Orthodox Economy is an Oxymoron
I have very seldom display my thoughts outside the social media / web / marketing world lately. The sheer amount of stupidity that I have been reading lately has called for an intervention.
image credit: scriptingnews @ flickr
The world is in recession. Forget about being politically correct and trying to avoid panic by not using terms that sound "so very negative" about the economic situation. Things are screwed, not looking good and policy makers are as lost as they usually are.
I had a professor that once stated: "Economists are the only professionals who see their theories being grounded on a daily basis and still abide to their discourse". The concept proves to be right now more than ever.
According to wikitionary Orthodox means:
Adhering to whatever is traditional, customary or generally accepted.
Well, if economy was written in stone "Orthodox Economy" would make some sense as a general concept, but people would hardly make any money. But that's not the case.
Economy, as a general (and almost abstract) entity is always changing. People and companies find new ways to make and loose money on a daily basis. Markets adapt, laws change, conditions get altered. Prices rise and fall. It is a living and breathing animal.
This does not mean that crisis such as the one that's currently underway can't be foreseen; but rather that what has proven to be traditional, customary or generally accepted in the past might not be so as the world evolves.
I expect that as readers go through the previous paragraph I'll make a statement for the bailout.
Wrong.
The proposed bailout is too little, too late. The usual band-aid on a broken leg stuff. It will (if passed this Thursday) create little relief on the very short term and a big problem in the medium to long term.
Something must be done in the short term. Trust must be restored, credit must flow again. "Bailing Out" does not restore trust. Or would you trust the plane you just bailed out off?
A money injection into the financial system is just a minor thing, 700 billion can be sucked up almost overnight. But what's required is not a rescue, but a reform. Life without credit is not a nice thing, trust me. (Over Argentina mortgages have ~24% interest rates)
Over my 29 years I have witnessed 3 serious economic crises. To be honest I only have recollection of the last 2. The last time the banking system was so screwed up that the infamous "corralito" was imposed over all of us. People could not withdraw more than X amount of money per month. Things went down the drain, we had devaluation and now we live with inflation.
Things here weren't solved, just fixed enough to get going and sooner or later Argentina will be facing another economic crisis.
Final word is: timing for this crisis couldn't be worst. No politic wants to put out his head for chopping with less than a month left until the general election. But I'm afraid some serious and not-so-popular decision making must happen. And it can't wait 29 days, much less until Inauguration Day. Hopefully real leadership will surface as it has done in the past.
Idiocy on the method
Or a handbook on how Argentinian Government runs this country.
87 fucking days. That is how long the strikes and protests from the rural workers has lasted. There have been ups and downs. We've seen Supermarket shelves empty and fill up again. Now we see them emptying.
What is going on around here is the kind of idiotic fight our current government loves to get into. Their definition of strength is to never step back a single inch. It would seem that "to talk" equals "debility" in their deranged and power blinded minds.
It all started due to a tax imposition to agricultural exports. With soybean and other commodities at record prices Government thought it would be a good idea to increase the export fees. There were two problems with this: a. It didn't contemplate that such high taxes would strangle small producers and b. the money will most certainly go to some obscure account somewhere in the Cayman Islands.
Lie and deceit are two of the favorite tools used by Cristina Kirchner. I have posted before how they lie to the general public about inflation. Now even the economist has taken up that story.
If a government calculates year-to-year inflation in 9% and independent studies show it could be nowhere bellow 25% one of two things must be happening. Those in charge of price variation measurements are either morons (and they need to quit) or they lie (and they need to quit). Only in a country such as Argentina can something so obscenely absurd can be sustained for so long.
The sheer lack of political intelligence to solve something as primary as food production in a country which has historically based its economy on... Guess what? food production, demostrates that this government (as those that preceded) cares not about the general wellbeing but to make as much money as they can during their time in power.
I don't think I have ever came across a policy that was thought to last for longer than a couple of years in my entire adulthood. A country is not built upon temporary fixes. A country is built with a general direction in mind, with a common goal, with planning, with long term policies.
Argentina survives by the sheer fact that we have settled on a blessed land. All it takes is to toss a couple of seeds and plants grow. Drill a hole on a mountain and some mineral pops out. Anyone who ever visits is amazed by the beauty of the geography. Maybe that's our problem, we take things for granted. Way too much. (There is even an old Joke about that: God is creating Earth and places great farmlands, beautiful mountains, amazing coastlines all in the same place; some Archangel comes and notices this; thus he asks God if he didn't go too far with the good things on this particular land. God smiles and replies: "maybe, but I'm going to fill it up with Argentinians")
This government (and their farmer counterparts) are sickening. The greed and idiocy on the method never cease to amuse me in the worst possible way.
(can you tell I'm pissed?)