Sweet saccharine inflation

20/12/2010

I couldn’t have been more than 9, and like any 9-year-old on a hot summer day, I was waiting in the coldest part of my house for a phone call from the only friend I had with a pool. It was a reluctant friendship; at six he’d ordered me off his property and I’d never quite trusted him after that banishment. Ours was a relationship of convenience. We both knew it. And I never fooled myself into thinking I was anything more than a temporary cure for his boredom. And that was fine with me, because as I said, along with having more toys than he knew what to do with…the pool.

Despite being in the basement, I must’ve got to the phone by the second ring.

“Hello?”

“Meet me at the park in 10 minutes.”

Always dictatorial, he’d already hung up. It wasn’t the invitation I’d expected or wanted, but I was curious. I told my mom I was meeting him at the park and immediately ran out the front door.

He was sitting under a giant oak tree with a backpack in front of him and a smug look on his face.

He passed me the backpack.

“Look inside.”

There were more twenty dollar bills than I’d ever seen in my life, and since I was in the habit then of converting everything monetary into its equivalent value in penny candy, my underdeveloped accounting skills told me we had enough money to fill his pool with Swedish berries. And when he told me our next stop was 7-11, I started to think that was a distinct possibility.

As the spending spree came to an end that day—both of us sick from all the candy we’d eaten, I finally admitted to myself how unlikely it was that his grandfather had given him $700 in cash for his birthday. It all got cleared up later that day when his mom called to explain what had happened. The short-lived façade was over; he was grounded for a long time, and I didn’t get to swim there for the rest of the summer.

I guess we all delude ourselves from time to time, but the longer we do, the harder we fall. The stories my Argentine friends have told me about life before and after the 2001-2002 financial crisis often made me think of that indulgent day from my childhood. Former Minister of the Economy Domingo Cavallo had pegged the peso to the dollar at one-to-one, and though it was ostensibly implemented to fight hyperinflation, no one could deny they enjoyed the benefits that came with the façade.

One Argentine friend of mine told me he spent a significant amount of time in England as a teenager, learning the Queen’s and drinking like a proper Londoner; it was the time of his life, and he looked back on it fondly; but he’d always known something wasn’t right. He as a teenager, and I as a 9-year-old, could both smell rats; they just smelled too good to do anything about it.

So when the proverbial shit hit the fan in Buenos Aires and everyone woke up from the nightmare with their savings worth a third of what they had been, the first to feel the wrath of the Argentine populace was the government; the De la Rúa administration had to go. As did the three Peronists who took his place and left as quickly as they came. And when there was finally no one left to blame in government, the hunt for a scapegoat quickly led them to the IMF.

IFM loans and the requirements of neoliberalization were the roots of the problem; they’d been duped, tricked. If the IMF thought an Argentine default was a strong possibility, they shouldn’t have given them the money in the first place.

It was a variation of my friend’s 7-11 defense; his grandpa surely shouldn’t have left all the cash out if he didn’t want it spent on candy and comic books.

It was the drift towards that way of thinking that made the 2005 decision of Néstor Kirchner’s government to pay the IMF debt back in its entirety, a hugely popular ‘up yours’ to the Fund that had abandoned them when they needed them most. No longer would Argentines be beholden to IMF “recommendations”. Given the choice, they chose the highway.

That is up until last week.

After a five year absence, the IMF is back in Buenos Aires—invited by none other than the wife of the man who distanced his government from the Fund. This time, though, they’re there to evaluate what appears to be a flawed Consumer Price Index. It’s believed that for the last 5 years the National Statistics and Census Institute has been underestimating the CPI in Buenos Aires, which is used to represent the nation as a whole. And since the IMF does annual revisions of all its members’ statistics, regardless of whether they’re a debtor nation or not, and the likelihood of a glaring difference in metrics appears to be strong—the Fund has threatened sanctions for non-compliance.

So off to Washington Minister of the Economy Amado Boudou flew, coming back with an announcement that a team of IMF academics and consultants were en route to Buenos Aires to find out what the real inflation rate is.

That answer will come in six months. And though no one is seriously thinking about 2001-2002, it’d be disingenuous to say there isn’t a slight suspicion they’ve again been caught with their hands in the candy (cookie) jar.

The endorsement of a rapist

10/12/2010

In July of ’91, Mike Tyson was still one of the best boxers in the world; aside from a slipup the year before against Buster Douglas, he remained a feared and respected opponent. While that fear wasn’t limited to the ring, however—respect most certainly was. By that point he’d already crashed several sports cars, beaten up a parking attendant, and been accused of domestic violence by his then wife, actress Robin Givens.

His reply to the domestic violence charge was classic Tyson:

“Anyone with a grain of sense would know that if I punched my wife I would rip her head off.”

Misogynistic quips like that that certainly didn’t help his cause when, in July ’91, he was formally charged with the rape of a beauty pageant contestant named Desiree Washington.

