Monday, June 23, 2014

Crying for Argentina

Last week, the US Supreme Court made a decision that could force Argentina to pay American billionaire hedge fund managers the full value of its decade-old debts. Argentina’s dollar denominated/pegged debt is one of many cruel legacies of the criminal Washington consensus government under Carlos Menem. Menem was known for being buddy-buddy with Bill Clinton, and excluded the same sort of chill machismo as Clinton, while turning his country into an internationally financed Ponzi scheme. In the 90’s, he was lauded as a hero of fiscal discipline and inflation control, but his real achievement was severely eroding Argentina’s sovereignty and allowing it to become a petri dish for reckless neoliberalism. As poorly managed as Argentina had been before the neoliberal experiment, it should now be clear that establishing a currency board and pegging the peso to the US dollar was a disastrous “solution.”

The current Kirchner government is also deeply flawed, and I have trouble finding anything positive to say about the leadership of my second home country. This government has continually lied about inflation statistics and violated freedom of the press. That being said, Argentina has been struggling for years to build up its dollar reserves by exporting an enormous amount of its agricultural production, at the cost of increased food prices for the poor. Argentina has also seen millions of acres of its land transformed into soybean farms, with all the environmental consequences from the herbicides and fertilizers that go along with it. Meanwhile, the US refuses to allow imports of Argentina’s higher valued agricultural goods, such as meat and citrus, due to grossly outdated health and safety measures that masquerade as protectionism for America’s welfare farmers. So on the one hand, US policy is forcing Argentina to pay back debts in dollars, and on the other hand, US policy is making it difficult for Argentina to actually acquire those dollars! Along with the current disaster in Iraq, it’s hard to see how our current leadership could do a better job of turning the entire world against the US.

This recent series of decisions from our neo-con court system may force Argentina to pay back these illegitimate debts, which could drain billions of its hard earned dollar reserves. This is crony capitalism of the worst kind; sociopath-investors like Paul Singer are using America’s court system to force the sovereign government of Argentina back into client-state status. The already unstable Argentine peso, which has caused some farmers to start reverting to commodity currency, could fall even further as the result of this decision. In the purest sense, it’s hard to see how human welfare, except for the top 0.001%, will improve as a result of this decision.


Tom Hickey said...

What some are pointing out is that this decision is counterproductive for the US in the it sends a clear warning, after the financial crisis, to avoid US financial centers like New York. There is already a strong reaction away from US hegemony and the Ukraine crisis was a tipping point that pushed Russia out of the Western orbit and into closer relationship with China. Brazil has already been alienated over US espionage, spying on the president's email. Germany also. Then there was part of the Snowden affair where a foreign chief of state's plane was force to land for inspection.

Bank on it that there is a rising global alliance to counter US hubris and that of its close allies, some whom are discovering that they are not close enough to be above US manipulation.

What this is signals is that US soft power is crumbling and the US grab for global hegemony is provoking the dialectical reaction that would be expected historically.

Even worse for the US elite, this is also going on within the US itself as the population finds itself increasingly commoditized and exploited for rents, with constitutional liberties not only revoked but criminalized.

Americans should be crying for the US.

paul meli said...

In other words…"something's gotta give".

Hopefully citizens (or their leaders) don't choose the degree of freedom known as poverty. I'm optimistic they won't.

NeilW said...

"So on the one hand, US policy is forcing Argentina to pay back debts in dollars, and on the other hand, US policy is making it difficult for Argentina to actually acquire those dollars! "

The solution is to assert sovereignty, redenominate this foreign debt forcible into Pesos and then start doing trade deals with the Chinese and Russians.

The state can bring about a decent country if it wants - implement a hut tax and then start hiring public sector workers to put public money into local communities.

Argentina is nearly there, but it just needs to stop kowtowing to the US hegemony.

Ignacio said...

Tom what you describe sounds like every other empire collapse, because stupid elites too obtuse to know what's going on in front of them while they fall into their own control paranoia (resulting in chaos instead).

People in charge should know better by now, but they are irrational control freaks after all.