Headline : Argentina’s fickle fortunes have turned sour once again
Sub-headline : Despite President Macri’s efforts at reform, the country faces a new financial crisis
Mr. Rathbone writes advocacy journalism, or should the reader call it propaganda? With help from the headline writers of The Financial Times. Mr. Rathbone presents Ms Fernández as first part of a ‘pink tide’ : the perpetual enemy of the Oligarchy is the Communist, or its invented political simulacrum. Néstor Kirchner ‘broke with the IMF in 2006.’ , ‘Yet he balanced the books…’.
Ms Fernández is the enemy, yet ‘pink tide‘ and the amassing a considerable personal fortune , would seem to be antithetical to Socialism in whatever guise: we are back in the territory that political simulacrum. Is Ms Fernández just another political opportunist? Her self-presentation as the New Evita is more like the homegrown fascism of Peronism: has Mr. Rathbone broken new political ground?
Ms Fernández was part of the leftist “pink tide” that swept to power in South America at the start of this century. Her predecessor and husband, the late Néstor Kirchner, broke with the IMF in 2006. A political bruiser, Kirchner even sported a plaster on his head at his inauguration. Yet he balanced the books and it was only after his wife took over that the economy truly went off the rails. Ms Fernández cast herself as a latter day Evita Perón, a patron of the poor, but left the presidency with a considerable personal fortune.
Macri is the Neo-Liberal in a more harmonious key: ‘gradualist reforms’ instead of the stark reality of Austerity, as Argentina has experienced it in its recent past. Macri is the rarest of political creatures, as narrated by Rathbone, a Neo-Liberal with a heart! Expressing compassion for the lesser beings of the Argentine polis. One dull-witted American political technocrat has named this ‘Progressive Neo-Liberalism‘! Mises/Hayek/Friedman and Ayn Rand would denounce this very notion as Heretical!
Cleaning up the mess left by unfulfillable populist promises is hard. It takes ambitious, market-friendly and socially sensitive reforms of the kind that Ms Lagarde praised in Argentina. Mr Macri has liberalised the exchange rate, slashed blanket subsidies and put in place a tough structural reform package. But contrary to his image as heartless businessman, he has also boosted pensions and increased targeted cash transfers for the poor. With the IMF now involved, it is an open question if those will be cut back.
Mr. Rathbone points to Macri’s gradualism as the reason for that failure, allied to ‘easy money’. Mr. Rathbone might just be in the Mises/Hayek/Friedman and Ayn Rand camp?
All of which begs the question: if Mr Macri’s reforms really are so fabulous, what went wrong? The simple answer is that he wanted to avoid the brusque shock treatments of the past. Such “gradualism” required ample foreign financing. For a while, ultra-low global interest rates made that easy: Argentina sold more than $100bn of bonds in just two years.
As US homeowners and emerging markets worldwide are now discovering, those days of easy money are coming to an end. A central flaw of Mr Macri’s plan to make Argentina “normal” was that it rested on borrowing rates that were not normal at all.