His subsequent conviction surprised few; another spoiled professional athlete who finally pushed the envelope as far as he could.

At the time of his sentencing in March of ’92, the Presidential election in the U.S. was still a ways off, and even if it hadn’t been, no GOP strategist in their right mind would’ve suggested calling in some favors to make sure Mike didn’t see jail time; even if he did contribute, say, all his winnings to the Republican Party; even if he did sport shorts with the Republican elephants on them and dedicate his next primetime fight to the President Bush reelection campaign.

The endorsement of a rapist isn’t usually sought after; that is unless you’re in Nicaragua.

One of the latest WikiLeaks gems to be released tells the story of Ricardo Moyorga. Like Tyson, Moyorga was also a boxer, and like Tyson, Moyorga was also an accused rapist. According to the release, Mayorga was facing charges in 2004 before he came to an agreement with the FSLN.

The deal was fairly simple: In exchange for diverting his winnings to Daniel Ortega and the FSLN, and advertising/campaigning on their behalf, an FSLN judge would make sure Mayorga never did any time.

A quid pro quo everyone could live with…

Mayorga fought in Chicago in 2005—in FSLN colors, dedicated the fight to Ortega, and that was that.

But I guess having a pugilist sex-offender stump for you isn’t really that serious when your former Interior Minister and his minions once helped Pablo Escobar load and unload cargo; when the profits of drug trafficking are regularly financing your party's campaigns in exchange for the dismissal of charges; when in more recent developments, members of your government return from Venezuela with suitcases full of money and no explanations.

In Ortega’s defense, it’s never exactly been a fair fight. Sleazy last minute Presidential pardons of the likes of Caspar Weinberger, Elliot Abrams and the rest of the Iran-Contra gang did nothing but remind Latin America how hypocritical American foreign policy in the region has been; yes, democracy. But only as long as the results are predetermined and the right person wins, be it Violetta Chamorro or really anyone who’s name isn’t Daniel Ortega.

True, if Ortega were an American politician he’d have resigned by now or be facing some sort of impeachment proceedings, but he’d probably also be a contestant on Celebrity Apprentice.

Mayorga, if he didn’t already have a show of his own, wouldn’t be far behind.

Economic surgery in Cuba

03/12/2010

To a certain extent, most resorts are indistinguishable from one another.

The quality of the food can vary; some have nicer rooms and facilities—but for the most part, they’re all pretty similar.

That is, till you get to Cuba.

For one thing, the place is full of French Canadians—a veritable petite belle province. Then there’s the almost complete absence of Americans, save for the occasional thrill-seeker and self-proclaimed izquierdista who got lost somewhere in Central America in the eighties and never managed to find their way home; and finally, there’s the brain surgeon who moonlights as crooner, singing covers at night to make up for the pittance he’s paid by the state.

It’s the surgeon who came to mind when I read the front page editorial in Granma on Wednesday. The theme was the debates taking place in the lead up to the ridiculously delayed Communist Party Congress in April—debates which are to focus entirely on economic issues.

At its most melodramatic, it simplifies the complexities of Cuba’s latest capitalist experiment: “…what’s in play is the future of the Cuban nation…”

The Cuban nation. Of course. People like the brain surgeon I met…ten years ago?

Ever since the Bay of Pigs, the world has been waiting for a catalyst—another revolutionary moment in Cuba, though revolutionary in the sense of return. Not to the days of Batista. The majority alive now weren’t alive then. But to the days when remuneration, if not equitable, was at least somewhat logical.

No one imagined a piecemeal process. But hotels and tourism came in the 90s, and lo and behold, surgeons could finally make some money; then a few years ago came cellphones, computers, and permission for Cubans to vacation at Cuban resorts.

Was this really how it would play out, though?

A country run by geriatrics attempting to control the perception of each concession with caveats about the fragility of the Cuban model?

Maybe.

But what happens as the concessions get bigger? Does it really matter that they’re borne by necessity as opposed to ideology?

Crippling debt in Europe has shown the expense of an inflated public service isn’t sustainable. Greeks must shudder at the thought of what that means in Cuban terms: roughly 85% of the workforce. The difference is that most Greeks fear austerity measures, as anyone would who’s told their getting a significant pay cut. Cubans, however, can see opportunity in the 12% of public service jobs to be eliminated in 2011.

The inundation of requests for self-employment licenses, which have come with the government’s announcement of an increase in the number of those granted, has shown how eager most Cubans are to embrace any entrepreneurial leeway they’re given; it’s also focused attention on a black market far more pervasive than the PCC would ever publically admit.

But do either of the Castro brothers really believe these economic changes will sustain or preserve anything? Or is the burden of the judgments and evaluations of Cuban posterity finally starting to weigh heavy?

Again, the changes themselves are more important than the reason for them.

