One entails what appears to be an effort by Argentine President Cristina Fernandez to silence economists who question the government’s inflation data.
As I wrote here in the Wall Street Journal:
“Argentina’s government has fined more economists for challenging official inflation estimates in what lawyers call a violation of freedom of speech.
On Tuesday, the government fined consulting firm Econviews 500,000 pesos ($123,442). It fined the consultancy abeceb.com an equal amount Monday for allegedly publishing inflation estimates that “lack scientific rigor.”
“This isn’t about methodology or truth in advertising, as the government claims. It’s really about silencing dissident voices,” economist and former finance undersecretary Miguel Kiguel said in a phone interview Tuesday.
The government has imposed similar fines against Estudio Bein & Asociados, Finsoport, MyS Consultores, GRA Consultoras and former Indec official Graciela Bevacqua, who used to oversee Indec’s consumer price index. Several other firms said they expect to be fined soon.”
By now pretty much everyone in Argentina knows inflation is rampant. Economists say inflation hovers around 25%, give or take a few points.
But government officials have long denied this to be the case. Instead, they say, the country is experiencing “price dispersion.” Just a few months ago officials said inflation didn’t even exist.
Economy Minister Amado Boudou even went as far as saying that given Argentina’s macroeconmic situation, inflation “could not exist.” He said people should “walk around” to find good prices. (If you’re gonna walk around, try Belgrano. Its tree-lined streets and classic homes are delightful.)
Whatever the case, prices are up. Even the government says officially that prices are up 10% from a year ago.
In just about any other country, an inflation rate of 10% would raise red flags and cause politicians to panic over ways to curb rising prices. Moreover, government officials in those countries would use the word “inflation” to describe what was happening to prices. But Argentina has never been “any other country” and its idiosyncrasies are sometimes so frequent that they cease to surprise.
The other notable piece of news was a move by the government to gain control over the decisions made by companies in which it has stakes. As I noted in a another WSJ piece:
“Argentina’s government increased its sway over dozens of companies through a presidential decree on Wednesday, a move that will grant the administration a larger influence in some of the key sectors of the economy ahead of presidential elections in the fall.
The decree lifts limits on the government to unilaterally name board members and expands its influence over other corporate decisions. Until Wednesday, the government’s voting rights were capped at a 5% equity stake even if its actual ownership in a firm exceeded that level.
Pension agency Anses owns stakes in 42 local companies after the government nationalized the private pension system at the peak of the 2008-09 financial crisis.
When Congress debated the pension nationalization bill in 2008, opponents agreed to pass the bill only after assurances that the state’s influence over corporate decisions would be limited by the 5% rule. But the decree published in the Official Bulletin abolished that limit, greatly enhancing the government’s influence.”
So there you have it. A quick and dirty round up of this week’s top news.
Have a great weekend!