The government does as Ritchie insists!

Unfortunately it\’s the government of Argentina.

she (President Christina Kirchner) decreed that insurance companies must invest up to 30 percent of their holdings in \”productive activities\” to improve Argentina\’s infrastructure. \”This decree links the insurance industry with the development of the actual economy,\” said the decree published Tuesday.

With her government redirecting resources toward \”projects that have a clear productive and social purpose,\” insurers will \”encounter new possibilities of investment that that will feed a virtuous cycle of development with social inclusion,\” it said. The decree, effective Wednesday, puts Deputy Economy Minister Axel Kiciloff and Commerce Secretary Guillermo Moreno in charge of a committee that will decide where the insurers can invest their holdings.

The list begins with projects already sponsored by the nationalized pension system and other government-run funds, but also can include whatever the committee decides is \”productive, according to the objectives of the political economy.\”

Economy Minister Hernan Lorenzino said Argentina\’s insurers are sitting on $13 billion but put only $18.5 million in what the government considers productive projects. The government hopes to raise that to $1.5 billion by mid-2013. This \”will be good for the national economy and for the insurance sector as well, since these investments have proven to be the best in terms of profits and security in recent years,\” Lorenzino said in a radio interview.

That is exactly what Ritchie has been urging, isn\’t it?

And I think you\’ve rather got to hand in your reputation as a lefty liberal type when it\’s the fucking fascists that pick up your ideas don\’t you?

44 thoughts on “The government does as Ritchie insists!”

  1. “And I think you’ve rather got to hand in your reputation as a lefty liberal type when it’s the fucking fascists that pick up your ideas don’t you?”

    Far from it. I think it will probably enhance his reputation amongst Leftists. After all, a statist is a statist…

  2. If any government is daft enough to listen to Ritchie, I’m glad it is one half a world away and that we aren’t particularly friendly to. He’ll probably do them more damage than a heavy bombing run.

  3. I have never really understood why Fascism and Socialism are supposed to be opposite ends of the spectrum. Basically, both systems are based on centralised planning, and murdering the opposition.

  4. The state picking winners again.

    Because it worked so well last time, I suppose.

    As a dog returns to his vomit…

  5. @diogenes

    That very same comment has caused some of my friends to look at me very weirdly and comment on my mental health behind my back.

  6. Diogenes, same bird, different feather.

    Statists, as you nearly say. The modern struggle is between state power and liberty. Maybe it was always so.

  7. What Surreptitions Evil said. Frankly, given their behaviour recently, I can with Argentina little more than that Ritchie becomes their economics advisor forthwith.

  8. I thought the Argie government was no longer Fascist. In any case, the consequences of their adoption of the barmy ideas of Timmy’s hero will be an adequate recompense for their assault on the Falklands. Heh heh …

  9. Interesting stuff.

    Forcing these companies to invest 30% of their activity in “industry” can be viewed as forcing them to take on a specific risk to their portfolios.

    Specifically, high-risk equity-financed projects in the form of direct investment, corporate lending via bond buying or other stuff like Mezzanine.

    Where are they to turn to to get low-risk/zero-risk on the other 70%? Certainly not Argentina’s own Government bonds!

  10. The decree, effective Wednesday, puts Deputy Economy Minister Axel Kiciloff and Commerce Secretary Guillermo Moreno in charge of a committee that will decide where the insurers can invest their holdings.

    I bet their relatives are falling over themselves setting up business ventures as we speak.

  11. I thought the Argie government was no longer Fascist.

    What do you call a mixed-but-sort-of-centre-left*, nationalist, statist kleptocracy?

    * The limited economic laisse-faire stuff Menem instituted were largely IMF loan prerequisites. It’s not really in the mindset of the Argentine political class (of any party or military service.)

  12. Well at least its the argies trying out this batshit insane policy.
    Also I love the irony of the statement “…will be good for the national economy and for the insurance sector as well, since these investments have proven to be the best in terms of profits and security in recent years,”
    Naturally the MERVAL dropped like a fucking stone.

  13. As some bloke said, extreme left and extreme right are points on the circumference of a circle, they end up in the same place.

