Official inflation statistics in Argentina show prices rising at around 10% but independent assessments have prices rising at 25% and more. The problem that inflation is running higher than official figures is acknowledged by Gabriela Cerruti, an MP from the governing party.
Cerruti said: \”I think the real problem is if you have unemployment, or you\’re losing your home, not the statistics themselves. People always argue over statistics. Prices may be rising up to 20% a year, but people\’s pay is also going up by 20%.\”
Sigh.
No one gives a toss that Argentina is lying about its inflation rate. Well, except maybe the economists they\’ve fined and ruined for calculating the real one. We\’ve all put up with Cuba lying about everything for 60 years after all.
Except, except…..Argentina has issued index linked bonds as part of the 2001/2 debt restructuring. The interest paid depends on what the inflation rate is. If the government deliberately undercounts inflation then they get away with rooking the holders of those bonds.
That\’s what this is about. That\’s why anyone cares. It\’s not simply that they\’re liars it\’s that they\’re thieves.
In all fairness, if they are stealing from bond holders or not really only affects the people of Argentina and the bond holders. One more directly and immediately than the other, but probably less severely in the long run.
For the rest of us, do we have a dog in this fight? Well I do. Argentina manages to destroy its economy once every generation. It looks about that time again. So I am saving up so that when everything goes belly up, I can buy a nice 19th century apartment in downtown BA. Not to mention the fact that Argentinian women are, you know, hot.
I like to think of myself as a mini-vulture fund. So I say, go for it Argentina! Rip off all the bond holders you like. The more the better. The sooner you do so, the sooner I will be sitting in a cafe, having a decent coffee, smoking something big and fat from Cuba, with a cutie from BA on each arm.
I’m sure the professionals factored into the price the long South American tradition of lying and stealing by governments.
They are doubly thieves. They seized control of domestic pension funds and forced them to “invest” in said bonds.
What is sad is that the callous disregard for the rule of law undermines the economy and sets the stage for the next round of economic underperformance.
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Ken // Dec 17, 2012 at 1:47 pm
They are doubly thieves. They seized control of domestic pension funds and forced them to “invest” in said bonds.
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That’s what I was wondering. Thanks for providing the answer Ken. So in effect, these bonds were just an instrument, contrived by the government, to plunder the pension funds of their own citizens.
Why do places always seem to fuck themselves up just as I get the cash and opportunity to visit them?
Argentina is off the list until their prez stops whipping up anti-British sentiment for domestic consumption. I like to go places I feel welcome.
Argentina is off the list until their prez stops whipping up anti-British sentiment for domestic consumption. I like to go places I feel welcome.
Have you actually been? Unless you go around declaiming that the Falklands are rightly British and you’re glad we sank the Belgrano (which would be a bit tactless – equivalent to going to a bar in the States and saying “we burned down the White House, haha), then you’ll be welcome. Argentineans have developed a long-standing habit of distinguishing between governments and people, for reasons that are probably obvious.
Not been, and thanks for the reassurance. That at least some peoples have learned to make the distinction is gratifying. I can’t imagine the Mujahideen grasping that obvious point.
Presumably the value of the index linked bonds should decline to reflect the underreporting? That was suggested as an explanation for the fall in UK index linked gilt prices, after the possibility of changes to RPI were announced., though it wasn’t sustained (or other affects swamped it).