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[QUOTE=Argento]If the purpose of business is to simply employ people as Andres has advanced, then the K's should decree that no modern equipment can be used at all in Argentina and go back to horses as the transport mode. It will employ plenty of people producing goods unprofitable to sell but heck, think of the employed people.
Argento[/QUOTE]I wonder who said that the sole purpose of the economy is employing people. Employment is one of the most important factors, but not the only one.
Andres
[QUOTE=Andres]In any case, holding a session under such circumstances doesn't set a good precedent. Tomorrow, any other industrial sector would force layoffs and road blockades to force the Congress to move forward their agenda.
Andres[/QUOTE]This seems like a really important point and you don't have to look back very many months to see it occurred in the recent rounds of union wage increases which from my perception set inflation on fire. It appeared the unions, one after the other, extracted wage increases out of the government and suddenly the cost of everything that wasn't under firm control by the government in the supermarkets jumped in price by the day or by the week, from cortados to restaurant tabs to services to rents and anybody not in a union was left at their old salaries getting poorer by the day.
I sense this government's intentions are in the right place and Lousteau was a bright guy with sound ideas, but they've been lousy at laying out a broad vision and selling it to the public. They seem to leave Fernandez out there, busy as a one armed paper hanger, fending off criticism and explaining policy. Nestor Kirchner is building up the Peronist party but he better hurry before this crisis cuts him and whatever ideas he has off at the pass.
A couple interesting facts in here I did not contemplate, like Chavez Gov getting 13% for their generosity. Let's see how long the freindship lasts if that gets defaulted.
[quote]Argentine debt surge raises spectre of default.
By Jude Webber in Buenos Aires.
Published: June 13 2008 00:23 | Last updated: June 13 2008 00:23
Argentina's debt levels are now higher than they were when it crashed into the biggest sovereign debt default in history in 2001, and a worsening crisis of confidence in the government has brought the spectre of a new default closer, a report to be published next week says.
Despite a radical restructuring just three years ago, public debt has reached $114.7bn (€74.4bn, £59bn) or 56 per cent of gross domestic product, compared with $144.2bn, or 54 per cent of GDP, in 2001 – at a time when Argentina's economy was much larger – according to the paper.
Martín Krause and Aldo Abram, directors of the Argentine Institutions and Markets Research Centre at Eseade business school and the report's authors, also found that if the amount owed to bondholders who did not accept the 2005 restructuring and are suing to recover their money is included, Argentina's overall debt rises to $170bn, or 67 per cent of GDP.
"We're not teetering on the brink of default but if we continue down this path, with this level of [social] conflict, we could get there," Mr Abram told the FT.
Many developed countries, including Italy and Japan, have higher ratios of debt to GDP but Argentina's higher borrowing costs and rocky institutional record make it harder to secure credit. "The worry is not the amount, it's that we won't have access to credit," Mr Abram said.
The six-month-old government of Cristina Fernández, the president, has been struggling to resolve a conflict with farmers after it imposed a sliding scale of export tariffs on key agricultural exports in March. The unrest has spread to truck drivers, who have mounted roadblocks to demand an end to the farm dispute, which has disrupted grains transportation.
Their action has caused fuel shortages and will put further pressure on inflation, which the government is widely accused of trying to conceal with doctored data.
Meanwhile, the government must this year find $14.6bn for debt servicing, plus $11.8bn next year and $10.5bn in 2010.
However, the threat of legal action by bond holdouts bars Argentina from international capital markets whilst it remains in default with the Paris Club of creditor nations, to which it owes $6.6bn.
Argentina has increasingly turned to Hugo Chávez, the Venezuelan president, who has bought $6.4bn in bonds in the past three years.
But its international financial isolation is costly – Buenos Aires has had to pay Venezuela interest rates of up to 13 per cent, yet it cancelled its low-cost International Monetary Fund debt and the Paris Club debt only costs 5.3 per cent, Mr Krause said.
By contrast Brazil, which had a far worse debt profile than Argentina in 2001, recently achieved investment grade and sold a 10-year bond at 5.3 per cent.[/quote]
[url]http://www.mercopress.com/vernoticia.do?id=13741&formato=HTML[/url]
[QUOTE=Andres]Opposition lawmakers tried twice before, but lawmakers supporting CFK were absent and the session had to be called off for lack of "quorum".