  14. “will be good for the national economy and for the insurance sector as well, since these investments have proven to be the best in terms of profits and security in recent years,”
    I’d be interested in what this “proof” is. I’m not asking for mathematical, scientific, statistical or economic. Just “51% of the population benefits, 49% suffers no harm” would be sufficient.
    (If anyone could provide a bit of long-term “proof” that would be a bonus.)

  15. In the last 15 years, the UK has ndulged in several massive infrastructure investments – West Coast rail upgrade, M25 upgrade, Channel rail link, mobile 3g networks, BT’s ISDN and then fibre roll-outs etc….has the rate of return on investment been positive as far as anyone can tell?

  16. bilbaoboy…I know the feeling…and yet the similarities are spooky…even when you look at the obsessive anti-semitism of Stalin and Hitler. And for the John B’s of this world…look at the 30s purges and count the Jews.

  17. diogenes, not sure the BT roll out was that good, I get about 50 times faster speed on cable for similar price.
    The anti-semitism of Hitler was pretty common in Germany, partly helped by the churches. Giving an ‘acceptable’ group to blame for all the troubles that were in most places a small minority of people. As happens these days too…

  18. Martin

    is that a way of saying you agree with me that infrastructure spending – just check the BT accounts – has a variable effect in the real world? So the labour nostrum…amplified by “economists “such as Chris Dillow, Steve Keen, Ed Roundshapes and the egregious murphmeister are all wrong!!!!! Too horrific to contemplate

  19. I would be prepared to testify that the real result of the West Coast line upgrade was that I spent a heap more time stranded between stations than I ever did before the so-called- upgrade. An hour spent on a train between 2200 and 2300 is a very long hour. It brought me no benefit, I can assure you – hinting at a strongly negative multiplier.

  20. diogenes,

    In the last 15 years, the UK has ndulged in several massive infrastructure investments – West Coast rail upgrade, M25 upgrade, Channel rail link, mobile 3g networks, BT’s ISDN and then fibre roll-outs etc….has the rate of return on investment been positive as far as anyone can tell?

    Channel tunnel rail link was a loser. The savings were calculated based on the amount of time that people were saved, and it turned out that only 1/3rd of the extra people that they thought would use it back in 1995 would.

  21. Actually the core of fascism was the then revolutionary idea of a state-directed economy.
    I translated the lead papers in the 1942 series “European Economic Community” and Reichsminister Walther Funk was very clear on this point. See http://www.freenations.freeuk.com and the title “The EU’s Evil Pedigree” amongst the titles which scroll up on the right hand side of the page.

    Jonah Goldberg’s book ‘Liberal Fascism” is quite an eye opener too. Many things now regarded as “progressive” originate from fascist ideas. Sir Oswald Mosley left the Labour Party because it did not at the time embrace Keynesian spending plans and H G Wells exhorted the Young Liberals in 1932 to form their own fascist movement because Fabian Socialism was too nice and too slow.

  22. So Much For Subtlety

    Surreptitious Evil – “What do you call a mixed-but-sort-of-centre-left*, nationalist, statist kleptocracy?”

    The European Union? The de facto state of two thirds of the world? The inevitable result of Latin culture in the realm of politics? Britain’s future?

    There are a lot of things you could call it, but I don’t think it is fair to call the Argies’ moronic leader Fascist just yet.

  23. All this rather ignores that private sector financial institutions used their considerable rights to direct their own affairs to almost crash the capitalist system and had to be rescued by Statist and supra Statist action.In the UK the State now waits for the banks to lend money and for the developers to build houses i.e. fulfil their ostensible functions.

  24. Fascists believe in utopian socialism in their country for those of their nationality and people of other nationalities can get stuffed.

    Socialists believe in utopian socialism in their country for those of other nationalities and people of their nationality can get stuffed.

  25. You know JamesV – that’s about the best description of splitting hairs that is differentiating fascism from socialism…

  26. All this rather ignores that private sector financial institutions used their considerable rights to direct their own affairs to almost crash the capitalist system and had to be rescued by Statist and supra Statist action.

    The institutions knew the state would rescue them.

