Watch out, Up: MOS/Argentina25 Jan 2013 23:50
By contrast, President Fernandez has doubled down, further antagonizing the West and isolating Argentina. In 2011, Fernandez ordered foreign car dealers to try their hand at the other side of the ledger by exporting goods of the same value as the cars they imported: a Buenos Aires Porsche dealer opted to export wine (BMW dealers had to resort to selling processed rice). Then, earlier this year, Fernandez nationalized the gas company YPF from Spain’s Repsol, a desperate attempt to cordon off a natural resource.
Thus, Argentina’s scuffle with holdout creditors muddles the larger issue in legalese: South America’s most volatile economy is ambling once again toward collapse.
After a decade of growth, Argentina’s economy contracted 3.4 percent in the third quarter. Meanwhile, inflation gallops ahead at an estimated 25 percent. In the coming months, Fernandez will have to retreat from her claims that she will not pay the “vulture funds” of holdout creditors or else Argentina will go back into default. One hedge fund manager recently told the Financial Times that he expects Fernandez will “go scorched earth.” Fed up with the gimmicks, central Buenos Aires was arrested by a 500,000-strong protest against the government on November 9.
Commentary on Argentina’s plight tends toward soccer and tango dancing. These metaphors imply that the confidence of policymakers, though perhaps overdone, is largely warranted on the basis of the country’s spirited traditions. Instead, reference to the work of Jorge Luis Borges appears in order. “Time,” wrote Argentina’s great man of letters, “is a delusion,” which can alternatively appear “a tireless labyrinth” and “a chaos.” Cristina Fernandez might well buy into this outlook, and it would in any case help explain the reason behind Argentina’s repeated economic crises.
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