Thursday, October 25, 2007

Those who do not learn from History.....

.....apparently live in Argentina!

Argentina has a long and proud history of hyperinflation, and after the interlude of convertibility and the ensuing disaster and recovery when convertibility failed, it seems that things may be heating up again. KPC has reported on the political battle over the inflation number in Argentina here and here. Now the old school press is picking up on this issue with an article in the Economist and a front page story in the WSJ.

The gist of the matter is that the ruling Kirchner family (current prez Nestor and future prez Christina) after overseeing a quite remarkable recovery from the end of convertibility crisis, dumped the finance minister who helped a lot during the recovery and have been ramping up the populist economics that has made Argentina justly famous throughout the world. Energy price controls are causing shortages, price controls on beef (Argentines consume 140 lbs of beef per person annually) are causing shortages, though beef is now cheaper than veggies in many cases as veggies, being mere incidentals, are not subject to controls! Government spending is up over 45% this year in nominal terms and independent estimates put the current inflation rate somewhere north of 20%, though the official number seems stuck at around 8%.

Mugabenomics on the rise?

1 comment:

Anonymous said...

A key component of Mugabenomics is getting rid of a sizeable proportion of your population via emigration - the folks who'd be the most likely to kick you out of office.

We'll see if the Kirchners are adept at getting rid of disatisfied customers in the same way. I somehow doubt so.