Argentina and economic crisis, it can sometimes seem, have been conjoined since the country’s birth, like Siamese twins. In fact, Argentina is the only developed country that has succeeded, in the period from World War II until today, in mismanaging its way out of the First World.
However, for all their failings, Argentina’s ruling elites have never been short on “attitude,” viewing their country as the equal of the world’s strongest, and thus never afraid to stand up to them all.
It is fighting words in Buenos Aires, for instance, to suggest that Argentine soccer is not the best in the world, though it has managed to win the World Cup only twice, behind Brazil (five), Italy (four), and Germany (three) — and matched by its tiny neighbor, Uruguay. While many experts, players and fans rank Brazil’s Pele as the best soccer player of all time, it is wise not to dispute the local insistence that either Maradona or Lionel Messi, two local boys, is better.
Recently, in a taxi in Hong Kong, of all places, a young tango dancer from Buenos Aires was visibly agitated at his host when Brazilian soccer was put ahead of his country’s game.
Such bravura, or chutzpah, has enabled Argentine President Cristina Fernandez to insist that inflation in Argentina — currently rampaging well above 20 percent — remains in single digits. In 2007, Fernandez replaced professional statisticians at the National Statistics and Censuses Institute with political appointees when the Institute began to publish inflation rates that were accelerating alarmingly. Ever since, official numbers and reality have parted ways.
Moreover, academic and private sector economists have been warned that publishing different figures could result in criminal prosecution for spreading false rumors. In fact, one academic was fined US$125,000 for publishing inflation figures that were substantially higher than official data indicated.
Of course, when you control the official statistics office, you can claim any inflation rate you want; but that does not lower the price of bread. Anyone who buys food in supermarkets or uses a taxi knows that the true rate of annual inflation over the past several years has been between 20 and 30 percent.
Clearly, the market has reached its own verdict, reflected in the gap between the official exchange rate of 4.6 Argentine pesos to one US dollar and the black market rate, which recently reached 6.8, with some economists whispering that a rate of 8 pesos to the US dollar is likely before too long.
Not only has Argentina repudiated the US$100 billion in foreign debt on which it defaulted a decade ago; it has also shrugged off criticism of its expropriation in April of the Spanish oil company Repsol. Argentina has offered to compensate the company at “fair” market value, to be determined at some future date — presumably when the floor has dropped out of Repsol’s share price, which initially plunged nearly 60 percent from its previous high, and is still down 40 percent.
Even as evidence of an economic crisis continues to mount — the latest sign being that supermarket shoppers are limited to one bottle of cooking oil per customer — the government gives no indication of concern. The authorities have defied the IMF, defaulted on debts and proudly proclaimed that Argentina has transcended traditional economics. The government is still “negotiating” with the IMF on how best to collect, measure and report inflation, as if this were not done routinely by trained statisticians throughout the world.