Antonio - Whats goin on with Argentina?

centermass556centermass556 Senior MemberPosts: 3,464 Senior Member
I Was gonna ask whats going on with your neighbors..But that is not exactly a correct statement. But, at any rate...Whats the more local scoop on the melt down in the land of Sliver? I didn't know they were on a down slope trajectory until I saw the news this week about riots and the president fleeing. You see any chance of them turning it around?
"To have really lived, you must have almost died. To those who have fought for it, freedom has a flavor the protected will never know."

Replies

  • AntonioAntonio Senior Member Posts: 2,137 Senior Member
    Some famous economist once said that there are 3 different economic structures; 2 of them which were socialist and capitalist economies he could understand when applied to certain historical & social context, but the 3rd. one was completely impossible to reason about, and that's the Argentinian economy.

    Problem for them isn't uncommon to the region, but it's even worse for them considering the huge natural resources they have. Basically they're swamped by corruption, worsened by the fact that the last 70 years or so a leftist populist political party called Peronismo (For a former president, Juan Peron) has hugely influenced the govenrment and when in power applied all the classic recipes to keep the populace happy (Subsides, welfare, state-run businesses, private entrepreneurship taxing, etc. etc.) while dilapidating the national budget in corrupt infrastructure schemes and so that only benefited the party and their allies.

    That has left the state finances in a sorry situation that someone had to fix, and that means harsh economic measures to sincere services tariffs, cutting social programs spending, reducing the size of bureocracy by firing excessive employees, etc. Current right-lined president Macri vowed to do that while prosecuting former Peronist administration for huge and evident corruption scandals that even went international (Specially related to Brazilian construction companies) and involved serious crimes like money laundering and even murder.

    Of course taking such hugely needed "fat trimming" measures is hugely impopular, specially among those who benefit from the state of things and the poor who either depend on such help or even became used to get help in exchange of nothing but votes.

    Political enemies of reforms and the current administration are using popular unhappiness to their purposes and that's all the fuss about, with threats of unions to strike and popular unrest. Basically it's a push of criminals disguised as usually leftist politicians to recover their share of the national income no matter what....pretty much the same that has thrown Venezuela into the sorry situation it's suffering right now.

    Economic measures taken were needed; country was literally falling apart thanks to the Peronists. In 2013 we went there with the Chilean in-laws to ski and some friends of my BIL with properties both sides of the border were making good money by literally smuggling home appliances (Like TVs, laptops and so) and clothing that were scarce and expensive in Argentina due to the import restrictions and artificial currency interchange rates imposed by the government that was trying to hoard Dollars by strict controls.
  • centermass556centermass556 Senior Member Posts: 3,464 Senior Member
    I thought things turned around at the turn of the century and they were headed back to the days of prosperity. Argentina always stood out to me, because of all the countries around the world that were leveled by the great depression, Argentina stayed strong. 
    "To have really lived, you must have almost died. To those who have fought for it, freedom has a flavor the protected will never know."
  • AntonioAntonio Senior Member Posts: 2,137 Senior Member
    Argentina was prosperous maybe until the '60s thanks to the huge world demand for beef and wheat, their main export products; right after the war thousands of European migrants fled the devastation to start over in that country (My in-laws among them, but later would relocate in Chile) bringing knowledge and a work force hungry to make a living for their families, but unfortunately politicians with socialist policies ended up ruining the economy; military coups and dictatorships brought order among the communist and populist unrest but were shortsighted to generate better economic structures and when wheel turned around and socialists reached power everything went down the road.