  27. “diogenes // Oct 24, 2012 at 11:12 pm

    bilbaoboy…I know the feeling…and yet the similarities are spooky…even when you look at the obsessive anti-semitism of Stalin and Hitler. And for the John B’s of this world…look at the 30s purges and count the Jews.

    Didn’t Stalin stop persecuting Jews because Hitler was and he didn’t want to make the comparison too easy?
    I don’t have a source for that.

    BTW isn’t this the same economic policy that has been working so well for Argentina for the last 60+ years. I.e. made it from a first world to a third world country.

  28. @UKL
    Fair point .But they did n’t rescue Lehmans’s ,not a High Street bank and look a the mess that caused.From a coldly logical p.o.v the State should n’t have rescued the Nat West but the alternative was just too grim.
    It is fair to say ,isn’t it,that the Gov( of whatever party) put the banks on the hook for all those mortgages in the house price bubble in order to appease the homeowner/ voters desperate for unearned capital gains in the price of their houses.Governments probably need to keep the banks onside to continue with the same operation.Perhaps now the banks, having had their fingers burned, don’t want to play any more (on the property market).Does n’t explain why they won’t lend to manufacturers though.Or don’t they trust the manufacturer’s estimates of the level of demand?

  29. Does n’t explain why they won’t lend to manufacturers though.

    Because they are being ordered to improve their capital adequacy ratios and to reduce bad debt provisions or there will be legislation to compel such. Neither of these are particularly compatible with an expansion of lending during a recession (or near such.)

  30. @SE
    Quite! But the banks, which are n’t popular, can hardly complain .They can’t demand to operate on inadequate capital ratios and increased bad debts.
    Obviously the Argentinian policy is not a solution but its a hard nut to crack.

  31. So Much for Subtlety

    diogenes – “even when you look at the obsessive anti-semitism of Stalin and Hitler. And for the John B’s of this world…look at the 30s purges and count the Jews.”

    I am not sure that you would find a lot of Jews if you looked at the purges of the 1930s. You would if you looked at the post-War purges especially in Eastern Europe. But in the 1930s? A tiny proportion of the victims of Stalin would have been Jewish. It may be true that among top Party leaders, they were likely to be Jewish because, how does one put this politely, Jews really were over-represented in the Communist Party. As they were right to the end of the Soviet Union. But in the 1930s most of Stalin’s victims were peasants.

    I doubt anyone here has more contempt for Stalin and Stalinists than me, and everyone here but a few Trots has contempt for Stalin, but I don’t think anti-Semitism was one of his problems. He worked with many without any obvious problems. His daughter’s first boy friend was Jewish – although Stalin did have him sentenced to five years in prison but that shows he got on alright with the guy. His eldest son married a Jewish girl.

  32. Diogenes (19): The M25 widening and BT’s network investments were unequivocally positive. HS1 was approximately neutral (usage came in at 2/3 the figure that the DfT used when it agreed to finance the project – while it was 1/3 of LCR’s original projections, this is only of academic interest), and the WCRM is hard to quantify as below.

    The massive loss, as hinted at by Martin’s comment, was in telecoms infrastructure projects made by companies other than BT. All the constituent companies of Virgin Media went bust at least once before the current business was created, completely wiping out equity holders and giving creditors a massive haircut.

    Diogenes (20): What the hell? As SMfS notes, Stalin wasn’t antisemitic, but I also don’t understand your underlying point. Also as SMfS notes, only the most utterly bonkers revolutionary communists (not even Trots, for fairly obvious reasons!) are Stalin fans.

    Diogenes (23): you’ve fallen into an obvious fallacy regarding the WCML, of assuming the options were the status quo or the modernisation. They weren’t: they were degradation and collapse of the infrastructure or the modernisation. The modernisation programme, as planned by the newly-privatised, run-by-consultants-not-engineers Railtrack, was a disaster of execution, but some kind of expensive renewal project was absolutely essential. So gauging ROI is difficult.

  33. So Much For Subtlety

    john b – “Also as SMfS notes, only the most utterly bonkers revolutionary communists (not even Trots, for fairly obvious reasons!) are Stalin fans.”