Bank accounts, social security for the self-employed, access to credit—the right to buy and sell houses?

How long will it be till the once aspiring surgeon trades in their textbooks for whatever they can get on the latest financial derivative?

Bolivarian diplomacy: you give us a drug trafficker; we’ll give you a few terrorists and maybe even that money we owe you

25/11/2010

It isn’t just anyone who can give you the concession to the most important port in the country. That decision comes from up high.

I’d hope so.

It only makes sense that control of something so vitally important to a nation’s economy would be awarded by high-level functionaries through a well-vetted and excruciatingly detailed process.

Except that’s not Walid Makled meant in his post-arrest interview (http://www.youtube.com/watch?v=Gdv3n18Od24) with the Colombian news channel RCN, because Walid Makled, despite once having legitimate assets such as the Venezuelan Airline Aeropostal and the port I alluded to above (Puerto Cabello), is not a legitimate businessman—he’s a drug dealer; and up until recently, a really successful one.

The Venezuelan of Syrian heritage who for some reason often goes by “The Turk” was said to be moving ten tons of cocaine a month to Europe and the United States.

And the reason he could do this?

I’ll just assume you won’t need a second guess. Those people up high: Governors, Generals, and really anyone with concomitant decision-making power.

“If I’m a drug trafficker,” he told the RCN interviewer, “then they’re all drug traffickers.”

That was back in September. But if you picked up a major Latin American newspaper in the last few days, you most often found the story front and centre again. That’s because Mr. Makled’s extradition has become a diplomatic hot topic.

Hugo Chávez has made it clear that Makled’s extradition from Colombia to Venezuela (as opposed to the United States) is nonnegotiable if again amicable Venezuela-Colombia relations are to remain that way. Luckily for Chávez, at least if you believe Makled has the damning proof he claims he does, President Santos agreed to temporarily turn his back on longtime ally the United States and send Mr. Makled back to Venezuela.

On Sunday, a gleeful Chávez rejoiced: “I believe in President Santos’ word.”

He continued by saying that this decision would prevent Makled from vomiting “up all sorts of accusations against the Bolivarian Republic, against its political and military leadership…”

He offers no explanation of why the accusations of a drug trafficker and accused murderer should matter at all. Nor does he explain, as one Colombian editorialist remarked the other day, why Makled was being protected in Venezuela—why he had no trouble till “he made the mistake of stepping on to Colombian territory…”

The answers to those questions being fairly obvious, the focus has shifted to President Santos. The most hyperbolic column I read compared him to Neville Chamberlain signing the Munich Agreement; I have no doubt that former President Uribe is at least partially responsible for these kinds of editorials. He’s more active on his Twitter account than most celebrities, and is none too subtle in publically second-guessing the dovish policies of his former Defense Minister; he’s also quite clearly peeved his successor’s approval ratings after his first hundred days are higher than those he had at any time throughout his immensely popular presidency.

So, knowing that Santos has some popularity to spare—why Makled? Why now?

Two reasons: first, it’s widely-known and acknowledged by almost everyone except Chávez that there are guerilla camps inside the Venezuelan border. In a gesture intended to show future cooperation in that area, two captured middle ranking ELN and one FARC member were turned over to Colombia. Considering guerilla presence within Venezuela was one of the main reasons relations soured in the first place—it’s a big step.

Second, there’s the issue of outstanding debt to Colombian exporters, said to be close to US$ 800 million. If Chávez is angry, there’s no hope of those exporters seeing any of what they’re owed, and there’s certainly no hope of returning cross-border trade to its pre-dispute levels.

True, that’ll hurt Venezuela, too; it’ll mean increased inflation in an economic environment where everyone but the government ignores the official exchange rate; but for Colombia, where politicians are more likely to be held accountable, it’ll mean additional unemployment in a country where levels are already too high.

At personal level, we tell ourselves we can choose our friends. In the realm of international relations, that’s more than a little misleading. A certain naïveté leads us to believe an active conscience can and should dictate all of leaders’ actions; necessity proves that disingenuous.

Were Makled extradited to the United States, his revelations could—as some have pointed out, turn Chávez into another Noriega.

I doubt it.

I suspect they’d quickly be dismissed as Yanqui propaganda, and that would be that. A more likely scenario would be a slightly more difficult Presidential election for Chávez in 2012—one without the financing he appears to have been receiving from one of Latin America’s more powerful drug traffickers.

President Santos certainly isn’t Neville Chamberlain, but statements of that kind evidence the sympathy Colombians currently have for Venezuelans. They see a country people fear to visit and remember a time not that long ago when their own was perceived to be a place to avoid.

Now major American dailies are encouraging tourists:

http://www.washingtonpost.com/wp-dyn/content/article/2010/11/19/AR2010111902827.html

If giving away a drug trafficker is the price to pay for stability, it’s easy to understand why most Colombians don’t find the price all that steep.