Fausta's Blog

American and Latin American Politics, Society, and Culture

February 8, 2010 By Fausta

The Argentinian Central Bank crisis Carnival of Latin America and the Caribbean

LatinAmerWelcome to the Carnival of Latin America and the Caribbean.

The big story of the week: Cristina Fernandez seized the Central Bank

After a month of wrangling, Argentine President Cristina Kirchner succeeded in sacking central bank President Martin Redrado last week. In his place she named Mercedes Marcó del Pont, a Yale-trained economist who has expressed the view that central bank autonomy ought to be limited.

The opposition howled at the news. Felipe Sola, former governor of Provincia de Buenos Aires, warned that the new bank president “is going to do what the executive decides and they are going to modify the bank charter to justify her doing what the executive tells her.”

Of course that would seem to be the point. Mr. Redrado was fired because he refused to turn over $6.6 billion in bank reserves to Mrs. Kirchner, who wants to pay foreign creditors but doesn’t want to use treasury revenues.Ms. Marcó del Pont, if she wants to keep her job, will follow the orders of the president.

UPDATE
Welcome, Instapundit readers!
Please also listen to the podcast, Argentina’s Cristina seizes the Central Bank

LATIN AMERICA
Obama and the FTAs

ARGENTINA
Argentina’s reserves and its debts
Central Bank robbery: The president gets her way, again, but at a price
, and visit the blogs and articles featured below,


El riesgo país es el matrimonio

BOLIVIA
PDF file: Into the abyss: Bolivia under Evo Morales and the MAS

BRAZIL
Brazil’s possible next president
Serra waits, a bit too patiently, for the presidency
The front-runner in Brazil’s coming presidential contest has done a decent job running its biggest state. But to keep his lead he must get campaigning

CHILE
El impacto de un gigante: “Mi negocio queda al lado del Costanera Center”

COLOMBIA
Uribe Vows Calm as Colombia Awaits Referendum Ruling

Colombia’s health reforms
Shock treatment: President Uribe tries to push through some much-needed changes

COSTA RICA
Costa Rica Debt May Outperform on Chinchilla Poll Win, RBS Says

CUBA
“Guardian angels”

Kenneth, What Is the Frequency: How CBS and Dan Rather Set Up Elian Gonzalez

Rage against the Marxist machine

Commentary: No ‘common policy,’ as Europe grapples over its future ties with Cuba

Cuba 1963: Inside castro’s prisons

Orlando Zapata Tamayo and Juan Ramón Rivera Despaine, Cuban Political Prisoners of the Week, 2/7/10

ECUADOR
Ecuador at Risk: Drugs, Thugs, Guerrillas and the Citizens Revolution

Cocaine trafficking keeps Ecuador anti-drug authorities busy
Seizures set a record last year for the country, which is growing in importance as a hub for shipments to the U.S. and Europe

Ecuador president says cops overreacted to insult

Humor: Por atentado a la majestad del poder
¡Correa se mete preso a sí mismo!
Asesores le aconsejan no volver a salir a la calle

Indigenous Groups Confront Rafael Correa
Ecuador’s Neo-Liberal Model

GUATEMALA
Conferencia sobre Evolución en Guatemala

HAITI
“Trop loin du Bon Dieu”

Haiti’s Crisis: Oil, Oligarchs, and The Groundhog Day Manifesto

The evil genius of the U.S. plan to destroy Haiti

HONDURAS
Honduran amnesty and truth

MEXICO
Protection through Integration: The Mexican Government’s Efforts to Aid
Migrants in the United States

PANAMA
Facts and rumors

PARAGUAY
¡Sinvergüenzo!

PERU
Chocolate and coca

PUERTO RICO
Puerto Rican nationalist pleads guilty to charges related to 1983 Wells Fargo robbery in Conn.

In Hartford, A Machetero Pleads Guilty To Role In 1983 Wells Fargo Robbery

VENEZUELA
Via Instapundit, Venezuela: Chavez equates Twitter with terrorism

DEL “TAS PONCHAO” AL 26/9: ¿ESCALERA, BARRANCO O TOBOGÁN?

Murderer Ramiro Valdes comes for the 18 years of Chavez bloody military coup


CIA Factbook Draws Chavez’s Ire

Government Expands Business Nationalization Powers

From 2007,

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Filed Under: Argentina, Bolivia, Brazil, Caribbean, Carnival of Latin America, Chile, Colombia, Communism, Costa Rica, Cuba, Ecuador, Guatemala, Haiti, Honduras, Latin America, Mexico, Panama, Paraguay, Peru, Puerto Rico, Venezuela Tagged With: 1983 Wells Fargo, Cristina Fernandez, Fausta's blog, Martin Redrado

February 8, 2010 By Fausta

Argentina’s Cristina seizes the Central Bank: 15 Minutes on Latin America

In today’s podcast at 11AM Eastern,
Argentina Seizes the Central Bank

After a month of wrangling, Argentine President Cristina Kirchner succeeded in sacking central bank President Martin Redrado last week. In his place she named Mercedes Marcó del Pont, a Yale-trained economist who has expressed the view that central bank autonomy ought to be limited.