    Pretty much the same history of most S.A. countries....so sad.
  • centermass556centermass556 Senior Member Posts: 3,464 Senior Member
    Yeah, I guess so. outside of Columbia and Venezuela, I haven't ever really taken a deep dive into each countries history. I know some of the high points, but that is about it. The way Chile achieved independence is a pretty interesting story. There seems to be so much prosperity to be had down there, but it does seem like the right people are ever in charge.
    "To have really lived, you must have almost died. To those who have fought for it, freedom has a flavor the protected will never know."
  • Wambli SkaWambli Ska Moderator Posts: 25,653 Senior Member
    Argentina goes through cycles a bit more pronounced than the USA but that is where we are probably headed.  Venezuela is the advanced stage of this welfare state from which there is no return when the "poor" just take over and continuously hand over the country to the biggest "benefactor" they can elect.
    "Attack rapidly, ruthlessly, viciously, without rest, however tired and hungry you may be, the enemy will be more tired, more hungry. Keep punching." General George S. Patton
  • AntonioAntonio Senior Member Posts: 2,137 Senior Member
    Currently Chile is the only one that appears to be heading the right way, without the drug-related issues that plague tropical & subtropical countries, relatively low political corruption problems and crime and solid institutions; even the Chilean left seems to be the least childish of all, more worried about "social conquests" like abortion, same sex "marriage", etc. than reverting the economic guidelines that made that country more prosper and solid than its neighbors....more in the line of leftist Democrats or European socialists than cartoonish commies frozen in the '60s.

    If not for being far from my beloved sea and having awful gun laws, I'd probably ponder moving to Santiago, specially considering wife's a citizen (So are the twins) and that there are few migrant restrictions for fellow S.As.

    Venezuela has been literally taken over by an armed criminal gang disguised as the socialist party, and sadly such people will only be removed by force, probably with big loss of civilian lives. Meanwhile, most people who put them in power is "enjoying" a 5-digit yearly inflation and controlled/state-ran exchange & production of currency and goods....been there in the late '80s and it's NO fun at all!


  • alphasigmookiealphasigmookie Senior Member Posts: 7,899 Senior Member
    Argentina goes through cycles a bit more pronounced than the USA but that is where we are probably headed.  Venezuela is the advanced stage of this welfare state from which there is no return when the "poor" just take over and continuously hand over the country to the biggest "benefactor" they can elect.
    Big problem in Venezuela seems to be all driven by oil. They found a bunch, started producing a lot around the same time global oil prices were rising. Politicians saw it as the answer to all their problems and made big promises to people based upon what they assumed would be a never ending fountain of wealth. Then '09 hit, prices crashed, revenues crashed. While revenues were crashed they also stopped investment in their oil production infrastructure. Do that long enough and production crashes which it has been for the past few years.  Add it all  up and you have oil revenues that  have fallen on the order of 90+% over the course of a few years. When you have a massive chunk of your GDP disappear almost overnight it's fairly hard to recover no matter who is in power. 
    "Finding out that you have run out of toilet paper is a good example of lack of preparation, buying 10 years worth is silly"
    -DoctorWho
  • AntonioAntonio Senior Member Posts: 2,137 Senior Member
    Not quite, since instead of investing diversifying production and develop infrastructure to mitigate any potential backwash from the ever present oil trade situations, they dilapidated the money by essentially creating a strong state-run help programs network, while destroying their own industrial capacities by confiscating all sorts of private business from their owners and stockholders under the classic socialist "strategic industries" mantra.

    Venezuelan economic refugees have flooded us, with over 100K arriving in the last year, and all they share the same common history: They worked in businesses as employees and managers, or owned small businesses, but due to the state-imposed artificial exchange rate and foreign currency, they ran out of money to import machinery or goods to keep producing; rampant crime drove them from their places of work, and corrupt bureaucracy made them impossible to keep functioning jobs, thus the most productive layer of their society, that is educated, craft-skilled  middle class and small entrepreneurs from 18 to 50 is fleeing the country and leaving a growing void that only worsens the situation.

    At least all the cases I've seen (And suffered) of this kind of crisis in the region came from socialist, "progressive" recipes applied by an extremely corrupt net of politicians that disguised as "social avengers" will hold on to power as long as they can while making personal fortunes (Like the Kitcheners did in Argentina in the last decade). we had the same problem in 1985-1990 when a leftist government following a leftist military dictatorship tried to apply economic measures that chocked private initiative and plunged our economy into a yearly 6-figure inflation rate!
    Only a right-winged government that took HARSH corrective measures was able to correct this huge mess while fighting one of the most violent terrorist band the world have seen (Pol Pot style)

