Thursday, July 1, 2010

Argentina, where economic growth is a bad thing

Only with Argentina, whom investors and the business community (and press) clearly haven't forgiven for defaulting in 2001, can rising GDP forecasts be reported as a bad thing. Bloomberg reported yesterday that RBS raised their estimate of Argentina's GDP growth this year from 4.4% to 7%. Amazing you might say, that would put Argentina at the top of the hemisphere, and be a seriously nice way to rebound out of the world recession, but wait. According to RBS:

“This ‘full throttle’ growth strategy is likely to exacerbate current distortions in the economy,” RBS economist Boris Segura wrote in a report today from Stamford, Connecticut. This would leave “a heavy legacy to the next administration,” Segura said.

You know, if the US undertook a serious stimulus and our GDP forecast went up that much, this would probably be straight from a set of Republican talking points. I can see it now, "This 'full throttle' government spending is only going to drive the nation further into debt. Mr. Obama is going to leave this country in ruins for whoever our next President will be."In fact, I bet they've already said that.

Just a reminder that when reading the mainstream media's coverage of Latin America, it reads more like FOX News' coverage of Obama than what passes for good journalism on domestic issues.

1 comment:

  1. but inflation in Argentina (real inflation, not the cooked numbers reported by the gov.) is really high, up around 21%... whereas the US is still staring deflation in the face. So stimulating Argentina by increasing public sector spending will just stoke inflation more, if you subscribe to a rather standard interpretation of monetary policy/inflation/fiscal stimulus. You might not (Cristina definitely doesn't) but that doesn't mean RBS is being inconsistent.

    Also, I would hardly call RBS mainstream media, since they issued that report for investors, and investors aren't interested in politics, they're interested in making money. They don't care about what's popular or correct. As an example of this, I recently read a report (from Barclays, I think?) recommending investors buy PdVSA bonds, since their yield is incredible and it's highly unlikely the Venezuelan oil company will default on its debt because it has so many seizable assets in the US. That's not a position you'll see media types in the US take (buy Venezuela!) but where there's money to be made...