The opposition howled at the news. Felipe Sola, former governor of Provincia de Buenos Aires, warned that the new bank president “is going to do what the executive decides and they are going to modify the bank charter to justify her doing what the executive tells her.”

Of course that would seem to be the point. Mr. Redrado was fired because he refused to turn over $6.6 billion in bank reserves to Mrs. Kirchner, who wants to pay foreign creditors but doesn’t want to use treasury revenues.Ms. Marcó del Pont, if she wants to keep her job, will follow the orders of the president.

Mrs. Kirchner is not the first politician to covet the wealth available from the monetary authority. Closer to home, there is Barack Obama, who didn’t back Ben Bernanke’s controversial second term as head of the Federal Reserve out of magnanimity. Mr. Bernanke kept his job because he has shown a willingness to finance Mr. Obama’s big-government agenda.

Yet Americans can still hold out hope that competing institutions will check the runaway power of a government that is being underwritten by the central bank. In Argentina, institutions are frail and it is far from certain that they can hold up under Mrs. Kirchner’s iron fist.

There’s a lot at stake. More inflation—beyond the 17% rate in 2009—is one danger. A Hugo Chávez-style power grab is another. Mr. Chávez is Mrs. Kirchner’s closest ally in the region, and she has been open about her desire to copy his model; her husband, former president Nestór Kirchner is widely viewed as the author of her playbook.

The lunge for the bank reserves is all about improving the Kirchners’ odds of staying in power. Until last night when Mr. Kirchner underwent emergency circulatory surgery, analysts expected him, rather than her, to run in the 2011 presidential election. What remains clear is that if the kirchneristas want to retain power they will need to boost government spending.

Related reading:
Argentine Committee Backs Firing of Central Banker
Argentina Bank Won’t Be Independent, Goldman Says
Argentina Markets Slump On Central Bank Worries
And from the English-language Buenos Aires Herald, After gov’t made appointment official
‘Marcó del Pont must stop Moreno, otherwise she has too much to lose’

In other news, Argentine Ex-President Kirchner May Leave Hospital by Midweek

The Carnival of Latin America will be up this afternoon.

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Filed Under: Argentina, podcasts Tagged With: Cristina Fernandez, Fausta's blog, Martin Redrado

January 21, 2010 By Fausta

Cristina against everybody

cobos210

My latest post at Real Clear World, Argentina: Cristina Against Everybody Else?

Just the other day Noticias 24 had an article on how Cristina Kirchner is the most unpopular head of state in our hemisphere. However, Hugo Chavez was not rated in that survey.

Click on the chart for more detail (link in Spanish):
mito18

Prior Real Clear World posts here

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Filed Under: Argentina, business Tagged With: Cristina Fernandez, Fausta's blog, Julio Cobos, Martin Redrado

January 12, 2010 By Fausta

The constitutional showdown in Argentina: 15 Minutes on Latin America

In today’s podcast at 11AM Eastern,

RedradoCristina

Redrado Remains at Argentine Central Bank Amid Clash after president Cristina Fernandez provokes a constitutional crisis.

Constitutional Showdown in Argentina
President Cristina Kirchner tries to seize control of the central bank.

Crisis Threatens to Curb Central Banks
Argentina’s bad timing
Argentine President and Central Bank in Standoff

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Filed Under: Argentina, business, economics, economy, podcasts Tagged With: Cristina Fernádez de Kirchner, Cristina Fernandez, Fausta's blog, Martin Redrado

January 11, 2010 By Fausta

The devalued currency Carnival of Latin America and the Caribbean

LatinAmerWelcome to the Carnival of Latin America and the Caribbean. The two top stories of the week are the Venezuelan currency devaluation, and Argentina’s Central Bank dispute.

LATIN AMERICA
Threat of Terrorism in Latin America

Today’s roundup at The Americano

ARGENTINA
Argentine Leader Fights Bank Move

Argentina’s bank grab
The reserves, or your job: The president’s ultimatum to her Central Bank chief

BRAZIL
Brazil reflects on Lula’s last year

Lula and the generals
Don’t look back: The army blocks a truth commission

CUBA
The Vigil brothers, Cuban Political Prisoners of the Week, 1/10/10

En memoria de Gloria Amaya

Reggaeton

U.S. says contractor arrested in Cuba is no spy

500 Cuban Doctors Manage to Defect Via Venezuela

ECUADOR
Flota aerea Taura trasladada desde ayer a la base de Manta

Ecuador Orgs Reiterates Solidarity with Cuba

HONDURAS
Guest blog: Diaspora, remittances and immigration

MEXICO
A peaceful getaway or a lawless frontier?

