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Argentina to Press: Don't Ask, Don't Tell

Argentina is a textbook case of a country telling foreign investors to stay away.  That isn’t the official message, of course, but it is the only possible way to interpret recent events. According to the New York Times:

A judge has subpoenaed six newspapers for the names and telephone numbers of all reporters and editors who have covered the economy in the past five years, so they can be called as witnesses against their sources. News organizations called it an attempt to censor and intimidate the news media from accurately reporting on inflation, which many economists say is above 20 percent annually, more than twice what the government says. Judge Alejandro Catania also issued subpoenas on Thursday for the office of the International Monetary Fund in Argentina, the tax ministry and the central bank, seeking information about their consultants and clients, according to the state news agency Telam.

After a signal like that, stockholders should be able to sue the management of any company which puts money into Argentina.  It is hard to think of measures which send a more unmistakable warning of dishonesty and impending crisis.  Nothing and no one can be safe in a country where such things are done.

Markets behave strangely and the Argentines are past masters of manipulation, so it is impossible to predict exactly how or when the disaster will strike.  But it could not be more clear that this is a government without scruple or dignity and that there is something going on there that it desperately wants to conceal.  When it comes to Argentina, the only sound investment advice is to avoid this country like the plague.

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  • Gordon Pasha

    Investments in Argentina ar at an sll time high of 25% of GDP, and it has the second fastest growing economy on the planet.

  • Gordon Pasha

    You’d better find another example for your textbook, otherwise you’ll confuse your students.

    Argentina’s rate of investment is its highest in history, at 25% of GDP. Its economy is the second fastest growing in the world.

    I guess investors do not care what happens to journalists as long as they make money left and right.

    See e.g.

    • Walter Russell Mead

      As before, if the statistics are so grand, why is the government trying to suppress honest economic reporting? My advice to foreign investors remains: get out while you can. Argentina is the home of large, unquantifiable but very real risks.

  • Kris

    Gordon, for your edification:

  • Gordon Pasha

    Kris: for your edification, no one disputes the numbers I quote, the government lies mostly about inflation, to pay less on their inflation adjusted bonds and other infllation adjusted payments, which are more prevalent in Argentina than in the US. It is ironic that in its calculation of the rate of GDP growth the government uses as inflation deflactor a number in line with the estimates of inflation of the private consultants!

    Walter: no one said investing there was not risky!

    • Walter Russell Mead

      If inflation is much higher than official figures state (and I note you agree that the government is using the criminal courts against the press in order to defraud investors of rightful returns under contracts freely entered into by the Argentine government), then real GDP growth would be significantly smaller than official figures indicate. Any investor should realize that as so many times in the past, the Argentine economy is a house of cards and legal protections cannot be depended on. A country run in this way will sooner or later experience a meltdown — as Argentina has done periodically — and foreign investors are often the biggest losers.

  • Random Dude

    This dude has had the chance to spend quality professional time helping do what needs to be done over the past years in the GWOT/OCO war zones. Needless to say, not always the best places on earth…

    But, the worse place ever had to spend time was Argentina… Arrogant, stupid, racist–be advised: these are people proud of their racism, still now in today’s day and age–the list goes on and on, and it’s not a good list.

    So, a people most deserving of recurrant economic catastrophes, each a signature of predictable mediocrity: what did they say in Watts? Oh yeah–Burn baby, burn.

  • Gordon Pasha

    Walter: as I mentioned, when computing the growth rate the Argentine government remarkably uses the correct rate of inflation (actually slightly lower, but not the ridiculous numbers they quote as inflation). As a consequence private analysts usually give slightly lower predictions for the growth rate, but it nevertheless remains impressive. The last number for the growth rate is from July, the government claims it is at an annualized rate of 9.1%, private analysts estimate it in 5.9%.

    Argentina is growing at phenomenal rates and the growth is real. One can see it in the reduction of poverty, record spending in education and R&D, etc.

    The growth is IN SPITE OF the government and its shenanigans, and is fueled by the remarkable rise in the price of commodities, particularly soybeans.

    If Argentina will crash or not will depend largely on if commodities are in a speculative boom. Economists are divided on if the price rise is genuine, fueled by India and China elevating millions of their people to middle class status or if it is fueled by the securitization of commodities.

    • Walter Russell Mead

      Agreed that the commodities boom is causing the growth; again, this is exactly the kind of prosperity Argentina has been throwing away for a century due to the same failures of government seen today. The advice to investors stands.

  • Gordon Pasha

    Incidentally, there is quite a bit of evidence that the US government manipulates the inflation index to defraud investors of rightful returns under contracts freely entered into by the US government.

    See for instance

    Best wishes. Gordon

  • Gordon Pasha

    Walter: By the way, thanks for your replies!

    All the best.


  • Gordon Pasha

    Well, here is an academic paper that disagrees with both you and me and claims that the commodities boom is NOT responsible for Argentina’s current prosperity…

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