the publication of the proposed rule, we have changed the process by which we recognize the animal health status of regions. Therefore, we are withdrawing the January 5, 2007, proposed rule and will make the new risk analysis available in accordance with the current process.
In a final rule /2/ published in the Federal Register on January 10, 2012 (77 FR 1388-1396, Docket No. APHIS-2009-0035), we removed lists of regions classified with respect to certain animal diseases and pests from our animal and animal product import regulations in 9 CFR parts 92, 93, 94, 96, and 98. The lists are now posted on APHIS’ Web site, rather than published in the Code of Federal Regulations. These lists are maintained on the APHIS Web site at http://www.aphis.usda.gov/import_export/animals/animal_disease_status.shtml. Copies of the lists are also available via postal mail, fax, or email upon request to National Import and Export Services, Veterinary Services, Animal and Plant Health Inspection Service, 4700 River Road Unit 38, Riverdale, Maryland 20737.
The regulations in 9 CFR 92.2 contain requirements for requesting the recognition of the animal health status of a foreign region or for the approval of the export of a particular type of animal or animal product to the United States from a foreign region. If, after review and evaluation of the information submitted in support of the request, the Animal and Plant Health Inspection Service (APHIS) believes the request can be safely granted, APHIS will make the evaluation available for public comment through a notice published in the Federal Register . Following the close of the comment period, APHIS will review all comments received and will make a final determination regarding the request that will be detailed in another notice published in the Federal Register .
In accordance with this process, we are announcing the availability of an evaluation of the FMD status of a region of Patagonia, Argentina, in a notice published today in the Federal Register (Docket No. APHIS-2013-0105). The concerns and recommendations of all the commenters on the January 5, 2007, proposed rule have been considered in the development of the new evaluation.
Authority: 7 U.S.C. 450, 7701-7772, 7781-7786, and 8301-8317; 21 U.S.C. 136 and 136a; 31 U.S.C. 9701; 7 CFR 2.22, 2.80, and 371.4.
Done in Washington, DC, this 16th day of January 2014.
Kevin Shea,
Administrator, Animal and Plant Health Inspection Service.
Proposed rule; withdrawal.
CFR Part: “9 CFR Part 94″
Citation: “79 FR 3741″
Document Number: “Docket No. APHIS-2005-0096″
Federal Register Page Number: “3741″
 
23. EXPOSING THE LEGACY OF OPERATION CONDOR (NYT Blogs)
24 January 2014
In 1975, six South American military dictatorships conspired to concoct a secret plan to eliminate their left-wing opponents. Not only would the intelligence services of Argentina, Bolivia, Brazil, Chile, Paraguay and Uruguay trade information with each other and kidnap, disappear and kill their own domestic foes, they would also cooperate in identifying and killing exiles from partner countries who had taken refuge elsewhere.
By the time Operation Condor ended in the early 1980s, as many as 60,000 people may have been killed. Precise numbers are hard to come by, because of the clandestine undertaking, and in the years since, political amnesties, the destruction or decay of public records and the reluctance of survivors to revisit the trauma of their imprisonment and torture have impeded the compilation of a definitive history.
But those were only some of the challenges that the Portuguese photographer João de Carvalho Pina, 33, faced a decade ago when he began a project to document Operation Condor. The torture and detention centers themselves have also been largely abandoned or converted to conventional uses, and there was a larger overarching conceptual problem for Mr. Pina to solve: how to illustrate something that by its very nature was both abstract and hidden.
Still, Mr. Pina, who has worked for The New York Times and The New Yorker, Time, Newsweek and other magazines, kept at it, and his labors are now bearing fruit. He has a book coming out this year, and he will be exhibiting about 100 of his photographs in a multimedia show at the Paço das Artes in São Paulo beginning in late September.
From Jan. 29 through Oct. 3, he will also be one of five photographers exhibiting recent work at the Open Society Foundations in Manhattan as part of its “Moving Walls” documentary photography project. This month Mr. Pina talked with Larry Rohter by telephone from Portugal about the origins and objectives of “Shadow of the Condor.” Their interview has been edited.
Q.
You were born in 1980, as Operation Condor was winding down. What drew you in?
A.
Well, it comes from my own idiosyncrasy and my family’s history. I’m the grandson of two political prisoners in Portugal, and those memories were present from a very early stage in my life. My granddad died before I was born, but my grandmother, when we were on vacation we would listen to these amazing stories and adventures, first clandestinely for the Portuguese Communist Party and then as political prisoners. So I was born with all that baggage and had to deal with it. But my friends, they had no clue about it because in Portugal, as in Brazil, there isn’t much conversation about the subject. As a result, when I started to work in the early 2000s, I decided to go after the subject here in Portugal.
Q.
And that’s what led to your first book, “Por Teu Livre Pensamento” (“For Your Free Thought”)?
A.
Right. And in 2002 I started to work a lot in Latin America, where the political prisoner question was an issue and still is. When I made my first trip to Argentina, the military dictatorship [which had ended in 1983] was still a big thing, a big trauma. That was 2004, also the year of my first trip to Brazil. So I slowly started to understand what had been the reality in South America.
Eventually, I did go to New York to do photojournalism and documentary photography at school. This was after I had already produced my work in Portugal, and people in New York and elsewhere were slightly amazed by it. Like, “Wow, this happened in Portugal? Nobody knows about this.” That encouraged me to continue this type of work.
Q.
I’d like for you to talk about methodology, about the practical problem of trying to document as a photographer an operation that is long over and even when it was taking place was shrouded in secrecy.
A.
Well, my first concern is who do I want to represent here? What’s my goal? Who do I want to address and who do I want to talk about? That was my main goal: how do I link all six countries together? So the first thing I did was to understand the history of each country and to select victims, meaning people who survived, families of people who disappeared, which is a big issue in the region, as you know, and the places where things happened — the concentration camps, the different places where torture was practiced, the places where a person was last seen. I also had places where people think other people are buried, like in the Araguaia [River region of the Brazilian Amazon] or the Atacama [desert of northern Chile].
I wanted to show these fairly normal places, some of which are actually pretty creepy because they have been abandoned for a long time. The idea was to share those places and show the memories that are still there. So when I went there, I tried to think how a victim felt. How was it to be locked up here for three months? I tend to spend a lot of time in those places, and sometimes pictures come to me and other times I went and talked to people.
Q.
Can you give an example of a picture that came to you in a torture center?
A.
There’s a particular photograph of a floor in Chile. I was talking to someone there, who said, “Well, the survivors recognized this place because of the floor.” They could do that only because when they were walking in with blindfolds on their eyes, they could glance down and see the black and white tiles on the floor, leading to a wooden stairway. So when they walked in, they saw the floor, measured the number of steps to the stairway and said, “It’s here.” I would never think about that, but suddenly I looked at the floor, I saw the tile and photographed the tile. To me it was obvious that that was a picture.
Q.
When I see your work online, I notice that there is always comment about your unusual choice of equipment.
A.
I’m very comfortable working in medium format, with a Hasselblad with one type of film that I’ve developed with one developer for the past 15 years. So it’s a very natural language to me. One thing I particularly like about that camera is that you don’t put it in front of your face. You look down, so I can interact with the people I am photographing much easier than if I had put this huge camera in front of my eyes, and having me and them and a big camera in the middle.
And then I really love the square format. So I did the project in black-and-white film because that’s what I wanted, and also because I couldn’t afford a digital camera. So it was all for very simplistic reasons. I didn’t intellectualize it.
Q.
So you were working with a shoestring budget?
A.
The first five years of this project I did self-funded. I was very lucky that the International Center of Photography, the school I went to, has this amazing darkroom. Every time I would gather more than 100 rolls of film, I would fly to New York, they would give me access to the lab because I studied there. I would develop the film, and it would be much cheaper than sending it out to a lab in Portugal or Argentina.
Q.
In this project, you are both a creator and a curator, since you have also included archival photographs from the countries involved in Operation Condor.
A.
It was interesting, because Elisabeth Biondi, who used to be the visual director at The New Yorker, she started following this work from an early stage. One day we were looking at the pictures and she said, “Look, you have the representation of the past, you have the present, what’s going on now, but you’re still missing the past.” And I was thinking, Hell, it’s true. I should go and look at archives. And she asked, “Is that accessible?” I said I would ask around and manage something, and that’s what I did. I made two more trips to the countries involved and started asking local photographers and at courthouses and public archives.
I started looking at these amazing images — Paraguay has thousands and thousands of images from this period. Argentina, Brazil, Uruguay, all of them had either local photographers or law enforcement documenting all these things. Though a lot of them are accessible, others are secret, unknown. That was the most fascinating part: going to courthouses, explaining to judges what I’m doing, and looking at their archives for what I could reproduce. It was really incredible.
Q.
What was the reaction when you asked to see official archives, either military or civilian? Were the bureaucrats cooperative or resistant?
A.
I had a bit of everything. (Laughs.) It depended on the country and the specific situation. Paraguay was the most open, by far. I was talking to people, they’d call up the director of the archive, and he’d say, “Yeah, come on over,” and two hours later I was there, and he’d say, “Sure, do you want to start now?” To which I’d say, “Don’t I have to write a letter and get approval?” and he’d say: “What? No, you can do it.” So I came back with my tripod, and they were really, really helpful.
Q.
You mention local photographers. I imagine that for many of them the reaction was, “Great, somebody is interested, so this is not going to be forgotten.”
A.
They were all very supportive of someone interested in this subject, and photographing the present looking for the past. They all agreed that I could use some photographs free of charge. I think that people who lived through this understand very well what I am doing. It really helps that when I go there, I show them photographs I’ve already done, I tell them why I’m interested in this. No one really says no, neither victims nor the people around them.
Q.
And what qualities are you looking for in the archival photographs?
A.
I’m looking for the historical, really. Latin America has always had incredible photographers, so I know the quality and the information is going to be there. What happened in this particular place, that has or has not been documented, and how can I show this, that’s what I was after.
Q.
Those before-and-after mug shots you found in the Paraguayan archives are very powerful. They remind me a bit of the notorious photographs from the Tuol Sleng torture center that the Khmer Rouge maintained in Cambodia.
A.
I give a lot of play in the book to those pictures. They also reminded me of the Nazi period; they show people with hair and without hair. It made me think of concentration camps. They are all very scared-looking and miserable, they had pretty much all gone through torture. They have 11,000 files there, of each prisoner. My editor in Spain is saying we should go there and do a book, reproduce all 11,000 images to do a little book.
These guys were not amateurs, they knew what they were doing. The fact that it is public and very well organized, with the little resources that Paraguay has, is really amazing. The bureaucrats are always good that way. In 50 years we’ll see all the Homeland Security photos somewhere, and it will be really fascinating when they are declassified.
The Open Society Foundations’ “Moving Walls” Exhibition will open on Wednesday, Jan. 29, at the society’s New York headquarters in Manhattan, and remain on view through Oct. 3.
 