Even if they succeeded, the lawmakers supporting CFK would turn down the proposals. They outnumber the opposition.
In any case, holding a session under such circumstances doesn't set a good precedent. Tomorrow, any other industrial sector would force layoffs and road blockades to force the Congress to move forward their agenda.
Andres[/QUOTE]Facing the biggest crisis since filling the seat vacated by her husband, President Cristina Fernandez de Kirchner announced yesterday that a grain export tax increase that has unleashed months of protests by farmers will be debated by Congress.
Fernandez, whose party dominates both chambers, said she will send the proposal to legislators to give it "more democratic support".
[url]http://www.guardian.co.uk/world/2008/jun/18/argentina[/url]
[QUOTE=Bacchus9]Deberias conocer mas la realidad de nuestro campo antes de opinar de forma erronea.
Suma muy simple:
Impuesto a las ganancias: 35%
I. V. A.: 21% (lo perdemos)
Retenciones hasta el 11 de Marzo /2008: 35%
Retenciones Moviles: del 9 al 11%
Total: 35 + 21 + 35 + 9 = 100 o sea rentabilidad CERO"[/QUOTE]If these numbers are accurate at all, it explains why Argentines cheat on there taxes so much. If they did not, they would be out of business!
[QUOTE=Andres]When you set economic policies, you choose certain goals to accomplish as of your "political agenda" (or at least you are supposed to do so) When setting such priorities, unavoidably some sectors get favored while others not.
What I mean is that "What is good for Argentina" doesn't has the same meaning for a university researcher, an export-oriented farmer or a manufacturer who sells to the domestic market.
Andres[/QUOTE]The government should do what grows the economy most. With the increased revenues, it can help out the "university researcher" or any other sector it want too.
The government taxes the farmer allot, because it is easy. They have to export their goods, and it can be taxed easily. By over taxing the farmers, it harms future growth, which will cause government income from the farmers to be less in the future, then it would be otherwise.
If the government take too much of the income the farmers make, there is no incentive for the farmers to spend money on irrigation, which cost allot, if you have to pipe in water, or spend allot of extra money on fertilizer. Or to bring on marginal land, since the cost are higher.
There is no reason why Brazil should produce so much more cattle then Argentina. Argentina has lots of pastures that are perfect for cattle. The government limits the profits, so the ranchers do not expand, since there is no point in spending money, when your profits are so limited. I saw an interview with a rancher that said, "what was the point of expanding his herd, since he could not know when he can export anything. Or if the government allows some exports, high export tax that makes outbound beef too costly for many foreign buyers. So ranchers must keep selling 80 percent of their meat to swamped local markets where profits as well as prices are low. So there is no point in expanding."
The government would be better off subsidizing beef for local consumption, and letting production grow. Over time, the extra income form the taxes, will exceed the cost of the subsidy. And there would be more hard currency coming into Argentina.
In 2007, Argentina's cattle herd was estimated at 51.2 million head,.
In 2006, Brazilian cattle herd totaled 205.9 million head,
I do not have a 2007 number from Brazil.
There is not reason why Brazil produces so much more beef. Argentina should produce more then Brazil.
[QUOTE=Peter Europa]Why not sending the bill to congress (which is a formality) in the first place?
That would have saved over 90 days of social unrest.[/QUOTE]If the government had done so, the unrest would have sprouted anyway.
Reality is currently proving that: Now that the bill is in the Congress, farmers point out that the CFK supporting block may get through it on a fast-track manner, as if such procedure were not acceptable.
Andres
[QUOTE=Tessan]The government should do what grows the economy most. With the increased revenues, it can help out the "university researcher" or any other sector it want too.[/QUOTE]History proves that the Argentine elite (as most elites of underdeveloped countries) are not interested at all in developing Argentina. They want to pay the least possible taxes and amass their savings abroad.
Again, "economic growth" may have different definitions. To some, it may mean growth in domestic consumption. To others, only the ability to make a lot of money and save it abroad.
[QUOTE=Tessan] The government taxes the farmer allot, because it is easy. They have to export their goods, and it can be taxed easily. By over taxing the farmers, it harms future growth, which will cause government income from the farmers to be less in the future, then it would be otherwise.[/QUOTE]First, taxing the farmer is not easy at all. AFIP inspectors have to discover irregularities on a vast area and face a much more aggressive attitude from small town dwellers. In fact, retenciones are not the best way to solve the problem, but a sound and COLLECTABLE income tax.