  • Wambli SkaWambli Ska Moderator Posts: 25,653 Senior Member
    Argentina goes through cycles a bit more pronounced than the USA but that is where we are probably headed.  Venezuela is the advanced stage of this welfare state from which there is no return when the "poor" just take over and continuously hand over the country to the biggest "benefactor" they can elect.
    Big problem in Venezuela seems to be all driven by oil. They found a bunch, started producing a lot around the same time global oil prices were rising. Politicians saw it as the answer to all their problems and made big promises to people based upon what they assumed would be a never ending fountain of wealth. Then '09 hit, prices crashed, revenues crashed. While revenues were crashed they also stopped investment in their oil production infrastructure. Do that long enough and production crashes which it has been for the past few years.  Add it all  up and you have oil revenues that  have fallen on the order of 90+% over the course of a few years. When you have a massive chunk of your GDP disappear almost overnight it's fairly hard to recover no matter who is in power. 
    That is slightly over simplified.  Venezuela's woes have a LOOOOOOONG history going back quite a bit before their current state.  I used to do a lot of business with PDV in the 90s and more than once I was squirreled away out of the country the day before a coup.  I could go into a LOT of details but it's late and it's all out there on the inter web...

    BTW one of the things that really sunk them was unfettered immigration from neighboring countries (encouraged by the government) and the welfare state they created for these illegal immigrants that did not come in to work but only to enjoy the government handouts...  Sounds familiar?!?!?
    "Attack rapidly, ruthlessly, viciously, without rest, however tired and hungry you may be, the enemy will be more tired, more hungry. Keep punching." General George S. Patton
  • alphasigmookiealphasigmookie Senior Member Posts: 7,899 Senior Member
    Argentina goes through cycles a bit more pronounced than the USA but that is where we are probably headed.  Venezuela is the advanced stage of this welfare state from which there is no return when the "poor" just take over and continuously hand over the country to the biggest "benefactor" they can elect.
    Big problem in Venezuela seems to be all driven by oil. They found a bunch, started producing a lot around the same time global oil prices were rising. Politicians saw it as the answer to all their problems and made big promises to people based upon what they assumed would be a never ending fountain of wealth. Then '09 hit, prices crashed, revenues crashed. While revenues were crashed they also stopped investment in their oil production infrastructure. Do that long enough and production crashes which it has been for the past few years.  Add it all  up and you have oil revenues that  have fallen on the order of 90+% over the course of a few years. When you have a massive chunk of your GDP disappear almost overnight it's fairly hard to recover no matter who is in power. 
    That is slightly over simplified.  Venezuela's woes have a LOOOOOOONG history going back quite a bit before their current state.  I used to do a lot of business with PDV in the 90s and more than once I was squirreled away out of the country the day before a coup.  I could go into a LOT of details but it's late and it's all out there on the inter web...

    BTW one of the things that really sunk them was unfettered immigration from neighboring countries (encouraged by the government) and the welfare state they created for these illegal immigrants that did not come in to work but only to enjoy the government handouts...  Sounds familiar?!?!?
    But all the oil revenue allowed them to build and fund such a large welfare state. Like up to 30-40% of their GDP from oil revenues in fat years. 
    "Finding out that you have run out of toilet paper is a good example of lack of preparation, buying 10 years worth is silly"
    -DoctorWho
  • MichakavMichakav Senior Member Posts: 2,098 Senior Member
    Argentina goes through cycles a bit more pronounced than the USA but that is where we are probably headed.  Venezuela is the advanced stage of this welfare state from which there is no return when the "poor" just take over and continuously hand over the country to the biggest "benefactor" they can elect.
    Big problem in Venezuela seems to be all driven by oil. They found a bunch, started producing a lot around the same time global oil prices were rising. Politicians saw it as the answer to all their problems and made big promises to people based upon what they assumed would be a never ending fountain of wealth. Then '09 hit, prices crashed, revenues crashed. While revenues were crashed they also stopped investment in their oil production infrastructure. Do that long enough and production crashes which it has been for the past few years.  Add it all  up and you have oil revenues that  have fallen on the order of 90+% over the course of a few years. When you have a massive chunk of your GDP disappear almost overnight it's fairly hard to recover no matter who is in power. 
    That is slightly over simplified.  Venezuela's woes have a LOOOOOOONG history going back quite a bit before their current state.  I used to do a lot of business with PDV in the 90s and more than once I was squirreled away out of the country the day before a coup.  I could go into a LOT of details but it's late and it's all out there on the inter web...