24. A SKYLARK WHO SANG TRUTH TO POWER IN ARGENTINA (The New York Times)
By Stephen Holden
24 January 2014
Bereaved but resilient, the sound of the monumental Argentine folk singer heard in Rodrigo H. Vila’s biographical documentary ”Mercedes Sosa: The Voice of Latin America” conveys eons of suffering and survival. You don’t have to understand Spanish, Sosa’s primary language, to be moved by an instrument that expressed the sorrows and hopes of the world’s poor and downtrodden with a profound empathy.
Sosa, who died in October 2009 at 74, applied her gift to the politically charged music of the Nueva Canción (New Song) movement in the 1960s that challenged dictatorships in Latin America and Europe. She was truly a voice of the people.
With her Indian features and straight black hair, she had the kind of face that might have been etched on a coin. Although her voice was lower, her purity of tone and intensity of emotion were not unlike those of the young Joan Baez, her closest American counterpart.
Despite the glorious singing heard in archival footage from various periods of her career, the film is frustratingly sketchy. Several audio and television interviews with Sosa are included, but they are haphazardly inserted and hastily introduced. The main interviewer is Sosa’s son, Fabián Matus, who reminisces informally with relatives and friends.
The lack of background information and connective tissue makes the film feel incomplete. The most intimate personal moments deal with Sosa’s depression, which once led her to stop eating.
A chronicle of her fraught relationship with Argentina’s military dictatorship and her painful exile abroad in the ’70s are recalled, often in her own words, but there is no overview.
When Sosa returned to Argentina in 1982, the dictatorship, though still in power, had weakened, and she was welcomed as a national symbol of freedom. But the story, as related in the movie, has little narrative force.
The most consistent outside voice belongs to David Byrne, who talks as if he were trying to explain the political power of folk music to a younger generation: how singing protest songs could get you jailed, tortured or killed.
Mercedes Sosa
The Voice of Latin America
Opens on Friday in Manhattan.
Written and directed by Rodrigo H. Vila; narrated by Fabián Matus; directors of photography, Mariano Cúneo, Hans Bonato and Ariel González; edited by Luciano Origlio; music by Diego Vila; released by First Run Features. At the Cinema Village, 22 East 12th Street, Greenwich Village. In English, Spanish, Portuguese and French, with English subtitles. Running time: 1 hour 33 minutes. This film is not rated.
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MONDAY PRESS CLIPS 