Second, farmers cannot take their land and bring it abroad. Thus, they are forced to sell their land or make it produce the most with the current rules. No such thing as "I don't like the rules, I don't produce more".
[QUOTE=Tessan]If the government take too much of the income the farmers make, there is no incentive for the farmers to spend money on irrigation, which cost allot, if you have to pipe in water, or spend allot of extra money on fertilizer. Or to bring on marginal land, since the cost are higher. [/QUOTE]There's an inverse problem: Since the high yields of MGOs bring devastating middle and long term effects to land fertility and water contamination, not controlling it would compromise the future of agriculture in Argentina.
[QUOTE=Tessan]There is no reason why Brazil should produce so much more cattle then Argentina. Argentina has lots of pastures that are perfect for cattle. The government limits the profits, so the ranchers do not expand, since there is no point in spending money, when your profits are so limited. I saw an interview with a rancher that said, "what was the point of expanding his herd, since he could not know when he can export anything. Or if the government allows some exports, high export tax that makes outbound beef too costly for many foreign buyers. So ranchers must keep selling 80 percent of their meat to swamped local markets where profits as well as prices are low. So there is no point in expanding."[/QUOTE]I'm surprised that the rancher didn't mention the Hilton quotas as the main limitation to export meat to Europe, the most important market. If we consumers know about it, he should also.
Also, take into account that the soy boom brought a strong disinterest into raising cattle, since it's much more profitable to plant soy (another nasty consequence of leaving such sector entirely to the market rules) Have you heard recently of the unprecedently big grass fires in Entre Ríos and Buenos Aires province? They were provoked mainly to free non-used land to raise cattle, since the best lots are reserved to soy.
That's one of the reasons to cap the income from soy to lure people away from it.
[QUOTE=Tessan]The government would be better off subsidizing beef for local consumption, and letting production grow. Over time, the extra income form the taxes, will exceed the cost of the subsidy. And there would be more hard currency coming into Argentina.[/QUOTE]Things don't work that way. First, as I mentioned above, those planting soy make much more money than raising cattle, so no subsidy would allow them to switch from soy easily. Second, in order to subsidy, the government needs to divert money from other accounts. Where to take it from? From taxes from manufactured goods industries? No sense at all. Third, agricultural exporters are not interested in investing domestically beyond the minimum infrastructure to operate, so why subsidizing them?
[QUOTE=Tessan]In 2007, Argentina's cattle herd was estimated at 51.2 million head,
In 2006, Brazilian cattle herd totaled 205.9 million head,
I do not have a 2007 number from Brazil.
There is not reason why Brazil produces so much more beef. Argentina should produce more then Brazil.[/QUOTE]"Argentina" (meaning Argentine farmers) is better off planting soy (if we mean better off as getting more money from it) Why growing cattle under such conditions?
Andres
[QUOTE=Peter Europa]Offcourse there would be less discontent and no public support. If the farmers then would block roads you could actually claim that they are out for a golpe del estado.
And offcourse a fast-track is unacceptable, use your common sense![/QUOTE]Fast-track may not be the wisest way, but it's a legal one.
I guess that an open debate would be more fruitful, but if the official representatives vote for the CFK scheme, then I don't see much difference at all on the long run.
Andres
Andres is an unrepentant Argentine and clings pretty close to the PJ position and attitude of the Kirchners. My friend Tessan and I come from free market backgrounds and our posts clearly express our background.
No matter what spin Andres cares to put on how wonderful the policies of the Kirchner government are, the fact remains that plays on these policies have not worked in the 50 years they have been in play. Inflation is quoted at a minimum of 34% by Argentine independent economists for the next 12 months and that is presupposing no more civil unrest. So there is a collapse in clear view. So the PJ policies will have failed again.
And Andres, in a recent post you made mention of the limited access Argentina has to the EC under the Hilton quotas. For the record, Argentina is short by 3500 tonnes this year. So your argument does not stand up. Command economies failed in all the socialist countries where they were instituted, so Andres, why do you think that they will work in this disfunctional mess of an economy?
