The Alte economist.

I will half apologize to Vanessa, who posted this at Tradtitional Christianity. What she is discussing — go read the full version, because I will shorten it down — is how Argentina is the canary in the Social Democratic mine. When it goes, it falls over completely, in a fairly predictable pattern.

Inflation will rise dramatically, but the government will simply massage the figures down to whatever level they prefer. Anybody who is monitoring their grocery bills is aware of this going on here already. The government is so heavily-indebted that recording the true interest rate would make COLA payments spike and immediately send our currency into a free-fall.
Attacks upon or persecution of the Church, particularly focused on Catholics (the old leftist scapegoat). Whenever people start to think that more people need to give them more stuff, they go piss in the holy water and manhandle a priest. True story
We’ll get used to periodic outbreaks of looting. Britain saw this in 2011, stunning the world, and Argentina fought a spate of it over the holiday season.
And finally, we’ll see the end of capitalism (well, what’s left of it), with price freezing and bans on advertising, and the eventual nationalization of private shops. Soon we’ll all have to use scrip at the national store.

Now, the old economists would say when the economy contracts, the state should retrench, simplify, and reduce the burden on others. If the state is to spend, it should do so on infrastructure (which is Keynesian: I am more of a let the system deflate to true value or Austrian influenced — which is why I used a german word for an oldster in the title in addition to the fact it was Vanessa’s old handle).

Argentina is also an example of how leftists want to control force. Ferfal notes:

The gun grabbing tactics used in Argentina are similar in many ways to those used in USA. Namely a very strong anti-gun media campaign, on all levels. In Argentina the slogan shoved down people’s throat was “if you have a gun, you have a problem”. It was pretty effective too, catchy. My wife used to make fun of me whenever we saw it on TV, “You heard that? We have a lot of problems!” We already had mandatory gun registration (try to avoid having that in USA!) and people were harassed regarding how many guns they had and the conditions they were stored in. The anti-gun campaign was strongly supported by so called NGOs that sympathized with the government and were funded by them.

You gotta watch those NGOs. They are part of the statist propaganda system, as the state wishes we will all be. This is Peter Schiff… and he is reinforcing Vanessa’s first point. The official story must be held up regardless of the facts.

With the announcement this week of its massive $5 billion lawsuit against ratings agency Standard & Poor’s, the Federal Government took a bold step to squelch any remaining independence of thought or action in the financial services industry. Given the circumstances and timing of the suit, can there be any doubt that S&P is paying the price for the August 2011 removal of its AAA rating on U.S. Treasury debt? In retaliation for the unpardonable sin of questioning the U.S. Treasury’s credit worthiness, the Obama Administration is sending a loud and clear message to Wall Street: Mess with the bull and get the horns. Shockingly, the blatant selectivity of the prosecution, however, has failed to ignite a backlash. But as the move violates both the spirit of the Constitution and the letter of the law in so many ways, I can’t help but look at it as a sea change in the nature of our governance. Call it Lincoln with a heavy dose of Putin.

Given the nature of the U.S. economy during the housing mania of the last decade, charging S&P with fraud is like handing out a speeding ticket at the Indy 500. Like nearly every other mainstream financial firm in the world at the time, S&P believed that the U.S. economy rested on a solid foundation of accumulated housing wealth. By 2006, the housing market was closing out one of its best decades in memory. Developers, speculators, financiers, real estate agents, bankers and even ordinary Americans had become charmed by the easy wealth of serial home purchases. The party had been orchestrated by a cadre of politicians and regulators who wanted to keep the party going and take credit for the good times.

To a degree that few Americans understand even to this day, it was not irresponsible lending, bad ratings, or excess greed that finally doomed the mortgage market, it was the simple fact that national home prices started falling. As long as prices stayed high, refinancing would have been open to borrowers, and defaults would have been manageable. Among the hordes of analysts, academics, and reporters who covered the market there were few if any standing who believed that national home prices could fall of a cliff. I know this to be true because I spent many years trying, unsuccessfully, to warn them.

I expect deflation in New Zealand — because we do make stuff still — and hyperinflation in the US, because they do not, and they owe too much.

The correction we are going through should have been deflationary. The inflated asset values should have shrunk as everyone ate losses. It would have hurt. Many banks would have gone to the wall.

But where that happened — such as Iceland — there is now recovery. Where the economies are not tightly regulated — Australia, NZ, Canada have fairly tight lending rules but it is easy to set up businesses — the economy is growing.

When times are tight, you can neither afford the schlerosis of red tape or the stupidity of central planning. Argentina does both. It is now, economically, a zombie state. If your country is like that, get your money, if not yourself, elsewhere.

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pukeko

Solo Dad. Calvinist. http://blog.photo.pukeko.net Photographer: manual, film and Digital. http://photo.pukeko.net.nz

  • David

    The thing that amazes me about Argentina is that some people on the anti-capitalist left in indebted countries such as Ireland or on the statist right in economically troubled ones such as Hungary float the idea of an Argentine style debt default as a magic panacea to all their economic problems.