1. THE INFLUENTIAL MINISTER BEHIND ARGENTINA’S ECONOMIC SHIFT (The New York Times)
By Simon Romero and Jonathan Gilbert
27 January 2014
BUENOS AIRES — As Argentina absorbs the shock from a sharp plunge in its currency, President Cristina Fernández de Kirchner’s mercurial young economy minister, Axel Kicillof, a scholar with rockabilly-style sideburns and an aversion to business suits, is emerging as the face of policy shifts that are sending tremors through financial markets around the developing world.
Mr. Kicillof, 42, is wielding greater influence over an array of areas, from Argentina’s oil industry to the government’s attempts to slow capital flight and improve relations with international creditors, as Mrs. Kirchner remains largely absent from the public eye after undergoing surgery in October to drain a blood clot near her brain.
The rise of Mr. Kicillof, whose writings use Marxist concepts to interpret the work of the British economist John Maynard Keynes, points to efforts by the authorities to assert greater state control over Argentina’s economy at a time when growth is slowing significantly and inflation is soaring.
”He’s the strongest economy minister Argentina has had in a decade,” said Ezequiel Burgo, the author of ”The Believer,” a book about Mr. Kicillof. ”He’s confrontational, outwardly self-confident and sometimes perceived as being arrogant, which of course makes him stand out at a time like this.”
Before advising Mrs. Kirchner on economic matters, Mr. Kicillof taught economics at the University of Buenos Aires. He rose to prominence as a deputy minister in 2012 when he directed the nationalization of YPF, the Argentine oil company then controlled by Repsol, the Spanish energy giant.
He has repeatedly justified the seizure of YPF, which Repsol had acquired in 1999, in pointed critiques of Argentina’s economic policies in the 1990s of fixing the currency to the dollar and selling state assets. In November, while reviewing Argentina’s offer to compensate Repsol for its stake in YPF, he contended that authorities had previously laid the foundations ”for the pillaging of our companies.”
Since Mrs. Kirchner named him economy minister in November, Mr. Kicillof has been thrust into the spotlight.
Paparazzi trail him around his middle-class neighborhood, Parque Chas, and a celebrity magazine has described his relatively modest lifestyle — reflected in the car he drives, a compact 2008 Renault, and his decision to forgo bodyguards on a vacation with his wife, a literature professor, and their two small children.
One columnist for the magazine Noticias went so far as to examine the psychology of Mr. Kicillof’s sideburns, questioning whether they fit within a rock ‘n’ roll tradition of chafing at authority, or within the fashions of 19th century Argentine political leaders who sought to display virility and power.
Mr. Kicillof has shown a flair for clashing with critics. In an interview published on Sunday by the pro-government newspaper Página 12, he warned against what he called ”disinformation” campaigns on social media networks that could destabilize Argentina’s financial system.
”Economic phenomena can have this magic,” he said, referring to the circumstances around some bank runs. ”They are self-fulfilling prophecies, results of a herd mentality which have no real cause.”
In a country where Freudian therapy and brooding are rooted in the popular culture, Mr. Kicillof, the son of a psychiatrist and a psychologist, accused his opponents of generating ”psychosis.”
Born to middle-class parents who prized intellectual achievement, Mr. Kicillof grew up in Recoleta, an elegant neighborhood in Buenos Aires. His father committed suicide when Mr. Kicillof was 22, according to Mr. Burgo’s book. Mr. Kicillof’s mother is a prominent psychologist. Before he became a fixture of Argentina’s political establishment, Mr. Kicillof gained notoriety as a leader of an anti-establishment student organization at the University of Buenos Aires, where he went on to earn his doctorate and lecture against orthodox economic theories as a professor.
Mr. Kicillof also gained a reputation for being obsessed with numbers in some industries. After he began requesting spreadsheets from oil companies with details of wells, investments and production, the news media here reported that industry executives began calling him Excel, after the Microsoft spreadsheet application.
While he is sometimes criticized for his leftist views by Mrs. Kirchner’s opponents, he has also led a shift in the government’s policies as Argentina seeks to regain access to global financial markets, following the country’s default on its foreign debt in 2002 during a severe economic crisis.
For instance, with Mr. Kicillof at the helm of the economy ministry, Argentina has begun discussions with Repsol over compensation for the seizure of its shares in YPF. Argentina is also trying to appease the International Monetary Fund, which censured the country in 2013 over the accuracy of its economic statistics, by releasing a revised inflation index next month.
In an attempt to obtain a $3 billion loan from the World Bank, Argentina has also settled disputes through the bank’s arbitration body with five companies claiming a total of more than $650 million. This month, Mr. Kicillof traveled to France to discuss with creditors the repayment of Argentina’s estimated $10 billion debt.
But as Argentina tries to halt a plunge in the central bank’s international reserves, Mr. Kicillof’s critics have also grown more outspoken, arguing that he helped create some of the problems he is now trying to solve.
Alfonso Prat-Gay, a former president of the central bank, called Mr. Kicillof’s recent maneuvering ”a scandal,” especially in relation to Argentina’s renewed efforts to reach an agreement with foreign creditors and the sharp fall of the peso. ”You don’t solve things with a devaluation, but with a credible economic program,” Mr. Prat-Gay told a local radio station.
Some people here believe Mr. Kicillof is out of his depth in government. Héctor Zumárraga, 68, a labor rights lawyer, said: “He’s not up to the job. He doesn’t understand that it’s not enough to know just economic theory, and we’re seeing proof of that now.”
2. CRISES SQUEEZE LATIN LEADERS (The Wall Street Journal)
By Taos Turner, Ken Parks and Juan Forero
27 January 2014
BUENOS AIRES — The leaders of Argentina and Venezuela were set to attend a conference in Cuba to debate Puerto Rican independence on Tuesday, as their countries faced their most acute economic crises in a decade.
Their trips — coming as currencies plummet and uncertainty about burgeoning economic troubles grow — seemed to underscore for many Argentines and Venezuelans the erratic governance that economists say have left both countries struggling.
The government of Argentine President Cristina Kirchner and her Venezuelan counterpart and ally Nicolas Maduro partly devalued their currencies last week, sending shudders across Latin America, and both administrations have blamed conspiracies for their economic woes. Argentina’s peso tumbled the most since the country’s 2001 default; basic goods in Venezuela are scarce.
On Saturday, Mrs. Kirchner landed in Havana three days before the start of a gathering of Latin American leaders hosted by Cuban President Raul Castro.
“Fidel invited me to lunch,” she said in a statement issued Sunday soon after her meal with the president’s brother and co-founder of the Communist state. “Very good food,” she told reporters after the meal.
Mrs. Kirchner and Mr. Maduro have expressed support for the U.S. commonwealth of Puerto Rico’s small independence movement. Mr. Maduro said he would propose that the island become the 34th member of the Community of Latin American and Caribbean States, the body of countries meeting in Havana to discuss commercial and diplomatic matters.
“Puerto Rico is not alone in its struggle for identity, for dignity, for independence, for its future,” Mr. Maduro, who was expected to arrive in Havana Sunday night, said in a speech last week.
On the streets of Argentina and Venezuela, many asked what their leaders were doing in Cuba when they were struggling with Latin America’s highest rates of inflation and the fear that things could worsen when private investment is veering toward a recovering American economy.
“Cuba?” said Alberto Gomez, an Argentine army retiree. “People are traumatized by the rise of the dollar, but the government isn’t talking about this. This is the only government we’ve had that doesn’t listen to people.”
Both governments, leaders of a leftist vanguard in Latin America opposed to the Obama administration, still retain a strong base of support.
“My opinion is that several businessmen are trying to weaken the government,” said Bruno Perez, a Buenos Aires sociology student. He was echoing Argentine Economy Minister Axel Kicillof’s comments that vested interests drove the peso down last week.
In Venezuela, the Datanalisis polling firm said in December that Mr. Maduro had just over half of his countrymen’s support in a poll that came days after he forced retailers to sell electronics goods at steep discounts to help fight inflation, a popular measure among the poor.
But the same polls showed only 26.5% of respondents believed the government’s economic policies were helping the situation (Mr. Maduro blames an “economic war” waged by Washington and Venezuelan capitalists for the troubles).
Mrs. Kirchner, who won a landslide re-election in 2011, has seen her approval rating fall fast in recent weeks, pollsters said. About 75% of those polled by the Buenos Aires pollster Management & Fit just over a week ago thought the economy was headed in the wrong direction, and 66.5% disapproved of her handling of the economy.
Of vital concern, especially to the legions of poor in both countries. is inflation, which was 56.2% in Venezuela and approaching 30% in Argentina, say economists whose data is used by multilateral lending agencies.
“The president is to blame for what’s happening and he’s off visiting Fidel,” said Jesus Rodriguez, 37, a cabdriver in Venezuela. “We accept the long lines to buy a bag of flour or milk,” he said. “We have just stood by as things have gotten worse.”
Mrs. Kirchner hasn’t elaborated over the vague measure her aides announced last week to take pressure off the country’s currency: the sale of dollars at the official 8 peso per greenback exchange rate.
Though a loosening of the currency regime, the plan carries major obstacles for Argentines: There will be a stiff 20% surcharge, and businesses are banned from buying.
Carlos Pertierra, 70, a history teacher, said the measures are unlikely to alter Argentina’s economic course, mainly because the weaker currency may stoke inflation further.
Javier Corrales, an Amherst College professor who writes frequently about Latin America, said that it is possible that, like Mr. Maduro in Venezuela, Mrs. Kirchner sees strengthening ties as beneficial to her cause.
“By choosing to go to Cuba perhaps Argentina is showing precisely how serious they think the crisis is, how much she needs external advice,” Mr. Corrales said. “And how much she wants that advice to stay secret.”
3. LETTERS TO THE EDITOR: ARGENTINA SERIOUSLY UNDERSTATES INFLATION (The Wall Street Journal)
27 January 2014
Count me among the skeptics mentioned by Mary Anastasia O’Grady in her Americas column “Argentina’s Crumbling Economy” (Jan. 13). Ms. O’Grady cites the government’s official annual inflation rate: 10.5%. She then reports an annual inflation figure of 26.4% courtesy of a Buenos Aires-based think tank (FIEL).
The Johns Hopkins/Cato Institute Troubled Currencies Project, which I direct, has been making reliable estimates for Argentina’s implied annual inflation rate since 2012. Our current estimate stands at 63% — more than double the highest rate reported by Ms. O’Grady.
Prof. Steve H. Hanke
The Johns Hopkins University
4. EROSION OF ARGENTINE PESO SENDS A SHUDDER THROUGH LATIN AMERICA (The New York Times)
By Jonathan Gilbert, Simon Romero and William Neuman
25 January 2014
BUENOS AIRES — Cities across Argentina are still unnerved by all the looting that broke out last month after police officers went on strike, protesting salaries eroded by rampant inflation. Residents fumed over blackouts that left them sweltering during a recent heat wave. Then the currency plunged this week, the steepest decline since the nation’s economic collapse in 2002, stirring fears that another major financial crisis could be around the corner.
”In 80 years, there’ve been tough times, but it’s never been as bad as this,” Irma Herrera, 80, a retired psychologist, said Friday after the government announced that it would make it easier for Argentines to buy dollars amid the financial upheaval.
”I’m not going to buy dollars when my monthly pension doesn’t even stretch to buy food,” Ms. Herrera said.
In a matter of days, Argentina has become a symbol of the economic stresses mounting in developing countries around the world. Fears are rising that the demand for commodities, a centerpiece of Argentina’s economy, is weakening in places like China, a slowdown that could threaten developing nations.
At the same time, the prospect of better returns in the United States is drawing money out of the developing world and battering currencies from Turkey to Russia to South Africa.
The worries over contagion are spreading. In Brazil, the country’s powerful automobile industry is bracing for the problems in Argentina, one of Brazil’s biggest export markets. But beyond the global forces at play, the financial swings this week have called attention to the particular challenges for some of Latin America’s most vulnerable economies.
”There’s something that’s happening all over Latin America, which is that the region is coming to the end of its commodities boom,” said Francisco Rodríguez, an economist with Bank of AmericaMerrill Lynch. ”Some countries are more vulnerable than others, and definitely the Venezuelas and Argentinas of the world are more vulnerable. Markets are getting very nervous about what will happen to them if you enter a period of a slump in commodities prices.”
This week in Venezuela, the government announced what amounted to a partial devaluation and new currency controls. On Friday, travel agents said several airlines had either stopped selling tickets over the last few days or made only a very limited number of seats available.
The airlines say they have $3.3 billion in revenues in Venezuelan banks that the government has not let them take out of the country. They worry that the value of that money, which is still in local currency, could shrink significantly.
”This is one of the high points when you speak to airline C.E.O.’s,” said Peter Cerda, regional vice president for the Americas of the International Air Transport Association. ”What keeps them up at night is exactly this. What their money’s worth today, it might not be worth tomorrow.”
On Friday, Venezuela’s government also put new limits on the dollars it promises to sell citizens traveling abroad, with a cap of $700 per trip to Florida, compared with $2,500 for travel elsewhere in the United States.
”It’s madness,” said Antonio Miglio, 42, a businessman, who flies to Orlando, Fla., every year with his family to go shopping. ”The government made this decision because of the economic crisis, but this will only make the crisis worse.”
In Argentina, the pressures have been building for years. Generous social spending after the crisis in 2002, like freezing household electricity rates and making payments to poor families, has widened Argentina’s deficit. The country has been printing money, fueling inflation. The issue has been so polemical that the government has been in a fight for years over how high inflation really is; independent economists say it reached 28 percent in 2013, while officials say it was 10.9 percent.
Argentina’s economy is still expected to grow at 2.8 percent this year, according to the International Monetary Fund, but growth has slowed significantly from recent years, and capital flight has been a longstanding problem. Given that the government has nationalized businesses like YPF, the country’s biggest oil company, some investors have pulled back, and many people here have tried to take their money out of the country.
To prevent that exodus, the authorities have tried to restrict access to foreign currency. Now, with a nearly 20 percent drop in the value of the peso just this week, the government said Friday that it would allow people to buy dollars with greater ease. The economy minister described the shift as a response to ”psychosis” in Argentina’s financial markets.
”The government is trying to find a way out of the mess it got into,” said Fausto Spotorno, an economist at Orlando Ferreres y Asociados in Buenos Aires. ”But there’s so much more to do, like tackle inflation.”
Rather than stemming the anxiety, the government’s announcement on Friday seemed to sow confusion.
”This is all improvised,” said Antonio López, 63, an administrator for an office building. ”They don’t know what they’re doing.”
The economy minister, Axel Kicillof, lashed out at financial analysts who contended that the peso might weaken further, calling them ”great liars.” In comments to an Argentine radio station, he attributed the sharp fall in the peso to a ”speculative attack” put into motion by the oil giant Royal Dutch Shell.
”The authorities in Argentina are suffering from low credibility,” said Alberto Ramos, an economist at Goldman Sachs. ”The situation can get as bad as they want to make it.”
The streets of downtown Buenos Aires were bustling but calm on Friday, with more dark humor than signs of panic. ”Great, we can buy dollars now,” said Nicolás Titaro, 61, a company treasurer. ”We just need salaries that let us.”
Other Argentines wondered whether another period of economic turmoil loomed. ”It’s always the same here, a crisis every 10 years,” said Marcelo Rosales, 50, a security guard. ”The government will not assume the political cost of dealing with this. It is only healing minor cuts with plasters.”
5. ARGENTINA EASES CURRENCY RULES TO STEM CRISIS (The Wall Street Journal)
By Ken Parks and Taos Turner
25 January 2014
BUENOS AIRES — Argentina’s government allowed its beleaguered peso to slide farther against the U.S. currency on Friday, saying it would ease limits on the purchase of dollars to stem a possible currency crisis like the one that hammered the country in 2001-02.
Economists welcomed the moves, but doubted they would work without an attack on the real source of the country’s mounting economic problems: rampant government spending and a loose money policy that has caused one of the world’s highest rates of inflation, estimated at more than 25% a year.
The devaluation and burgeoning economic crisis is shaping up as the biggest challenge to President Cristina Kirchner since she took power in 2007, succeeding her husband and predecessor Nestor Kirchner, who has since died. It also threatens the source of her power, which relies on spending and subsidies to ensure popularity.
“The president pledged not to devalue the currency, so this leaves her credibility in tatters and I think it will hurt her image,” said Nicolas Solari, a political analyst at the pollster Poliarquia.
Just this past week, the peso fell 15% and the central bank spent several hundred million dollars defending the currency, according to several economists. On Friday alone, the bank spent $160 million, according to a person familiar with the matter.
Argentina has been burning through its currency reserves, which are down to $29 billion from a peak of $52.6 billion three years ago. Too few reserves might prompt the country to default on its debts again or fall into a deep recession because it can’t buy the imports it needs to keep its economy going.
Mrs. Kirchner faces increasingly difficult trade-offs: The government needs to devalue the currency to protect dollar reserves and shore up exports, but the devaluation will cause inflation to rise farther by making imports more expensive in peso terms. Any attempt to corral inflation from the devaluation means cutting spending, which reduces economic growth and is politically toxic.
Many economists doubt the devaluation in itself will ease Argentina’s woes unless the government spends less and raises borrowing costs. Government spending as a percentage of annual economic output in Argentina has risen most years under Mrs. Kirchner, hitting roughly 40% in 2013, according to estimates from Argentine economists. And the central bank is widely seen as holding interest rates below the rate of price increases — prompting Argentines to spend rather than save.
“The problem now is that you’re devaluing the currency in an economy which inflation was already 30% and you’re doing it without a broader economic plan,” said economist Nicolas Dujovne, a former Argentine central-bank director.
Retailers throughout Argentina’s capital, including department stores such Chile’s Falabella, have already begun marking up prices on televisions, laptops and other items. On Calle Florida, a pedestrian area popular with tourists, a 55-inch HDTV set that cost around 26,000 pesos on Tuesday was selling for almost 32,000 pesos, or 23% more, on Friday.
The country’s long history of financial crises, including inflation that peaked at around 12,000% in the 1980s, makes Argentines understandably nervous. The country’s 1975 currency devaluation, caused inflation to spike to 300% from 50% within 12 months.
This week’s devaluation, coupled with rising inflation, “creates an outlook that is very similar to what Argentina faced in 1975,” said Domingo Cavallo, a former Argentine finance minister credited with controlling inflation in the early 1990s. “I’m not saying that’s going to happen now, but it is something that a lot of people are thinking about.”
When retailers don’t know how much the peso will be worth, they start withholding merchandise, assuming that it’s better to keep valuable goods in stock than to sell them, said Roberto Escobal, who runs a computer electronics store.
“The last think I want to do is have a bunch of pesos in my hands when I have no idea how much they’ll be worth,” Mr. Escobal said. “So if inflation gets worse, you start to see retailers who won’t sell goods even when consumers want to buy them.”
Mr. Escobal said today’s currency and inflation problems are nowhere near as bad they have been in previous crises, but that is little consolation now, he said. “The road to that kind of crisis starts here,” he added.
The government signaled it thought the peso had fallen far enough, suggesting the central bank might try to defend the official rate with more reserves in coming days. “The government thinks the price of the dollar has reached a level of convergence that is acceptable with our economic policy objectives,” Jorge Capitanich, President Kirchner’s cabinet chief, said in a news conference Friday.
The government got some good news Friday. Argentina’s peso firmed against the U.S. dollar on the black market, changing hands at around 12 per dollar, after finishing at 13.10 per dollar on Thursday, according to the newspaper El Cronista, which tracks black-market exchange rates.
Since October 2011, the government has allowed limited sales of dollars to businesses that need to buy imported goods and people who want to travel abroad. But the scarcity of dollars gave rise to a vibrant black market in currencies, in which Argentines pay a hefty premium to buy dollars for travel or as a hedge against inflation.
Starting Monday, Argentines — but not businesses — will be able to buy dollars at official rates. Not that access will be easy. Residents must fill out a form on the Internet, attach their tax ID number, and still pay a 20% tax on the transaction. And even then there is no guarantee they will get the money.
Many said they would closely watch on Monday to see if the government meets the demand for dollars or turns people away. A stampede to take out dollars would further drain central-bank reserves.
 