    I do not think that actually. I think that no one here is likely to be a Stalin fan. Except a few bonker Trots. Outside the relatively sane world of this blog? Well, I note that a British academic has just written a book calling Stalin the greatest statesman of the 20th century. I do not predict the same response that someone would get if they called Hitler the same. Stalin has a hell of a lot of fans outside this blog.

  34. SMfS: again, not Trots. There’s that business with the ice-pick, remember? I’m struggling to work out who the academic you’re referring to is – WWII and Cold War history being something I follow… either he’s incredibly obscure or you’re characterising his argument in a somewhat unrecognisable fashion.

  35. @ David #32
    There is a very thorough history book called “Hitler and Stalin – parallel lives” into which I have dipped once or twice before going back to work because the latter was easier. This makes the point that Hitler did not need to invent Stalin’s alleged friendship with Jews since a large part of Stalin’s inner circle, including at least one of his mistresses, were Jewish.

  36. @ DBC Read ’27
    The banks did not crash the capitalist system. When the Labour government confiscated Northern Rock (which was NOT insolvent, even according to the poodle accountant bought by Alastair Darling) the sky did not fall in. HBOS was not bust – Lloyds initially reported negative Goodwill of £15 billion on the acquisition. If Darling had allowed RBS to close (although it wasn’t actually bust) the sky would not have fallen in on the financial system but he might have lost his seat in the next election. The only UK deposit-taker that was rescued because it was actually insolvent was Dunfermline Building Society in Gordon Brown’s constituency.
    What has caused the recession is the cutback in consumer spending because consumers have stopped (or at least significantly reduced) borrowing money that they have not earned and cannot afford to repay. In ten years to 2008 UK consumers had increased their debts by one TRILLION pounds. This stopped because HM Treasury under Darling drastically increased the lax capital requirements allowed by HMT under Brown and hence new lending was drastically curtailed. So – who has caused the UK economy to fall into recession (which is NOT the same as capitalism crashing)? Brown, with a little help from greedy banks, and Darling.
    Incidentally, this also explains why banks are not lending as much to industry as one might like – the increase in capital ratios means that they have to focus on the most profitable areas of lending in order to cover their costs, which pushes them towards credit cards and overdrafts instead of lending to businesses at a couple of % over base rate.
    I sometimes wonder whether New Labour’s supporters *can* be that ignorant.

  37. So Much for Subtlety

    john b – “again, not Trots. There’s that business with the ice-pick, remember?”

    Well not literally Trots then. Tankies.

    “I’m struggling to work out who the academic you’re referring to is – WWII and Cold War history being something I follow… either he’s incredibly obscure or you’re characterising his argument in a somewhat unrecognisable fashion.”

    Geoffrey Roberts. No, I am not characterising his argument in an somewhat unrecognisable fashion. He comes out and says it.

  38. SMfF: I’m not convinced “The Soviet Union was responsible for some of the most epic achievements and most gross misdeeds of our age; I have no difficulty in joining the condemnation of the Soviet system’s violence, terror and repression” fits your take on Roberts’s work.

    From my POV, he’s good at understanding how Stalin’s existence meant that those of us who are of European, American or Commonwealth extraction are still alive, because our ancestors survived, because the USSR beat Germany, and so the kind of fighting that occured in Stalingrad didn’t need to occur featuring us and our people.

    Anyone who lived in pre-1990 Western Europe who isn’t grateful for the USSR is a hypocrite. People who grew up in the Warsaw Pact, on the other hand, have every right to be cross.

  39. “Anyone who lived in pre-1990 Western Europe who isn’t grateful for the USSR is a hypocrite. People who grew up in the Warsaw Pact, on the other hand, have every right to be cross.”
    I am not grateful for the USSR. I am greatful that Finns fought so well against the soviets that Hitler thought that he could conquer the USSR.
    The soldiers in Stalingrad didn’t fight to help us
    they did it to save themselves.
    Ironically if Hitler hadn’t fought Stalin we would have still won World War II just we would won a bit later with an atom bomb in Berlin followed by one in
    Moscow (which was originally our enemy) and one in Tokyo. (Which way would have resulted in more deaths is hard to say).

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