More warning signs from Argentina: The NYT reports:
A recent flurry of government measures to restrain foreign currency purchases haven’t succeeded in stemming a slow but steady drain on the central bank’s dollar reserves, making Argentine savers even more uneasy in the process.As it tries to prop up the peso, the Central Bank has been losing close to $100 million a day in reserves since the government of leftist President Cristina Kirchner imposed new restrictions on foreign exchange transactions on Oct. 31. The government said the new measures, which require the federal tax agency to approve foreign currency purchases, are aimed at attacking money laundering and tax evasion.But economists say the restrictions are in reality designed to counter a surge in capital flight, which has lowered central bank reserves to $46.81 billion from $52 billion in early August.
Argentina has had more than its fair share of booms and busts. Even slight turmoil in the markets makes Argentines jittery and worried. Analysts worry that efforts to stop capital flight by the government have only made things worse. They are right.Argentina has long seen itself as Brazil’s chief rival for the leadership of South America. In the last twenty years, the gap between the two has grown. Brazil has made serious economic and institutional reforms that have resulted in a society that is both more just and more prosperous. Argentina has lunged from one failed experiment to the next. Brazil is trying to control capital influx; Argentina is fighting capital flight. Brazilian companies are investing around the world and becoming recognized as leaders in a number of fields; Argentine companies are trapped in labyrinthine restrictions and have yet to make much impression in the world beyond. Brazil still faces many obstacles and problems but has made a decisive break with the futility of underdevelopment; Argentina is still stuck in the quagmire.At some point a critical mass of Argentines will note the difference between the development trajectories of the two countries and build a political movement to put Argentina on a sustainable course. When that happens, watch out: Argentina’s formidable resource base will power a dramatic burst of development. But that time is not yet; Argentina has not yet chosen to grow.