Argento
[QUOTE=Andres]History proves that the Argentine elite (as most elites of underdeveloped countries) are not interested at all in developing Argentina. They want to pay the least possible taxes and amass their savings abroad. [/QUOTE]
I do not expect them to do it out of the "goodness of their hearts". They do it because it make them more money. If they are allowed to make money, they want to make more, so they expand. They have no chose in paying the taxes, since they are collected when they export.
[QUOTE=Andres] Again, "economic growth" may have different definitions. To some, it may mean growth in domestic consumption. To others, only the ability to make a lot of money and save it abroad. [/QUOTE]The only reason to save all your money abroad, is because you do not trust your government or banking system. During the banking crisis, people could not get their money out of their bank accounts. Also the banks change everyone's money from Dollars to pesos. So it can be understood why people like keeping money outside of Argentina. Those people who had money outside of Argentina then, where ok.
Even if people take their profits abroad, the revenues the government gets from the export tax, will provide a good benefit.
[QUOTE=Andres] First, taxing the farmer is not easy at all. AFIP inspectors have to discover irregularities on a vast area and face a much more aggressive attitude from small town dwellers. In fact, retenciones are not the best way to solve the problem, but a sound and COLLECTABLE income tax. [/QUOTE]They just have to tax the exports, the farmers cannot get around it. Which is what the government is doing now.
[QUOTE=Andres] Second, farmers cannot take their land and bring it abroad. Thus, they are forced to sell their land or make it produce the most with the current rules. No such thing as "I don't like the rules, I don't produce more". [/QUOTE]It is not that they do not like the rules, they do not produce, like some small child. It is, I am making a small profit, so no incentive for the farmers to spend money on irrigation, which cost allot, if you have to pipe in water, or spend allot of extra money on fertilizer. Or to bring on marginal land, since the cost are higher. Therefore it does not grow.
[QUOTE=Andres] I'm surprised that the rancher didn't mention the Hilton quotas as the main limitation to export meat to Europe, the most important market. If we consumers know about it, he should also. [/QUOTE]Argento answered this already.
[QUOTE=Argento] For the record, Argentina is short by 3500 tonnes this year. So your argument does not stand up. [/QUOTE][QUOTE=Andres] Also, take into account that the soy boom brought a strong disinterest into raising cattle, since it's much more profitable to plant soy (another nasty consequence of leaving such sector entirely to the market rules) Have you heard recently of the unprecedently big grass fires in Entre Ríos and Buenos Aires province? They were provoked mainly to free non-used land to raise cattle, since the best lots are reserved to soy.
Things don't work that way. First, as I mentioned above, those planting soy make much more money than raising cattle, so no subsidy would allow them to switch from soy easily. [/QUOTE]Since the cattle men cannot make money, they are moving to soy, since it was the only real money maker.
In Brazil they produce 20-30% more soy then Argentina so why are the also producing 350-400% more cattle then Argentina? Why don't they just produce soy?
The reason is the cattle producers in Brazil can make money. Many Gauchos prefer to raise cattle as long as they can make good money, even if it is less then soy. It is a different way of life. My understanding is many argentine ranchers are in Brazil raising cattle, since they cannot make much money in Argentina.
[QUOTE=Andres]
Second, in order to subsidy, the government needs to divert money from other accounts. Where to take it from? From taxes from manufactured goods industries? No sense at all. Third, agricultural exporters are not interested in investing domestically beyond the minimum infrastructure to operate, so why subsidizing them? [/QUOTE]The reason the government taxes the meat exports is to keep domestic prices low. By doing that, they limit production. If they subsidized the meat price, it let the rancher make more money, they will expand, which will over time give the government more money. Under the present tax, there will be no expansion in cattle. The subsidy is necessary, since if prices of meat where to go up to international prices, the people would revolt.
The government says it has an $869 million dollar budget surplus this year, as tax income rose by more than 50 percent. I do not believe the government on this, since the governments dept load is going up. It makes no sense.
[QUOTE=Andres]
"Argentina" (meaning Argentine farmers) is better off planting soy (if we mean better off as getting more money from it) Why growing cattle under such conditions? [/QUOTE]Again Brazil produces more soy 20%-30% , and 350%-400% More cattle. Something is wrong with your logic. Why don't they just produce soy?
The rally is slated to begin at 3 p. M. Local time (1800 GMT) at the Plaza de Mayo in front of Government Palace. The rally is being supported by the nation's umbrella union group, the CGT, which is aligned with the ruling Peronist party.
