Saturday, December 22, 2012

Argentina's policies culminate in looting outbreak

As looting broke out across Argentina, political analysts scrambled to find the reason for the outbreak. Is it the unions? The opposition? The sad reality is that these events are simply the culmination of horrific government policies, including the recent theft of foreign property (see discussion). The belligerent approach to foreign relations (see post) for a nation whose growth had depended heavily on exports has backfired.
WSJ: - Thousands of people in several Argentine cities ransacked supermarkets for a second day in the latest challenge to President Cristina Kirchner, who is struggling to revive a weak economy and maintain her control over the ruling Peronist Party.

What started with a raid Thursday afternoon of a supermarket in the Patagonian resort town of Bariloche quickly spread to other parts of the country, with thousands of looters attacking supermarkets and shops in the cities of Rosario, Campana and Zárate. In the central city Rosario, two people were killed during the incidents and 137 people arrested.
Source: Reuters

Kirchner's government single-handedly drove the nation's economy into the ground. Here are just a couple of economic data points from Q3: construction spending and private consumption.

What makes this situation extreme is the out-of-control stagflation. Despite such severe economic weakness, inflation is running at 25% yoy, as the currency weakens further (and the government continues to lie about the actual inflation level - see discussion).

Of course Argentina's government (which now relies on children's vote to stay in power - see discussion) is attempting to deflect the blame for the mess it has created.
WSJ: - Mrs. Kirchner's cabinet chief Juan Manuel Abal Medina accused Mr. Moyano's truckers union and other union bosses of organizing the latest looting this week.

"These are isolated incidents that are clearly organized and structured. In none of them did people seek food. They took televisions and drinks," he said.
It seems Mrs. Kirchner wants to be congratulated for the fact that the nation, rich in natural resources and the world's 5th largest wheat exporter, is not yet in full starvation mode.
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