6. ARGENTINA EASES RESTRICTIONS ON DOLLAR PURCHASES, AFTER DEVALUATION (The Wall Street Journal Online)
By Ken Parks
24 January 2014
Moves Come as Government Tries to Stabilize Peso and Stem Slide in Currency Reserves
BUENOS AIRES—Argentina’s government allowed its beleaguered peso to slide farther against the U.S. currency on Friday, saying it would ease limits on the purchase of dollars to stem a possible currency crisis like the one that hammered the country in 2001-2002.
Economists welcomed the moves, but doubted they would work without an attack on the real source of the country’s mounting economic problems: rampant government spending and a loose money policy that has caused one of the world’s highest rates of inflation, estimated at more than 25% a year.
The devaluation and burgeoning economic crisis is shaping up as the biggest challenge to President Cristina Kirchner since she took power in 2007, succeeding her husband and predecessor Néstor Kirchner, who has since died. It also threatens the source of her power, which relies on spending and subsidies to ensure popularity.
“The president pledged not to devalue the currency, so this leaves her credibility in tatters and I think it will hurt her image,” said Nicolás Solari, a political analyst at the pollster Poliarquia.
Just this past week, the peso fell 15% and the central bank spent several hundred million dollars defending the currency, according to several economists. On Friday alone, the bank spent $160 million, according to a person familiar with the matter.
Argentina has been burning through its currency reserves, which are down to $29 billion from a peak of $52.6 billion three years ago. Too few reserves might prompt the country to default on its debts again or fall into a deep recession because it can’t buy the imports it needs to keep its economy going.
Mrs. Kirchner faces increasingly difficult trade-offs: The government needs to devalue the currency to protect dollar reserves and shore up exports, but the devaluation will cause inflation to rise farther by making imports more expensive in peso terms. Any attempt to corral inflation from the devaluation means cutting spending, which reduces economic growth and is politically toxic.
Many economists doubt the devaluation in itself will ease Argentina’s woes unless the government spends less and raises borrowing costs. Government spending as a percentage of annual economic output in Argentina has risen most years under Mrs. Kirchner, hitting roughly 40% in 2013, according to estimates from Argentine economists. And the central bank is widely seen as holding interest rates below the rate of price increases—prompting Argentines to spend rather than save.
“The problem now is that you’re devaluing the currency in an economy which inflation was already 30% and you’re doing it without a broader economic plan,” said economist Nicolas Dujovne, a former Argentine central-bank director. He estimated accelerating inflation for this year.
Retailers throughout Argentina’s capital, including department stores such Chile’s Falabella, have already begun emoving price tags and marking up prices on televisions, laptops and other items. Already, electronics retailers have raised prices on flat-screen televisions, expected to be big sellers ahead of this summer’s World Cup. On Calle Florida, a pedestrian area popular with tourists, a 55-inch HDTV set that cost around 26,000 pesos on Tuesday was selling for almost 32,000 pesos, or 23% more, on Friday.
The country’s long history of financial crises, including inflation that peaked at around 12,000% in the 1980s, makes Argentines understandably nervous. The country’s 1975 currency devaluation, known as the “Rodrigazo” for then finance minister Celestino Rodrigo,caused inflation to spike to 300% from 50% within 12 months.
This week’s devaluation, coupled with rising inflation, “creates an outlook that is very similar to what Argentina faced in 1975,” said Domingo Cavallo, a former Argentine finance minister credited with controlling inflation in the early 1990s. “I’m not saying that’s going to happen now, but it is something that a lot of people are thinking about.”
When retailers don’t know how much the peso will be worth, they start withholding merchandise, assuming that it’s better to keep valuable goods in stock than to sell them, said Roberto Escobal, who runs a computer electronics store.
“The last thing I want to do is have a bunch of pesos in my hands when I have no idea how much they’ll be worth,” Mr. Escobal said. “So if inflation gets worse, you start to see retailers who won’t sell goods even when consumers want to buy them.”
Mr. Escobal said today’s currency and inflation problems are nowhere near as bad they have been in previous crises, but that is little consolation now, he said. “The road to that kind of crisis starts here,” he added.
The government signaled it thought the peso had fallen far enough, suggesting the central bank might try to defend the official rate with more reserves in coming days. “The government thinks the price of the dollar has reached a level of convergence that is acceptable with our economic policy objectives,” Jorge Capitanich, President Kirchner’s cabinet chief, said in a news conference Friday.
The government got some good news Friday. Argentina’s peso firmed against the U.S. dollar on the black market, changing hands at around 12 per dollar, after finishing at 13.10 per dollar on Thursday, according to the newspaper El Cronista, which tracks black-market exchange rates.
Since October 2011, the government has allowed limited sales of dollars to businesses that need to buy imported goods and people who want to travel abroad. But the scarcity of dollars gave rise to a vibrant black market in currencies, in which Argentines pay a hefty premium to buy dollars for travel or as a hedge against inflation.
Starting Monday, Argentines—but not businesses—will be able to buy dollars at official rates. Not that access will be easy. Residents must fill out a form on the Internet, attach their tax ID number, and still pay a 20% tax on the transaction. And even then there is no guarantee they will get the money.
Many said they would closely watch on Monday to see if the government meets the demand for dollars or turns people away. The risk is clear: A stampede to take out dollars would further drain central-bank reserves.
Many economists saw the move to relax access to dollars as more style than substance–the government’s way of trying to reduce anxiety in the country by loosening, rather than restricting, access to dollars. In 2001, the government froze bank accounts as it devalued the peso, and memories of that crisis are still fresh for many Argentines.
“This is an effort to say we’re establishing confidence at this level for the peso, and trying to prevent panic. They don’t want the guy with $1,000 worth of pesos in his bank account to go to the street and trade in his pesos for dollars,” said Ryan Brier, head of Latin American research at Frontier Strategy Group, an advisory company for multinationals operating in emerging markets.
In addition to cutting spending and raising interest rates, the next best option to contain inflation is through controlling wage hikes, economists said. In coming months, Argentina’s muscular labor unions will press their annual wage demands, but any attempt by the government to limit those gains could lead to unrest.
Some economists say the early signs from the government are not encouraging. State news agency Telam tried to lay the blame for Thursday’s steep drop in the peso on purchases of dollars by the local subsidiary of Royal Dutch Shell PLC.
For years, administration officials have attacked Shell Argentina and its president, Juan José Aranguren, because of the oil executive’s public criticism of government policies that turned Argentina into a net energy importer in 2011. Shell Argentina officials didn’t respond to requests for comment.
7. ARGENTINA BRACED FOR FIRST DAY UNDER RELAXED FOREX CONTROLS (Reuters.com)
By Hugh Bronstein
Jan 27, 2014
BUENOS AIRES, – Argentina’s sudden relaxation of currency controls, long touted by the government as essential to the country’s financial health, has left investors wondering what’s next for Latin America’s crisis-prone No. 3 economy.
Shopkeepers around the country hurriedly placed new price tags over the weekend on imported items from Cuban cigars to Asia-made televisions, reflecting a more than 20 percent drop in the official peso rate over recent days.
The consumer price surge came after the government said on Friday it would lift a two-year-old ban on Argentines buying foreign currency, allowing savers access to coveted U.S. dollars while the peso was left to plummet.
Friday’s relaxation of controls came as central bank reserves fell beneath $30 billion, a level suggesting its interventions in support of the anemic peso had become unsustainable.
But allowing average wage-earners to access U.S. dollars was sure to pressure reserves as well, because the central bank is the main source of foreign exchange. The announcement on Friday ended a two-year ban on saving in the greenback.
Conditioned by previous crises to save in dollars, Argentines are obsessed with the greenback. The currency control regime ending on Monday forced people to go to the black market for dollars needed to protect them from the weak peso and fast-rising consumer prices.
The government, which consistently plays down the problem of inflation, is betting that the relaxation of controls will allow convergence of official and black-market peso rates.
The official rate ended at 8 per dollar on Friday after falling 11 percent on Thursday, its biggest one-day slump in 12 years.
“An exchange rate of 8 pesos is an adequate level,” Economy Minister Axel Kicillof said in a newspaper interview published on Sunday. “This is a reasonable level of convergence for the Argentine economy.”
The black-market peso fell 7.25 percent on Thursday to close at 13.1 per dollar. On Friday, it rose 11.97 percent to end at 11.7 per greenback.
HIGH INFLATION
Consumer prices rose about 25 percent in 2013, according to private analyst estimates. Official data, which many economists dispute, clocks inflation at less than half that rate. A new government consumer price index, ordered by the International Monetary Fund, is expected to be unveiled next month.
A price freeze imposed this month on staple foods has kept a lid on basic supermarket items. No one knows how long those prices can hold while labor unions prepare wage demands based on one of the world’s highest inflation rates.
While inflationary, President Cristina Fernandez’s policies were seen by most voters as the key to economic recovery from the 2002 debacle. She easily won re-election in 2011, promising deeper market interventions and more stimulus spending unencumbered by inflation targeting.
GRAINS TRADE PARALYZED
The effect of peso volatility on other countries’ markets should be limited by the fact that Argentina has been unable to issue international bonds since its 2002 sovereign default.
Argentina’s grains sector has held back exports as farmers hoard crops rather than expose themselves to the swooning local currency. That has contributed to the scarcity of dollars that has debilitated the peso.
The country is the world’s top exporter of soymeal and soyoil, as well as its No. 3 soybean and corn supplier at a time of booming world food demand.
The 2002 default, followed by a decade of policies such as corn export curbs, high soybean export taxes and the 2012 nationalization of the country’s top energy company, YPF , scared off investment needed to expand the grains sector and exploit Argentina’s huge shale oil and gas reserves.
If Argentina reports 30 percent inflation this year, as private analysts expect, it would mark the fastest rate since the 2002 crisis, when inflation reached 41 percent.
Consumer prices are a big worry on the street, but the issue has not sparked mass protests lately. Tensions could rise over the weeks ahead as labor demands pay increases in line with private economists’ 2014 inflation estimates.
Fernandez has mentioned neither consumer prices nor the peso’s plight in recent speeches, leaving her cabinet to announce policy changes. The next presidential election is next year, with Fernandez unable to seek a third term.
Possible candidates from the main parties offer policies that lean in a more pro-investment direction that Fernandez’s, as the outgoing leader tucks into her last two years in power.
“If the government fails to prevent inflation from accelerating it will probably hurt the chances of presidential aspirants who are aligned with the administration,” said Ignacio Labaqui, an analyst with Medley Global Advisors.
“A deeper economic crisis could provide a window of opportunity for candidates who are more business friendly.”
8. ARGENTINA DEVALUATION TRIGGERS 30% WHIRLPOOL PRICE MARKUP (Bloomberg News)
By Pablo Gonzalez and Daniel Cancel
Jan 27, 2014
A sign in the window of Quintex, a hardware store in the Wilde neighborhood of Buenos Aires, shows the effect of the peso’s biggest devaluation since 2002.
“Out of respect for our clients, this store will remain closed until our providers set their prices,” it reads.
Other shopkeepers chose not to wait to see the results of last week’s 15 percent depreciation, raising prices as much as 30 percent on appliances, electronics, wine and other goods that aren’t regulated by the government, while supermarkets seemed to abide by food-price accords reached earlier this month. President Cristina Fernandez de Kirchner left for Cuba over the weekend, days before the start of a regional summit, leaving top aides to try to contain price increases as investors raised bets on further declines in the peso.
