Last week Chavez expelled the Israeli ambassador to Caracas. Yesterday he was threatening to expel the American Charge d’Affaires in Caracas, John Caulfield, for going to a wedding in Puerto Rico. Chavez claims Caulfield was plotting against him…at the wedding.
Argentina’s economic outlook is bleak, and not likely to improve over the short term. While the country has been invited to the G20 summit and may be distancing itself from Caracas’s influence, government spending is out of control,
Argentina’s Ministry of Economics estimated in midsummer that the country was carrying about $150 billion in debt. The government has been borrowing from anyone who will lend — namely, the captive domestic bond market and regional ally Venezuela — at high interest rates to fund its populist programs, which include steep energy subsidies and the outright nationalization of six (now seven, counting Aerolineas) companies. Payments on Argentina’s debt will total more than $10 billion in the first six months of 2009 alone. At the same time, the government is assuming more and more responsibilities across the board and shows no sign of halting.
Because the 2009 government budget did not take the nationalized pension funds into account, it appeared at first blush that the government might have secured for itself some means of taking the bite out of debt payments with that appropriation. Given that the original budget was based on highly optimistic economic performance forecasts — the global downturn and the decline of Argentina’s agriculture industry notwithstanding –- it was possible to argue that the move was relatively prudent, despite the jitters felt by investors.
But the reality is that Fernandez is increasing spending at such a rate that the administration will quickly burn through the extra cash. This is not typical debt manipulation, but rather, as investors had feared, the outright commandeering of Argentines’ retirement savings to prop up the government’s populist policies.
Setting aside the emotional and financial impact to Argentine workers as they contemplate their futures, the government has ensnared itself in an accounting dilemma. If spending continues in the face of falling revenue and limited credit, Buenos Aires eventually will hit a wall. And so far, its only recourse has been to liquidate what few financial assets remain in-country. Although there could yet be a grand scheme that will compensate for this problem, the government has shown no evidence thus far that one exists. The odds of an outright debt default and a return to the economic crisis of 2002 are growing.
I’ll be talking about Argentina’s economy in today’s podcast at 11AM Eastern.
The world of the FARC (Part I: Europe)
The Antigua Sun reported that the Antigua and Barbuda Medical Registration Board (MRB) refused to register the documents because, according to the Chairman of the MRB, David Dorset, the requirements were not satisfied that they could practice medicine by themselves.
Additionally Dorset said the applicants had not proven their entitlement to practice medicine in another country. Therefore, they would not be registered in Antigua and Barbuda under the Medical Act.
Death toll rises to 9 from Costa Rica quake
Cincuenta años de revolución cubana –2ª parte–
Dominican Republic buys eight planes from Brazil
Mail Going Outside of Panama
Government reduces travel quotas for Venezuelan residents Travelers can take out even fewer dollars in order to conserve its US currency reserves.
According to this report, the embassies are closing Las últimas palabras del Embajador de Israel antes de su partida
Eric Holder and the FALN Pardons
These week’s posts and podcasts:
The Jews Face a Double Standard
Venezuela expels Israeli ambassador to protest Gaza offensive
Turkey holds Iranian explosives heading to Venezuela, transition purgatory, and other news items
At Real Clear World:
Argentina’s Outlook: Bleak
Bolivia Launches State-Run Media
Latin America and Israel
Venezuela expels the Israeli ambassador to protest Gaza offensive, and other headlines from Venezuela
Humberto Fontova talks about the Cuban Communist revolution: 15 Minutes on Latin America
Argentina runs out of change: 15 Minutes on Latin America