    BTW one of the things that really sunk them was unfettered immigration from neighboring countries (encouraged by the government) and the welfare state they created for these illegal immigrants that did not come in to work but only to enjoy the government handouts...  Sounds familiar?!?!?

    It does sound eerily familiar! Will be waiting for Alpha's response.
  • centermass556centermass556 Senior Member Posts: 3,464 Senior Member
    Qatar actually used Venezuela as an example of what not to do with your money. Almost immediately after seeing a return on their Natural Gas production they began a super trust for all Qataris and reinvested around the world. Today, that fund is at about 300 Billion dollars and growing. They own huge shares in Shell, the Russian Gas company, and about 5 billion in real estate in NYC.  Oh and it helped that they invited us to come to Qatar right after their Natural Gas production started. They share the field with Iran. We do here for the Qatari's what we have been doing in Kuwait since 91. 
    "To have really lived, you must have almost died. To those who have fought for it, freedom has a flavor the protected will never know."
  • alphasigmookiealphasigmookie Senior Member Posts: 7,899 Senior Member
    Qatar actually used Venezuela as an example of what not to do with your money. Almost immediately after seeing a return on their Natural Gas production they began a super trust for all Qataris and reinvested around the world. Today, that fund is at about 300 Billion dollars and growing. They own huge shares in Shell, the Russian Gas company, and about 5 billion in real estate in NYC.  Oh and it helped that they invited us to come to Qatar right after their Natural Gas production started. They share the field with Iran. We do here for the Qatari's what we have been doing in Kuwait since 91. 
    It's amazing when you look around the world you can quickly see that those with natural resource wealth that feeds into a large sovereign wealth fund (Norway, UAE, Kuwait) they are some of the most stable and prosperous (Saudi is a minor exception, but they're still pretty good compared to all their neighbors) and then you see the ones that are the biggest mess and they're the ones with natural resource wealth that spend beyond their means and don't plan for the future or have a good way to buffer against volatility in commodity prices and production challenges. 
    "Finding out that you have run out of toilet paper is a good example of lack of preparation, buying 10 years worth is silly"
    -DoctorWho
  • centermass556centermass556 Senior Member Posts: 3,464 Senior Member
    Qatar did all inside of 20 years too. They didn't go all in on Natural Gas until 96, after the coup. Well the coup happened in 95. The son took the throne from dad, dad half heartedly tried to retake it in 96. Until that point, Qatar was still more or less a failing fishing village..
    "To have really lived, you must have almost died. To those who have fought for it, freedom has a flavor the protected will never know."
  • Wambli SkaWambli Ska Moderator Posts: 25,653 Senior Member
    Qatar actually used Venezuela as an example of what not to do with your money. Almost immediately after seeing a return on their Natural Gas production they began a super trust for all Qataris and reinvested around the world. Today, that fund is at about 300 Billion dollars and growing. They own huge shares in Shell, the Russian Gas company, and about 5 billion in real estate in NYC.  Oh and it helped that they invited us to come to Qatar right after their Natural Gas production started. They share the field with Iran. We do here for the Qatari's what we have been doing in Kuwait since 91. 
    It's amazing when you look around the world you can quickly see that those with natural resource wealth that feeds into a large sovereign wealth fund (Norway, UAE, Kuwait) they are some of the most stable and prosperous (Saudi is a minor exception, but they're still pretty good compared to all their neighbors) and then you see the ones that are the biggest mess and they're the ones with natural resource wealth that spend beyond their means and don't plan for the future or have a good way to buffer against volatility in commodity prices and production challenges. 
    Kind of what we have been doing here in the USA?
    "Attack rapidly, ruthlessly, viciously, without rest, however tired and hungry you may be, the enemy will be more tired, more hungry. Keep punching." General George S. Patton
  • bisleybisley Senior Member Posts: 9,889 Senior Member
    Great discussion.

    Antonio, you are an excellent reporter. Thank you for a very well stated analysis that puts a lot of things into a perspective that a logical person can understand.
  • AntonioAntonio Senior Member Posts: 2,137 Senior Member
    You're welcomed; anything to throw some lights over the black comedy we live in at "the tropics and sub-tropics" from a 1st. hand experience and specially show the results of policies that sometimes some of your politicians try to apply over there.

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