Mexican Cartel Skins Rival’s Face, Stitches It on Soccer Ball

Tijuana reels amid a surge of violence
After some gains in Mexico’s drug war in 2009, Tijuana has had a bloody turn of events in the new year. More than a dozen people, four of them students, were reported slain in the last week.

Organised crime in Mexico
Outsmarted by Sinaloa: Why the biggest drug gang has been least hit

A Mexican cult
Death in holy orders: Syncretism in the era of the drug baron
. There is a novel on this, named La Virgen de los sicarios, and a movie of the same name.

NICARAGUA
Foto (del abuso) familiar

PANAMA
How to be a wheeler-dealer

PARAGUAY
Señor Topocho

PERU
Peru’s Interbank Names Interim General Manager

PUERTO RICO
Good news: Puerto Rico to Become Cruise Ship Hub of Caribbean

VENEZUELA
Chavez’s 3-Tiered Currency System May Spur Inflation

Venezuelan devaluation and Giordani for dummies!

Chavez Says Dollars Were Sold Very Cheap at Old Rate

By subscription: Chavez To Activate $1 Billion Fund

Chavez’s Devaluation Leaves Venezuelans Jittery About His “Socialism of the 21st Century”

Special thanks to the Baron, Eneas, Maggie and Vlad

The week’s posts and podcasts:
Chavez devalues the currency: 15 Minutes on Latin America
Oliver Stone: “We can’t judge people as only ‘bad’ or ‘good.’”
Chavez devalues currency, creates a distraction
Court reinstates head of Argentina’s Central Bank
Argentina’s central bank impasse: 15 Minutes on Latin America
Al-Qaeda and the FARC – together? 15 Minutes on Latin America
Argentina’s Central Bank director resigns: 15 Minutes on Latin America

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Filed Under: Argentina, Brazil, Carnival of Latin America, Colombia, Cuba, Ecuador, Honduras, Hugo Chavez, Mexico, Nicaragua, Panama, Paraguay, Peru, Puerto Rico, Venezuela Tagged With: Cristina Fernádez de Kirchner, Fausta's blog, Martin Redrado

January 9, 2010 By Fausta

Court reinstates head of Argentina’s Central Bank

NA-BD306_ARGENT_D_20100108170208

The news broke earlier yesterday as I was starting my podcast, and you may recall that I mentioned that a federal judge had suspended the decree that would allow the government to use foreign reserves to pay debt. The same judge reinstated Redrado.

Here’s an update,

Court Reinstates Fired Central-Bank Chief
Argentina’s Constitutional Crisis Escalates as Judge Blocks President Kirchner From Using Reserves to Pay National Debt

On Friday morning, federal judge Maria Jose Sarmiento granted an injunction request by two opposition parties barring the central bank from transferring money into the so-called Bicentennial Fund, which Mrs. Kirchner had hoped to create with $6.57 billion from the reserves.

A few hours later, Judge Sarmiento ordered the reinstatement of the bank president, Martín Redrado, whom Mrs. Kirchner dismissed on Thursday for refusing to make the transfer.

Since Fernandez does not control the legislature, she’s facing strong opposition:

Mrs. Kirchner faced a further threat on the legislative front, as Argentina’s vice president, Julio Cobos, moved Friday to call Congress out of recess for an emergency session on the reserves dispute. Mr. Cobos has fallen out with Mrs. Kirchner and her husband, former President Nestor Kirchner, and is their chief rival before next year’s presidential elections.

Mr. Cobos has questioned the legitimacy of the special decrees of “necessity and urgency,” which Mrs. Kirchner used both to enact the Bicentennial Fund and to fire Mr. Redrado. Some constitutional scholars said such decrees were intended for use only in emergencies, such as natural disasters. Congressional leaders maintain that the legislature must be consulted to replace the central-bank president and has final control over the reserves. Mrs. Kirchner’s faction of the Peronist party lost the majority in Congress in June midterm elections.

The government’s dealings with the central bank represent “a new abuse of the republic’s institutions,” said Ricardo Alfonsín, a leader of the opposition Radical Party.

Mrs. Kirchner accused Mr. Cobos of conspiring against her with Mr. Redrado, and lashed out at the Radicals, saying they presided over economic debacles when in power.

“If they didn’t know how to govern at least let us do it,” she said.

Underlying the dispute is the Kirchner administration’s need for funds to sustain the Peronist patronage machine. Last year, public spending grew at three times the rate of revenue.

