Posted on 07/03/2014 9:41:28 AM PDT by blam
It works until you run out of other people’s money.
The US turn is coming...
Witness the death throes of the Welfare State.
First, you spend and tax. When you can’t raise taxes anymore on “the rich,” you borrow and spend. When the suckers who loaned you the money ask to be repaid, tell them you aren’t going to repay them and scream about being raped by the international finance system. Repeat this process until the last idiot finally stops lending you money. Then the mob violence, civil war and killings begin.
In 1900, Argentina was one the top 10 richest countries in the world and a favorite destination for ambitious immigrants. Then the Peronists took charge.
Once Argentina defaults I’d be willing to bet that the Kirchner regime will try to invade the Falklands again in order to secure the oil and gas wealth of those islands. And, of course, to distract the Argentine street from the fact that their government screwed up. Again.
For some reason the stocks of Argentinean companies are doing really well.
As sad as it makes me...one day we will be in the same boat....
“For some reason the stocks of Argentinean companies are doing really well.”
Probably because they represent equity in physical capital and land, so for Argentinians, stocks are better than the local “money”. This is typical in all countries with fiat currencies.
Oops! I must be wrong, because that would include the USA!
We have some dealings with some Argentine business people. First rate, decent, courteous, salt of the earth folks. I can’t tell you the depth of contempt, and more, that they have for their government. They are trapped and they know it. They are targets and they know it. I imagine that they have some lively discussions that they are unwilling to share with foreigners. Things could get pretty rough, fast.
That's exactly why the Dow is hitting all time highs.
The US is following the same trail, except the results will have a racial element - sort of like a national Detroit on steroids.
Then the shooting really starts.
ping
Sadly, there will be no armed uprising in Argentina or Venezuela just like there wasn’t in Zimbabwe.
I am pretty sure the US won’t either. I would hope otherwise though.
Look at Venezuela. Nothing works but everything is still moving. Airlines are still flying on IOU’s, hospitals are operating without basic supplies, food companies still trying to import (and mostly failing) - all of them owed billions and billions by a broke government.
There was an article about how a cargo ship going to Venezuela might sit there for weeks or months to be unloaded. That costs $$$.
A poster on the site said that Christmas cookies and candies started showing up in April or May. They have shortages of everything, of course. Incompetence is the law, apparently.
It's happening here, too.
Actually, Argentina ran out of other people's money almost 15 years ago, and is trying desperately to run out of a new group of other peoples' money now, pretending they'll pay new investors what they would not pay the old investors.
What the folks in Argentina don't understand is that hedge funds and other types of so-called "speculators" have a role to play in risk mitigation that makes their borrowing possible.
What the folks at BI don't understand -- and have never understood -- is that Social Security is effectively the largest hedge fund in the world, and someday tens of millions of investors are going to be ruined. The US debt held by China is chicken feed compared to the debt held by Americans.
In short, Argentina, like the US, is blessed with every resource. But, it is also cursed with government-sponsored class envy of the most malignant sort. That's what, IMNVHO, turned Argentina from one of the planet's most successful nations into the welfare mess it is today. Peronismo. It used class envy to invent a total Welfare State as its path to everlasting power.
When even that grew stale, massive illegal immigration from Bolivia, Peru, Ecuador, and even the Middle East (!) and other Third World hellholes was encouraged to cheapen the vote and increase the welfare budget. Cross the border tonight ...go on Argentine welfare tomorrow morning ... vote for your benefactors in the afternoon.
Cross the Andes into Chile, and see quite a difference in the country General Pinochet saved from becoming a Communist Satellite. But even there, prosperity is being attacked by classic left-wing policies.
Don't cluck and shake your head. We are next. Our successive governments since 1965 have overseen our transformation form a successful nation into more and more of a government welfare state. Our immigration policies have made us into what must shortly become this hemisphere's northernmost Latin American countries.
USA? Nah. Argentina North. And very soon.
Argentina may have a huge hyrdrocarbon resource in the Vaca Muerte (spelling?) region which will make it a decent exporter of oil and gas in the next 5 years or so.
Christina F. is term limited out in October 2015. Things will get better there despite her, but it will be a while.
God, she’s starting to look like Hillary.
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