“The first reaction has been a paralyzation of almost all the markets for goods and services tied to the official exchange rate,” Domingo Cavallo, who as economy minister in 1991 linked the peso to the dollar at one-to-one, said in a telephone interview from Cordoba, Argentina. “No one wants to sell merchandise at a price if they don’t know what the rate will be tomorrow.”
Twelve-month non-deliverable peso forwards plunged 10 percent last week to 12 per dollar, signaling the currency will weaken 33 percent over the next year from the current 8.0014. The extra yield, or spread, investors demand to hold the nation’s dollar-denominated bonds instead of Treasuries jumped 1.02 percentage point to 10.43 percentage points, the highest since September.
The government is monitoring prices in the wake of the devaluation, Cabinet Chief Jorge Capitanich said Jan. 25.
Price Abuse
“Household appliances, cars, electronics and other goods with a percentage of imported parts will be subject to a permanent monitoring by the trade secretary to guarantee their supply and reasonable price,” Capitanich wrote in messages on his Twitter account on Jan. 25. The government will act with “all the weight of the law in the cases of abuse by businesses setting prices.”
Argentines had already been coping with annual inflation estimated at about 28 percent, the highest in Latin America after Venezuela, and currency controls that restricted access to dollars at the official exchange rate.
Consumer prices had risen 3 percent in January before the devaluation, and inflation will quicken to more than 30 percent this year, according to Lorenzo Sigaut, the head economist at the Ecolatina research company in Buenos Aires.
Investor Confidence
“This surprised us all and creates serious uncertainty since you don’t know where the exchange rate is going,” Sigaut said in a telephone interview. “This is a government that continues to deny inflationary problems but now has to win the battle of expectations.”
The government is seeking to restore investor confidence by paring back some of its control of the economy, reducing support for the peso and easing some currency controls after international reserves used to pay bondholders fell to a seven-year low.
Argentines will be able to begin buying dollars again in accordance with their income at the official rate plus a 20 percent redeemable tax in a reversal of policies installed after Fernandez won re-election in 2011. The central bank raised its yield guidance for a weekly bond auction by six percentage points to about 26 percent on Jan. 24 to create more demand for pesos and try to reduce negative interest rates.
Capitanich will provide details of the easing of currency controls today, Economy Minister Axel Kicillof said in an interview with Pagina12 yesterday.
EM Rout
The peso’s plunge forms part of an emerging-market currency rout last week that was triggered in part by a deepening of the political and financial crises in Turkey and Ukraine. The lira sank 4.4 percent in the week, Russia’s ruble dropped 2.9 percent and South Africa’s rand weakened beyond 11 per dollar for the first time since 2008.
In Brazil, the real slumped 2.3 percent to a five-month low on concern that the peso devaluation will erode demand for the country’s goods. Argentina was Brazil’s third-biggest export market in 2013. Neighboring Chile and Uruguay could also be hurt, Schroder Investment Management said in a note to clients.
Capitanich and Kicillof have both said the peso has now reached an “acceptable level” at about 8 per dollar, a signal the central bank may continue to spend reserves to keep the rate in check. Argentines pay as much as 11.7 pesos per dollar on the black market.
Sales Increase
Retailers “always find a good reason to raise prices; a change in the exchange rate, it’s humid outside, any excuse,” Kicillof said on public TV yesterday. “They lie and steal.”
Electronic goods store owner Roberto Campos, 46, raised prices 20 percent last week following the peso’s decline. He was skeptical that the government will allow people to buy dollars today, saying it will probably create bureaucratic obstacles in a bid to restrict access.
Sales at Campos’s store rose about 10 percent in the wake of the devaluation as people bought before prices rose, he said. Business will probably slow in the medium-term as the government continues to let the peso slide, he said.
“This is just the beginning,” he said while staring at a computer that was updating prices on his goods to reflect the new exchange rate. “Last year there was lots of uncertainty, now the uncertainty is a reality.”
At a store owned by Chilean retailer SACI Falabella in downtown Buenos Aires, the price of a Whirlpool 80X1 model refrigerator on Jan. 24 had risen 30 percent to 27,499 pesos ($3,437) from 21,199 pesos two days earlier.
“The fridge is assembled in Argentina, but all the components are imported,” Andre Viera, a salesman at the outlet on Florida Street, said in an interview. “The lady who came in on Wednesday and said she would be back to buy it on Saturday must be suicidal.”
9. CHRONICLE OF A CRASH FORETOLD (Investor’s Business Daily)
27 January 2014
Socialism: The huge currency devaluations that hit Venezuela and Argentina last week could be seen coming a mile away. This is a warning to the U.S. about big-government spending policies financed by printing money.
The markets have given a resounding vote of no confidence to many emerging-market currencies, triggering sell-offs as far flung as Turkey, Russia and South Africa.
But nowhere were the losses as catastrophic as those in two socialist Latin American countries that have thumbed their noses at fiscal discipline, ruthlessly used printed cash to expand their states and treated their citizens as cash cows, gleefully chasing out thousands of the most productive.
Venezuela and Argentina were the driest tinder in the box for the latest conflagration. It was no surprise.
Venezuela’s bolivar currency effectively lost half its value when President Nicolas Maduro announced that airline tickets would no longer be sold at the official 6.3 rate to the dollar, but rather at 11.36.
Meanwhile, Argentina’s peso tumbled 18% in one week to 7.88 to the dollar, its biggest fall since the great default and devaluation of 2001-02.
Both governments attempted to prevent this outcome by shackling their currencies with capital controls, but they prevented nothing because the money’s not there.
With foreign reserves down to $20 billion in Venezuela’s case and $29.5 billion in Argentina’s, there is too little money left to defend the currency and pay the debts.
Based on swap rates, the market forecasts a 79% chance of default by Argentina in the next five years. And this won’t be the end of it. All forecasts point to worse to come.
Yes, everything seemed fine for years, despite Venezuela’s 30% rise in M2 money printing since 2007 or Argentina’s sixfold increase in M2 money since 2008.
That’s like falling out of an airplane and saying, “So far, so good.” Everything’s fine until the great collision with reality. Because, to paraphrase economist Herbert Stein, anything that can’t go on won’t.
Sure, governments will blame speculators, while others, like economist Joe Stiglitz, will call currency devaluations “restoratives” for balance of payments crises.
But the reality is, they are terrible events that destroy a nation’s savings, hitting small savers who cannot move money abroad the hardest.
That’s the money that becomes a nation’s seed capital for new enterprises and future economic growth.
And they inevitably lead to inflation. For 2012, Venezuela’s inflation surged to 56.1%, its central bank said. In Argentina, the rate was 28%, according to a watchdog.
These man-made disasters are due to governments spending more than they have to buy votes. In Argentina, spending rose 50% in the past decade, and in Venezuela it surged 60% in just the past year.
The numbers are so hard, and crisp and predictable, it’s astonishing anyone could be surprised by them.
And that’s what brings to mind the U.S. and its money printing — M2 money supply is up 34% since President Obama took office — to finance its multi-trillion-dollar expansion of government. Who’s minding the store?
10. CURRENCY CONTROLS IN ARGENTINA; RELAXATION THERAPY (News Analysis from Economist.com)
24 January 2014
IT HAD already been a startling week in Argentina, thanks to a 15% slump in the value of the peso on January 22nd and 23rd. But the biggest surprise came this morning, when the government announced that Argentine individuals will be permitted to buy dollars for saving purposes, a privilege in effect denied to them since 2011. Having suffered many bouts of inflation and hyperinflation over the past decades, Argentines are conditioned not to hold their own currency. Instead they have converted their savings into greenbacks, often squirrelling dollar bills away under their mattresses and in their freezers. In late 2011, with the aim of defending the Central Bank’;s dwindling international reserves, the government tacitly eliminated that option.
The government made no announcement and passed no law in 2011. President Cristina Fernández de Kirchner has denied the existence of any restrictions. But from then on, all Argentines who applied to buy dollars for saving purposes were rejected by the tax agency with nebulous excuses or no explanation at all. The only place to buy dollars was the black market, where the exchange rate sometimes exceeded the official one by as much as 70%.
As of Monday January 27th, the government will supposedly lift this invisible “clamp”. Today’;s announcement by Jorge Capitanich, the cabinet chief, lasted only a minute and left his audience with more questions than answers. He revealed only that the exchange restrictions will be lifted for individuals, not for businesses; and that Argentines will still need to present tax affidavits along with their requests for dollars. Those making dollar purchases for travel will be charged a 20% tax advance on such purchases, down from 35% now.
One explanation for the events of the past week is that the authorities can no longer afford to prop up the peso by using Central Bank reserves. Although the 2011 dollar restrictions succeeded in stanching capital flight, they failed to stop the fall of Argentina’;s international reserves. In 2011, when the clamp was implemented, the reserves were around $47 billion. They have since dropped below $30 billion. With an energy bill of $15 billion and debt obligations of $10 billion to pay this year, the Central Bank cannot endure much more pressure.
On the other hand, letting the peso plummet as Argentines rush to swap their money into dollars could quickly lead to panic. Even if the Central Bank stops intervening, AFIP, Argentina’;s tax agency, will continue to control dollar sales, meaning Argentines could still face rejection of their exchange requests without explanation. Despite this morning’;s announcement several black-market exchange houses in Buenos Aires, unsure of what the next week might bring, are still hungrily buying and selling at a rate of roughly 12 pesos to the dollar, well above the official rate of 8.1.
The bigger issue, according to Daniel Marx, an economist and former secretary of finance, is how the government plans to address inflation, which he estimates at around 27% and accelerating. “The announcement was very incomplete. No mention was made of a larger plan of fiscal and monetary changes,” says Mr Marx. Freeing up the currency is all very well but without a coordinated effort to rein in inflation, devaluation may just end up fuelling price rises and further falls in the peso. This week was dramatic; Monday is shaping up to be more interesting still.
11. ARGENTINA BACKTRACKS ON DETAILS OF DOLLAR CONTROL (The Associated Press)
01/26/14
BUENOS AIRES, Argentina (AP) — Argentina’s economy minister is backtracking on details of the government’s recent announcements over the easing of currency controls.
Argentina announced Friday it was relaxing restrictions on the purchase of dollars. The decision was forced by double-digit inflation and the sharpest slide in the local peso’s value since its 2002 economic collapse, causing fears among many Argentines that it could happen again.
Economy Minister Axel Kicillof told local daily Pagina 12 in an interview published Sunday that the Argentine tax rate on credit card purchases made in dollars will not be lowered Monday from the current 35% to 20%, as he had announced.
“In the case of currency for tourism and for purchases with a credit card abroad, the 35 to 20 percent move will not be implemented this Monday,” Kicillof said. There was no word of when, or if, the tax rate on credit card purchases may be eased.
The tax for credit card purchases in dollars was issued by the center-left government late last year ahead of the southern hemisphere vacation season as one of several controls aimed at slowing the flood of greenbacks out of the country.
“Internal tourism improved a lot in Argentina and those who wanted to travel were able to,” Kicillof said. “People with a high purchasing power were able to spend in dollars without limits using their credit card.”
The tax will still be lowered for cash purchases, however. And all the other announced measures are still to take effect Monday, most notably a provision allowing Argentines to again buy pesos for personal savings, reversing a 2012 restriction.
Argentina has been kept from global credit markets since defaulting on its debt during the 2001-2002 economic crisis, so the government heavily relies on its foreign exchange reserves to meet debt obligations and finance infrastructure projects.
