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Tuesday, June 21, 2016

Argentinas wasted Kirchner decade and new beginning.

10:18 AM John Boyle
 In November of 2015 Argentina ended 12 years of Kirchnerism and Peronism with one mighty blow and returned the economy back toward the free market and away from protectionism.
The government of Cristina Kitchener had sailed against the wind for 8 solid years and 12 if you count the four years of her husband Nestor before her. She followed the ideology of Jaun Peron to the letter and financed it with shameless corruption. In order to keep the poor on board she ran the printing presses day and night printing an endless supply of pesos to meet pay demands. The flood of pesos led to rampant inflation and more pay demands which were met with more freshly printed bills.
   Meanwhile any hard currency US Dollars that came into the country were being milked off and dished out in kick backs to all the peronists bigwigs and hangers on.
   But things were about to unravel, slowly at first but in the end a tidal wave of corruption allegations would sweep her from power.
   One of the first major blows to her government came on 22 of Feb 2012 when a commuter train pulled into Once train station with more than 1000 passengers on board. It's entire breaking system failed and the train plowed into the buffers leaving 51 dead and more than 700 injured. 
  The public were outraged and the transport minister Ricardo Jaime was thrown to the wolves. 
It was quickly discovered that despite coming from a humble beginning that he had acquired his own private jet and Yacht  and that his wife and daughters had inexplicable amounts of money in their bank accounts. The health and safety funds of the rail network had been embezzled.
  The government liked to stall all investigations by handing them to their own in house judge (Oyabide) and he would do just that "Investigate " all told he investigated cases endlessly, so endlessly that none ever reached a court room. When the new government took office he quickly resigned and ran off with his ill gotten gains.
   Now Nestor Kirchner hailed from the province of Santa Cruz 0.4 % of Argentinas population live in this province but 12% of government building contracts were issued from here. 
   And mostly to Nestor Kirchners friend former bank clerk Lazaro Baez. The Kirchners used Baez as a means to embezzle untold millions out of the country into tax havens. To give an idea of how much may have been involved Baez has now been found to own more than 140 homes many of these are large estancias. And he is not the top of the food chain,those above him took far more.
  But it is the latest revelations that have really called time on the Kirchner ideology and even has it most ardent supporters screaming for blood.
  One of the heads of planning for the full 12 years of the Kirchner government Jose Lopez was in the small hours of the 14th of June 2016 caught trying to hide almost 9 Million dollars and a machine gun in the grounds of a monastery in the province of Buenos Aires. His paranoia had got the better of him and he become convinced the police were going to raid his house so chose to try and bury his illicit gains some where safe. Unfortunately for him a neighbor alerted the police to a man throwing sacks of money into the grounds of the convent at 3am. And the rest is pure soap opera.
   Meanwhile the new president Mauricio Macri has taken over and is desperately trying to calm the inflation and balance Argentinas books. Argentina has a huge amount of its economy under the table so to speak. So raising taxes would only hit those who are already paying taxes. So he has gone for a catch all approach and has hit water electricity and gas as well as petrol and cigarettes.
  The result has been a sharp contraction in spending from everybody on everything. The Macri honey moon is clearly over and the people are wondering if the medicine will cure or kill the patient. Argentines are not accustomed to thinking long term. But the first green shoots are beginning to appear as the long dead housing market is beginning to recover. Macri plans to be able to issue a million mortgages in his four year term. This in itself will transform Argentina.
He has also removed the hated U$D160 dollar visa fee the US citizens had to pay to enter Argentina.
And cruise ship passengers will now pay the Argentine port entry fee of U$S14 only at one port and not each port of call.
  Further good news for next year comes in the form of budget airline Ryanair buying Andes air to create Argentinas first budget airline. Prices for flying here internally have always been an outrage.
   It is also estimated that as much as 400 Billion dollars of Argentina money has been filtered out to safe havens or is in Banco de La Mattress as Argentines say. Macri plans an amnesty to allow this money to return and with interest rates in the US and Europe at record lows he may be very successful. Argentina has everything but the confidence of its own people and Macri will have his work cut out to change that way of thinking. But the alternative is the return of the corruption and the peronists. There is a saying here that rings very true.
That the peronists love the poor so much that they keep creating more of them.
And that in a nut shell is why Macri must succeed.


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