Argentina
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"The best predictor of future behavior
is past behavior."
domingo 4 de mayo de 2008 The Storm Clouds Are Gathering Over Argentina The storm clouds are gathering over Argentina again. Rumors are swirling. People are nervous, asking, “What is going to happen with the country?” Middle class Argentines are wondering if they should withdraw their cash from banks. “I hear they’re going to freeze deposits again,” they say. “I hear they’re going to split the exchange rate in two – one rate for exporters, another for the rest of us. What do you think is going to happen?” Unfortunately, after 10 years of writing about Argentine politics, I have no idea. And neither do any of the economists, politicians or businessmen I talk with. Many are struggling to get even the smallest bit of information about what is to come. The uncertainty is both pervasive and profound. Even the keenest observers are grasping at straws, admitting they have no idea what to expect. Welcome to Argentina. Corporate executives are holding emergency meetings with economists and other paid advisors. CEOs who are normally confident about their ability to manage crises are calling colleagues and competitors to see if anyone knows what is going to happen. People with connections in the government – that is to say, connections to Nestor Kirchner, Julio De Vido or Cristina Fernández – are trying to find out what these three are thinking. Inflation is rising, perhaps by 30% annually, though nobody knows for sure because the government has decapitated the national statistics institute. The higher prices have pushed hundreds of thousands of people below the poverty level, economists say. But official data do not reflect such trouble because the government conveniently stopped measuring poverty last year. Banks are raising interest rates and curtailing loans. Another devastating farm protest looms. Mid-level managers are clamoring for higher salaries (for themselves and their employees) while postponing decisions about hiring new staff. On the street, people are returning to exchange houses and buying dollars, as they have so many times in years past. But few people know if any of this is necessary or wise. Nobody knows if there will even be another crisis. And that is the problem, you cannot be sure. After all, this is a country where boom and bust cycles tend to radically alter the political and financial landscape every decade or so. Argentines have come to expect this. History has taught them to take it as a given. And when expectations become so ingrained in a nation's collective conscious, they tend to become self-fulfilling prophecies.
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