The reserves recently plunged to their lowest level in seven years, forcing the government to ease the currency controls. The restrictions that began in 2011 seemed only to backfire by pushing many Argentines to the black market in search for dollars, and in turn, stoking the second-highest inflation rate in Latin America after Venezuela.
After Friday’s announcement, the black market dollar weakened to 11.8 from 13 pesos, while the official rate held roughly stable at an average 8 pesos to the dollar.
Argentines are haunted by memories of the country’s worst crisis, when banks froze deposits and the currency lost value, so they have been eager to obtain dollars as protection from high inflation.
12. ARGENTINA RELAXES CONTROLS ON US DOLLARS AFTER SHARP DROP IN VALUE OF LOCAL PESO (AP Newswire (Government Feed))
By Almudena Calatrava
24 January 2014
BUENOS AIRES, Argentina (AP) – Argentina announced Friday it will relax restrictions on the purchase of U.S. dollars after the sharpest slide in the value of the local peso since the 2002 economic collapse.
Analysts said the devaluation was forced by a steady decline in the country’s foreign exchange reserves, and it helped shake markets across the world as confidence in emerging markets slipped.
Argentines will be able to freely buy dollars starting on Monday, reversing a restriction imposed in 2012, and the surcharge on the exchanges will drop as well — to 20 percent from 35.
But the brief announcement by Cabinet Chief Jorge Capitanich made no mention of many other restrictions imposed over the past three years, such as those that have make it hard for businesses to import supplies or repatriate profits.
Many Argentines also were uncertain how the measure would be applied, or how the sudden slide in the peso would affect their trips abroad.
“I’m upset at having saved for something for so long and not being able to buy everything I wanted in the U.S. just for fear of not knowing what’s next,” said Camila Fernandez, a 20-year old law student who has been planning a vacation to New York for a year. “They don’t clear up a thing. No one knows how this will be regulated.”
Many travel agencies stopped taking orders Friday pending clarification, but otherwise business went on as usual.
The original currency restrictions were meant to stem the flood of dollars out of the country, but many economists say they undermined confidence in the peso.
Foreign reserves slipped 40 percent over the past 12 months to their lowest level in seven years.
That led the government to hold back from spending more hard currency to support the peso on the official exchange market on Wednesday and Thursday as the currency tumbled 16 percent against the dollar, falling to about 8 to 1. It had been 4.4 to 1 or better when the government began imposing the series of restrictions in 2011.
Economy Minister Axel Kicillof argued that the sharp fall was fed by speculators.
“Those interests want a dollar at 13 pesos and … yesterday we had a very strong speculative attack,” he told local Radio Continental, accusing Shell Oil of offering to buy dollars at 8.40 when the peso had been trading at 7.20.
Shell Argentina President Juan Jose Arangueren denied any speculation in comments to the newspapers La Nacion and Clarin.
After Friday’s announcement, the black market dollar weakened to 11.8 from 13 pesos, while the official rate held roughly stable.
Independent economists said the effective devaluation this week will feed inflation running at near 30 percent a year. Sellers will have to raise peso prices to get the money needed to buy imported goods in dollars.
Kicillof, however, insisted, “It’s a lie from any point of view that this will carry over to prices … We hope the people understand that there have been strong movements of economic destabilization to set prices that are not prices.”
Kicillof and Capitanich said purchases on the legal dollar market still must be in line with the income a person has declared to tax authorities. And many Argentines say that what they consider legitimate requests for dollars have been refused or delayed in recent years, pushing many to the black market.
Argentina has been kept from global credit markets since defaulting on its debt during its 2001-2002 financial crisis.
As the reserves have dwindled, Argentina also has tried to renegotiate its debt with foreign creditors. It presented a formal offer this week to the Paris Club on paying some $10 billion of debt it still owes to the group of creditor nations.
This week’s developments in Argentina served as “a trigger” for a broader trend of investors shifting out of emerging markets, said Adolfo Laurenti, deputy chief economist at Mesirow Financial Holdings.
And that contributed to a sell-off in stock markets across the world on Friday. Madrid’s stock market fell 3.64 percent, partly due to companies such as BBVA and Telefonica with interests in Argentina.
Argentines are haunted by memories of the financial crisis, when banks froze deposits and the currency lost value, so they have been eager for dollars to stash in vaults or even under their mattresses in case of an emergency.
“I’m sure that the dollar is going to spike up with this measure,” said Malena Perez, 47, who owns a candy shop in downtown Buenos Aires.
She said government restrictions on imports have hurt her small business because she’s no longer able to get her hands on popular potato chip brands made in the U.S. or chocolates from Switzerland.
“I don’t trust this government. I find it hard to believe that you can buy dollars just like that,” she said.
Helped by heavy spending by the leftist government, Argentina’s economy was growing at a 7 percent yearly clip before slowing to what officials say was likely 5.1 percent growth last year, though independent analysts said it was actually less than 3 percent.
“The high pace of government spending must be slowed down, or else the reserves will continue to be squeezed and this implies feeding inflation and a loss of reserves in a short time. The peso would also continue to appreciate,” said Aldo Abram, an economist at Buenos Aires-based Exante.
13. ANALYSIS: ARGENTINE PESO DEVALUATION SPARKS TALK OF CONTAGION (Business News Americas)
24 January 2014
The currency devaluation carried out by the Argentine authorities this week has left many scratching their heads. With the Argentine peso falling to around 8 pesos to the US dollar in the space of just two days, talk of a contagion has spooked markets.
After allowing the currency to depreciate steadily in the second half of 2013, the government allowed the rate to weaken by 3.5% to 7.15 pesos per US dollar on Wednesday (Jan 22) as it ceased to intervene in the currency. The peso weakened further on Thursday to reach 8.50 before stabilizing at around 8, according to a note from investment bank Credit Suisse.
The move in the currency marked its biggest fall since the 2002 economic crisis in the country and comes just days after Venezuela moved to further weaken its currency and introduce a dual currency system, with speculation continuing that Argentina could be set to introduce a similar system.
It also comes following a seven-month period which has seen currencies fall across the region relative to the US dollar as expectations of a tapering of stimulus by the US Federal Reserve spooked markets and led to sharp outflows of fund out of regional markets.
An appearance on Friday morning by cabinet chief Jorge Capitanich to announce a relaxation of some currency controls was only a tad less pitiful than the school kid-like impatience of economy minister Axel Kicillof as they attempted to claim credit for the moves, with many remembering that it was President Cristina Fernández herself who pointedly stated in the past that no devaluation would take place under her watch.
Another interpretation is of course possible, that is, the country is rapidly running out of international reserves and could not afford to carry on with its bizarre economic experiment.
ANALYST VIEWS
Alberto Ramos at Goldman Sachs, talking to BNamericas, noted that “the authorities seem to have lost the grip on the currency dynamics,” suggesting that the ARS could overshoot in the short term. “The economy needs a weaker currency, but that is taking place on top of a very weak macro picture,” added Ramos.
According to Rafael De La Fuente, chief LatAm economist at investment bank UBS, the moves are a “reflection of the fact that they are running out of reserves and are now faced with conflicting objectives.”
Talking to BNamericas, De La Fuente explained, “On the one hand they want to keep a stable exchange rate as an anchor for inflation,” which has led to the introduction of capital controls and currency intervention. “On the other hand they continue to run a very large and widening fiscal deficit, which in the absence of higher taxes and funding for the government they have tended to monetize those deficits, leaning on the central bank to print money.”
In a note to clients, Tony Volpon, Nomura’s fixed income strategist, said that the devaluation was “the inevitable result of an unsustainable mix of monetary and fiscal policies.”
Bulltick Capital markets’ head of research, Alberto Bernal, was more positive however, pointing out to BNamericas that “it is good policy to bring the shadow exchange rate and the official rate closer. The faster they do it and take the pain, the better.”
CONTAGION?
The sharp devaluation also triggered talk of contagion following recent events in Turkey, Ukraine and Venezuela with market view split.
“Greater exchange rate volatility could open up a series of political and economic uncertainties. Developments in Argentina have generated knock-on effects in Brazil, and the risk of contagion across EM has now become more real,” said Volpon.
At SocGen the views were even stronger. According to Benoit Anne, head of emerging market strategy at the investment bank, “Global emerging markets (GEM) are now trading in full-blown panic mode”, adding that “In any case, that panic mode has now spread to all regions and all asset classes including-until recently resilient-hard-currency debt.”
According to Ramos, however, “most of what is going on in Argentina is home brewed. This is an idiosyncratic story that has very little connection to global developments.
De La Fuente was in agreement, noting that the “type of balance of payments and fiscal crisis that you are seeing unfold in Argentina and in Venezuela is very much a traditional emerging markets crisis,” which most emerging market economies have moved away from. “This is self inflicting pain without question.”
With such polarized views in the market, only the coming days will tell if Argentina’s economic experiment will be allowed to continue.
However, uncertainty is never a good sign in financial markets and as JP Morgan’s Vladimir Werning noted, “Unfortunately, authorities have not signaled whether the decision to stop guiding the official FX level through spot intervention represents either (a) a formal end to the long-standing crawling-peg regime or (b) a temporary deviation from it which will end once the market reaches an (undisclosed) new preferred level.”
14. ARGENTINA PEELS BACK CAPITAL CONTROLS AS PESO, FX RESERVES SINK (Market News International)
By Charles Newbery
24 January 2014
BUENOS AIRES (MNI) – Argentina Monday plans to lift a ban on buying dollars for savings, a move seen aimed at shoring up the peso and foreign currency reserves after a massive plunge in the currency this week, senior government officials said Friday.
“We have decided to authorize the purchase of dollars for savings,” Chief of Staff Jorge Capitanich said in a very brief televised press conference.
Capitanich, who was accompanied by Economy Minster Axel Kicillof, sought to downplay concerns about the dive in the exchange rate.
“The government considers that the price of the dollar has reached a level of convergence that is acceptable for the objectives of our economic policy,” he said.
The announcement reverses the government’s October 2011 decision to bar dollar purchases for savings which came just after President Cristina Fernandez de Kirchner won a second four-year term. She also took other steps to stem capital flight that more than doubled to $21.5 billion in 2011 from 2010, leading to a decline in foreign reserves that the government relies on to make debt payments and finance imports.
Capitanich said the federal tax bureau will authorize individuals to purchase dollars if their declared incomes are in line with the amount they seek.
At the same time, the government will cut the withholding tax on dollar purchases to 20% from 35%. This means that when somebody seeks authorization from the tax bureau to buy dollars for savings, they pay the official exchange rate plus a withholding tax of 20% that can be credited against future payments of income or wealth taxes.
The announcement came a day after the peso plunged 8.9% to 7.5272 to the dollar on the wholesale market from 6.912 Wednesday, the worst decline since Argentina scrapped a one-for-one currency regime that was in place from 1991 until 2002, when a severe economic crisis forced the government to abandon the system. The central bank has since used a managed floating system in which it intervenes in the market by buying or selling dollars to set the rate.
However, the central bank stayed out of the market Wednesday, allowing the peso to drop 0.5% to 6.912 from 6.8763 the previous day, according to central bank data.
The depreciation accelerated Thursday, tumbling to as low as 8.60 at some banks before the central bank, after an emergency board meeting, stepped in to the market in the last hour of trading. It sold $100 million of its foreign reserves to shore up the peso.
 