From the government’s standpoint, paying debt with reserves frees up resources for politically popular spending programs. It also helps to persuade skeptical financial markets of Argentina’s willingness to pay its debts.

She can’t persuade them.

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Filed Under: Argentina, business, economics Tagged With: Cristina Fernádez de Kirchner, Cristina Fernandez, Martin Redrado

January 8, 2010 By Fausta

Argentina’s central bank impasse: 15 Minutes on Latin America

In today’s podcast at 11AM Eastern,
Behind Impasse Over Argentine Central Bank Is Battle For Cash

Behind the dispute between the Argentine government and the governor of the central bank is a battle over the administration’s efforts to secure new sources of cash to maintain high public spending.

The government says it must continue to spend generously to reboot the economy and prop up employment after a slump in 2009. Political opponents, invigorated by gains in recent midterm elections, contend that the government is forcing through extra spending without consulting Congress as it seeks to boost its waning popularity ahead of presidential elections in late 2011.

Public outlays have risen constantly, and government revenues haven’t kept up. While income was up about 12.5% in 2009, spending was up 29%, according to the ACM consulting firm.

The latest move to borrow $6.6 billion from the central bank to pay down debts coming due this year would have freed up cash from the budget. At the same time, it would improve the country’s profile among investors, helping it regain access to international debt markets to be able to borrow at reasonable rates.

President Cristina Fernandez on Thursday signed a decree removing Martin Redrado from the helm of the central bank for dragging his feet in setting up the fund as he sought assurances that all the right procedural steps were taken.

A federal judge has suspended the decree that would allow the government to use foreign reserves to pay debt. The government says it will appeal the judge’s decision.

Redrado has stepped down: The BBC reports,

Advertisement

Argentina’s central bank boss has stepped down after the president signed a decree firing him for refusing to use currency reserves to pay foreign debt.

Cristina Fernandez de Kirchner cited misconduct and dereliction of duties in a decree dismissing Martin Redrado.

A spokesman for Mr Redrado said he had agreed to step aside but not to resign, and was launching a legal challenge.

As a result,

he county’s bonds were the worst performers on JPMorgan’s Emerging Market Bond Index Global. The country’s risk premium was raised by 18 basis points, to 674 basis points over Treasurys, for a loss of 1.74%.

And despite some analysts’ calls that a sell-off presented a good buying opportunity, not too many buyers stepped up, a trader in New York said.

Pressure was put on the bonds when central bank governor Martin Redrado vowed to stay in his job despite President Cristina Fernandez’s call for him to step down. Late Thursday, Fernandez signed a decree that sacked Redrado, citing poor conduct. The government said it is proceeding with the $6.6 billion fund using central bank reserves.

The dispute has heightened market concerns over the formation of a debt-payment fund that is seen as a major step for the country as it looks to settle its defaulted debt and regain access to international capital markets.

“The main risk to Argentine asset prices is an unwarranted delay or an eventual cancellation of the reopening of the 2005 debt exchange,” said Boris Segura, an economist at RBS.

Prior post and podcast here.

cristinaamenazasx

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Filed Under: Argentina, business, economics, economy Tagged With: Cristina Fernandez, Fausta's blog, Martin Redrado

January 6, 2010 By Fausta

Argentina’s Central Bank director resigns: 15 Minutes on Latin America

cristinaamenazasx

In today’s podcast at 11AM Eastern,
Argentina’s Central Bank President Redrado Resigns under duress in a dispute with the government over the use of central bank reserves to pay debt this year. However, other reports state that he is not leaving.

Related reading:
Argentina’s Central Bank President Redrado Is Fired

Argentina President Cristina Fernandez de Kirchner fired Central Bank President Martin Redrado, the state news agency Telam reported.

Redrado, who took office in September 2004, will be replaced by Mario Blejer, the agency reported.

Television channel C5N said Redrado was sacked amid a dispute with the government over the use of central bank reserves to pay debt this year.

An official at the press offices at the presidential palace declined to comment and the central bank press office said it had no information.

Blejer’s wife, Susana, told Bloomberg News that her husband was traveling in Europe and isn’t available for comment.

Redrado has resisted releasing $6.5 billion in foreign currency reserves that Fernandez ordered for a special fund to meet the country’s rising debt obligations this year.
The money that he would have to transfer from the Central Bank’s reserves reaches the amount of 6,569 million dollars. The amount will be used to pay the debt in 2010.

The Globe and Mail has a more detailed report, Argentina asks central bank boss to quit

On December 31, the Wall Street Journal reported that Argentina Central Bank Calls On Government To Stem Inflation. So much for that.

Argentine peso, stocks weak on cenbank tension

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Filed Under: Argentina, business, economics Tagged With: Cristina Fernádez de Kirchner, Cristina Fernandez, Fausta's blog, Mario Blejer, Martin Redrado

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