Back from the campo...and what do I see in my inbox? La Argentina in the yanqui media again!This one has audio and you can get it here.
If you've been following the local papers you already know that it's a big story for a couple of reasons: the inflation that expats usually DON'T notice and the fact that Argentina issues inflation indexed bonds.
Maybe I'm like you...it takes literally years of increases in the price of the delicious produce here for me to personally, finally take note of it. It goes without saying that local families take note much earlier.
Secondly, La República derives a lot of income from government issued bonds that are indexed to Argentine inflation. These bonds can be traded because of the confidence in the government's inflation figures that regulate their relative value in the market.
This controversy began last year when the final 2006 figures for inflation here came in just a wee tad below the double digit level. That was a mighty achievement for an economy that, truth be told, was probably growing faster than China (China's growth figures are largely suspect because of the Chinese propensity for exaggeration...Argentina's growth figures are taken cum grano salis for the local tradition of not wanting anyone to know how much money you REALLY make.) Last month's figures for inflation here seemed to many a continuation of last year's suspected low-ball.
Bueno. When you're growing this fast inflation is something that you'll have to expect and deal with...and Kirchner's administration is taking very big steps to deal with it (sometimes a little TOO BIG as far as we in the cow bidness are concerned.)
The yanqui audio is a little too shallow and too provincial to describe what's happening down here but, hey-what-the-hell, we are on the other side of the planet after all.
However, what could have been mentioned in the piece, imho, is that just the mention of how the "I" word wreaks havoc in the hearts and minds of Argentines anywhere above the age of 45 or so.
In order to be fair to Kirchner... and be fair to our foreign intellects... we need to understand.
When we yanquis speak of inflation-South-American-style... we're speaking of Argentina and what began to happen here about 30 years ago. While our President Ford was handing out "WIN" buttons (whip inflation now), Argentina's inflation rate exceeded 300%.
In 1985 the rate here was 672%
Ford was faced with a seemingly undefeatable +12% inflation rate. Double-digies, baby, for the first time in American history.
I (maybe you, either) can't begin to fathom 100%, 200%, 300% inflation rates... they say that one month it was 1000%.
My wife helped me TRY and understand it: imagine that you own a shop, you buy the things for sale in your shop at what you consider a fair wholesale price... you put price tags on your stuff and sell them for what you consider a fair retail price. Simple, eh?
But what happens if you don't know, can't tell anymore, what a fair price is? When running around like CRAZY changing price-tags doesn't work anymore...
...you just don't open your doors.
Yep. During those years here, shops full of merch wouldn't open. Because they feared that at the end of the day they would have ended up selling everything at less than what they were worth.
Sorry, that was a long description. But the Marketplace Radio piece really didn't do justice to the fear that inflation strikes in the hearts of voters here.
I like K. I have some big disagreements with some of K's policies.
The political memory here of inflation, however, makes it almost irresistible to keep your presidential thumb off this particular scale... no matter what the bond market says.
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