May 19, 2013
Things fall apart
To the evident dismay of Cristina and her devotees, the gas-guzzling economic “model” they are so proud of that they think the rest of the planet would be well-advised to adopt it is running out of the fuel it so desperately needs. To make their situation worse, there are not that many petrol stations to be found on the road ahead. Up to now, they have managed to top up the tank by filling it with what they could get from farmers, private pension funds, the Central Bank reserves and the Spanish bit of the YPF oil company, but all that is behind them. What will they do next? Many fear they will resort to the traditional expedient of helping themselves to whatever they can find in people’s bank accounts or even, with the help of those sniffer dogs that have been trained to detect dollar bills, hidden under their mattresses, in holes beneath the floorboards or in the garden.
Such fears may be exaggerated, but there can be no doubt that an increasing number of Argentines, whether rich or poor, feel that once again the time has come to put their greenbacks out of the government’s reach. That is why, just a couple of days ago, on the black market the US dollar fled from the official one and sprinted away on its own. As always happens, the government’s strenuous efforts to stop it in its tracks backfired: instead of convincing folk that it would be better to stick to the peso, they merely gave wings to the already widespread suspicion that the country is about to plunge into its umpteenth economic crisis.
A new government can get away with desperate measures such as rifling people’s savings accounts because it “inherited a disaster” and therefore feels entitled to do things that in other circumstances would be considered outrageously illegal. But the Kirchnerites have been in office since May 2003 and it is generally agreed that with 54 percent of the votes in her handbag Cristina’s power is well nigh absolute. When the economy appeared to be booming, Cristina, a lady who has never been inhibited by false modesty, could take all the credit; should it crash, as it well could in the coming months, she will find it hard to avoid being shouldered with most of the blame.
In retrospect, all economic crises seem entirely predictable. Specialists in financial matters and political commentators tell us it was always evident that first Japan and then the US and Europe would come a cropper for a variety of what they say are perfectly obvious reasons. But when those bubbles they belatedly warn us against pop, most people, the experts included, react with astonishment. Some of them lose their own money betting on the market continuing on its upward march even though, they claim, they always knew an abrupt downturn was in the offing. They had never thought that the outlook could change with such bewildering swiftness, that in a question of days or even hours, rose-tinted optimism would be replaced by doom-laden pessimism.
The last decade has been galling for those “orthodox” economists who from the beginning assumed that the “populist model” that was adopted by Mr and Mrs Kirchner would share the unhappy fate of its many predecessors. Thanks to soybeans that provided torrents of hard cash, a huge devaluation, unused capacity left over from the nineties, and the willingness of much of the population to subsist on a pittance, for year after year the country as a whole grew at a “Chinese” rate, greatly enriching a few, allowing a fair number to live relatively well, and persuading millions who have become inured to poverty that at long last they would have some money not just for essentials but also for some little luxuries. Unfortunately, much as happened in Europe and the US, consumption, encouraged by lavish government spending, rose far faster than production, but unlike her counterparts in those ill-starred countries Cristina is against retrenchment on principle. On many occasions she has proclaimed that she would never even dream of obliging Argentines to try a spot of belt-tightening. Her instinctive solution to every problem is to throw money at it, but now that the money is running out she will just have to think of something else.
Cristina’s initial reaction to the bad times that are looming has been to look for someone to blame. There are plenty of candidates: greedy businessmen, stingy bankers, cantankerous union bosses whose behaviour infuriates her and, of course, “the world” which, to her indignation, has allegedly come down on her like a ton of bricks, ruining her generous plans. The appealing notion that Argentina’s many economic and social woes were all the fault of nasty foreigners and their treasonous local accomplices was put to work with great success by the late Nestor Kirchner, and his widow seems genuinely convinced that it holds the explanation for the country’s failure to keep pace with others, such as Canada and Australia, that are similarly endowed, but that does not mean it will help her much this time round. Unfortunately for Cristina and her more enthusiastic backers, should the Argentine economy go into a tail-spin, plenty of people will blame it on her habit of surrounding herself with eccentric incompetents like trade secretary Guillermo Moreno and the La Cámpora kids (some of whom are now in their forties) chosen not because she believes they will be up to the job but because she thinks that, depending as they do on her approval, they will never feel tempted to betray her.