On the black market, where most residents have had to turn because of the dollar-buying ban, the peso plunged to 13.10 Thursday from 12.15 Wednesday, for a gap of 70-75% with the official rate.
Kicillof, after hesitating to speak during the less-than-five-minute briefing, took the microphone to attack opponents who he said want a return of the pro-market measures and one-for-on currency peg of the 1990s.
“The same people who said during 10 years that the peso was worth one dollar now want to convince us that it is worth 13 pesos,” he said. “You can make your own conclusions.”
Economists warn that the government is facing tough challenges, largely stemming from its policies of monetary expansion and its failure to return to global markets or clamp down on inflation, which private economists say could surpass 30% this year after averaging 20-25% annual since 2010.
The government has not fully settled a $100 billion default from 2001, with around $20 billion still in arrears. This has left Argentina without access to global markets, meaning it must rely on the limited domestic market and foreign reserves.
While the reserves expanded after the country emerged from a 2001-2002 economic crisis to reach a peak of nearly $53 billion in 2011, they have since declined because capital flight and imports – in particular energy – are rising faster than the inflow of dollars from exports, foreign investment and loans from overseas development banks.
Dollar reserves have tumbled 45% to $29.3 billion, the lowest since November 2006.
The trade surplus narrowed 24% to $8.75 billion in the first 11 months of 2013 from $11.58 billion in the year-earlier period, led by a 25% rise in energy imports and a 22% decline in fuel exports.
Economist Federico Sturzenegger said on radio Friday that by easing the capital controls, the gap between the official and black-market exchange rates should narrow, which should allow the government to focus on deeper issues like reducing tax pressure and cutting inflation.
But it will not be easy.
With inflation of 30% and a fiscal deficit, Carlos Melconian, another economist, said on radio that the government “is playing with fire.”