To get workers there on time, banks closed at noon, while flights out of Argentina's international airport were to be canceled between noon and 7 p. M. The airline pilots' union leader, Pablo Biro, told news television channel Todo Noticias that the seven-hour strike would affect the nation's main air carriers, including Aerolineas Argentinas and LAN Airlines SA (LFL)
Meanwhile, schools curtailed afternoon bus services to allow drivers to attend the rally.
Government workers were also expected to attend the rally, although beleaguered government statistics agency INDEC, which has allegedly been doctoring inflation data since last year, said it will report its first-quarter gross domestic product report on time at 4 p. M. An INDEC spokeswoman said.
[url]http://money.cnn.com/news/newsfeeds/articles/djhighlights/200806181131DOWJONESDJONLINE000674.htm[/url]
Buenos Aires - Argentine President Cristina Fernandez de Kirchner Wednesday berated striking farmers for being selfish and unwilling to pay higher export tariffs on their increasingly valuable crops. Speaking at a crowded pro-government rally in Buenos Aires a day after she decided to send the controversial tariff increase to Congress, she called upon striking farmers to "free the roads and let Argentines get back to producing and to working."
Fernandez spoke to an estimated crowd of more than 100,000 people - many of them belonging to trade unions and other organizations linked to the Peronist movement - at the central Plaza de Mayo in the Argentine capital, before the governing palace Casa Rosada, at a gathering attended by many governors and mayors.
The president's speech was to be broadcast live on the country's television.
She complained about the selfishness of striking rural producers and again justified the rise in agricultural export tariffs with the need to combat poverty and underdevelopment at home. The president accused the farmers of not seeing beyond their own interests to the needs of society around them.
She stressed that blockading roads and banging pots in street corners "solves nothing," and called the opposition to her government to build a political project that can get power in an election.
"We invite those who think they can do better, and there must surely be some, to democratically constitute a political party and in the next election call for the popular vote to carry out their policies," Fernandez said.
However, she complained about the behaviour of farmers' leaders "for whom no one voted and whom no one chose" in a crisis that has been ongoing since March and that has caused shortages of food and fuel across the country.
There was a minute's silence before the president's speech, to mourn the death of a young man who was hit in the head by a heavy street lamp post earlier Wednesday on the Plaza de Mayo, where he was planning to attend the rally.
The man, 21, was injured and taken to a nearby hospital, but died a few minutes after admission after suffering "severe head trauma," medical sources said. He had travelled to Buenos Aires for the rally from the northern Argentine province of Tucuman.
Argentine Chief of Staff Alberto Fernandez met with pro-government legislators Wednesday to discuss the chances of approval of the bill that would increase tariffs on farming exports - an issue that has been at the root of a farmers' strike since March.
Farmers' leaders were evaluating their response to the latest developments in the 99-day-old crisis. They complained that the bill could only be approved or rejected by Congress and could be debated, but no modifications were to be allowed in the wording.
Like the president, Alberto Fernandez called upon farmers to put an end to their protest.
"It is not possible to persist in this scheme of road blockades and of preventing the free transit of Argentines, which generates terrible consequences, like shortages of food and fuel," the chief of staff told Argentine radio.
The pro-government camp was worried about securing a majority for the bill, with pressure mounting on pro-Kirchner legislators - particularly those representing provinces with intense agricultural activity - to vote against the bill.
The latest strike by Argentine farmers, launched Sunday and which suspended the sale of grain for export, was set to end Wednesday. This is the fourth such strike in recent months.
The crisis has been brewing since March, when an increase in export tariffs for soybeans and sunflower went into effect, tying tariffs to soaring international market prices for food.
The average tariff on soy was increased from 35 to 46 per cent, at the current prices. The levy was initially intended apply to almost all of the surplus if the price for soybeans were to rise above 600 dollars a tonne, but the government has since modified this to set a tax ceiling.
Late Monday many people in Argentine urban areas engaged in so- called "cacerolazos" - banging pots and pans - and hooting horns to demand that the government settle the crisis. The farmers' protest has been cupled with fuel and food shortages, since trucks cannot move freely through the country's roads.
Argentina is the third-largest producer of soybeans in the world, after the United States and Brazil. More than 95 per cent of its production is exported.