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The Man Behind Argentina’s Next Crash

Alex Kicillof, a young Marxist economist and talented orator, has been the main advisor to Argentinian president Cristina Fernandez. According to sources quoted in the Financial Times, Kicillof “is the economic brains—the first economist she has listened to since Néstor Kirchner died” and is “on the left of the left.”

This week Fernandez moved to nationalize the Spanish energy company YPF-Repsol  by taking a 51 percent stake. After months of haggling between the government and the private oil company over falling output and rising fuel costs, the move provoked condemnation from investors worldwide and threats of economic and legal retaliation by Spain. YPF has argued that its output has actually increased in recent years, and that the burdensome regulations that keep Argentine oil below market prices are the main impediment to healthier oil output.

Fernandez put Kicillof in charge of YPF by decree this past week. On Tuesday, the deputy economy minister delivered a rousing presentation on the bill designed to expropriate YPF, “with rhetoric straight out of the 1970s,” according to the FT. The nationalization of YPF has discredited Argentina in the eyes of investors and dashed the country’s economic prospects. The fact that it was whispered into the president’s ear by a charismatic young ideologue sporting outdated economic doctrines and Elvis sideburns should not fill foreign investors with confidence.

Via Meadia has been warning investors for some time that Argentina is moving towards one of its recurring periods of economic instability in which foreign owned assets are even more at risk than usual in this turbulent country.  Providence seems to have marked Argentina out for great riches, giving it enormous natural resources in one of the most peaceful and secure places on earth. Argentines, however, seem bound and determined to fight the divine decree and over and over again choose policies that ensure the country falls far short of what it could and should be.

It’s their country and it’s their choice, but it is still very sad. Via Meadia advice: money can be made in Argentina if you time the cycles properly. But that is a hard thing to do, and for most investors, the smartest choice is to put your money somewhere safer.

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  • bob

    Is it not amazing how many cultures get trapped in self-destructive loops and slides? How many cultures right now are thus trapped? Are we?

    I suppose the real question is how did several cultures escape? How did classical Greece come to be? How did the US come to be?

  • enrico

    This time you are wrong, sir. I’m afraid you are selling a clichè. Sideburns? That was plain philistinism. The same facial hairs would have made a gentleman hundread years ago. How do you know that he isn’t imitating them, rather than that lousy icon that I won’t name? Hint… You don’t. You just guessed.

  • Lorenz Gude

    I agree Bob that it is right to ask the question are we – the US – trapped too? I can see that the answer might be yes. I also see a strong resistance on the part of the American people. Mainly from the Tea Party, but even the Marxist tinged OWS movement clearly articulated the unholy connection between Sodom on Potomac and Sodom on Hudson. We have a strong political faction – lets just call them the Main St faction that sees that neither party is fit to govern.. Sen Marco Rubio of Florida actually says right out loud that both parties are at fault. I believe we have the cultural capital to invent a successful 21st century economy, but it was take guts and many of those proverbial broken eggs.

  • Kansas Scott

    Minor point, but I think it’s “Axel” Kicillof, not “Alex.”

  • Lexington Green

    Hopefully Mrs. Kirchner will plunge Argentina into economic chaos, reducing the country to sub-Saharan levels of poverty. The Royal Navy will scarcely be needed to defend the Falkland Islands. The oil will be pumped to a thirsty world by companies with secure property rights. Everybody wins except the Argentinians, who are getting the government they want and deserve.

  • Eric

    The Telegraph reports empty shelves in Buenos Aires. Yes, if there was one thing Marx was very good at, it was producing empty shelves in shops.

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