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DEFENSA: Ministro sospechado

27 enero, 2014

http://www.perfil.com/politica/Deudas-y-sospechas-llevan-a-la-fabrica-de-aviones-a-un-futuro-con-turbulencias-20140125-0031.html

CAUCINO: un abogado sensato

27 enero, 2014

http://opinion.infobae.com/mariano-caucino/2014/01/27/hacia-un-nuevo-paradigma/ describe la mentira peronista, y permite confirmar que ya el cristinismo no puede seguir engañando, porque por incapacidad el modelo está agotado, aunque los presidentes últimos hayan robado y lo sigan haciendo.

EL PAPA resucita a Duhalde

27 enero, 2014

Se decía que Bergoglio era peronista, no podía creerlo  porque peronismo es fascismo autoritario, pero leo http://www.perfil.com/politica/El-Papa-propone-abrir-la-Mesa-de-Dialogo-20140126-0033.html y noto que intentar resucitar al politico que destruyo la moneda nacional al proponerle abrir un diálogo con las víctimas del duhaldismo, kirchnerismo y cristinismo es – desde el punto de vista terrenal – una torpeza, pareciera que en el Vaticano la gente se marea y cree que con inflacion que llevo de 1 a 12 pesos el costo de un dólar, equivale a un mil doscientos por ciento de depreciacion del dinero argentino. Promediando los doce años, sería un cien por ciento anual de inflación, es decir,hiperinflación. Si Bergoglio cree que Duhalde se arrepentirá y no destruirá el peso convertible, es tarde porque Dios no hará el milagro, ya que Jesus dijo a Cesar lo que es de César, y la moneda la maneja el Estado, no la Iglesia.  El milagro lo haremos votando contra el peronismo fascista del cual Bergoglio no parece descreer, quizás porque es demasiado ingenuo en materia monetaria. Sin moneda seria estable, no hay sociedad civilizada, el peronismo es salvajismo, aunque todavía Dios no lo haya informado a


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