Skip to main content

Financial Times thinks rating agencies did a good job

A bizarre article in the Financial Times, by Jude Webber, that claims that Argentina's recovery "is not quite as attractive or clean-cut as some of its proponents suggest." There are lots of factual mistakes and half-truths. Just an example.  They say Argentina's investment at 19.4% of GDP  last year was too low.  Compared to what? The US that was at 15.9%, or Argentina in 2002 when it was around 10%?  So the problem with Argentina is that is not China?

Also, they say that Argentina's "economy [is] just a sixth of the size of Brazil’s and a third of Mexico’s," and is going to be overtaken by Colombia.  The only thing they forgot to tell you is that the population of Argentina is just a one fourth of the Brazilian and around 40% of the Mexican, and that if you measure GDP in dollars, since the Brazilian and Mexican currencies are appreciated, it would overestimate the GDP of those countries and underestimate the Argentine.  Data from the World Bank puts the Argentine Gross National Income (GNI) in Purchasing Power Parity (PPP) at the Mexican level (around US$14,000 in 2009) and above the Brazilian (close to US$ 10,000).  These seem more than just simple mistakes, and it's appalling that they publish this kind of stuff.

Let alone that the idea that the "recovery" (Argentina passed the peak of the previous cycle in 2005, but okay let's call it a recovery) is risky is strange (this from people that did not see anything risky about Convertibility!!!).  The country has current account surpluses, high levels of reserves, and debt denominated in foreign currency shrunk incredibly.  How is this risky?  They seem to have more trust in the views of rating agencies than the hard numbers.  In fact, the article says that the president (Cristina Fernández de Kirchner) "believes the rating agencies got the financial crisis wrong.” I was also under the impression that rating agencies did give triple-A ratings to subprime bonds. Was that a correct assessment of their riskiness in FT’s view? Is that just her belief or is it a fact?  Do FT's journalists know the difference? They only report what people believe, and do not check (if this actually needed checking) whether it is true or not?

PS: I'll leave the inflation stuff for another post.  Will not deal with the absurd implication that kiosks that sold Clarin were closed because the newspaper was critical of the government.  The problems have more to do with Clarin's business dealings with the murderous dictatorship of the 1970s, that gave it a quasi-monopolistic position in newsprint.  In fact, this government has an incredibly positive record of defending human rights and those that were oppressed during the last Argentine dictatorship.


  1. I am sure this has nothing to do with the need to justify the austerity measures imposed on Portugal, Ireland, Greece and Spain (aka PIGS).

    That would be scare mongering aimed at manipulating the public opinion.

    The British, for instance, didn't try that with Iceland.

    The august FT wouldn't do that, would they?

  2. Nope. Like Fox News they are fair and balanced!


Post a Comment

Popular posts from this blog

A few brief comments on Brexit and the postmortem of the European Union

Another end of the world is possible
There will be a lot of postmortems for the European Union (EU) after Brexit. Many will suggest that this was a victory against the neoliberal policies of the European Union. See, for example, the first three paragraphs of Paul Mason's column here. And it is true, large contingents of working class people, that have suffered with 'free-market' economics, voted for leaving the union. The union, rightly or wrongly, has been seen as undemocratic and responsible for the economics woes of Europe.

The problem is that while it is true that the EU leaders have been part of the problem and have pursued the neoliberal policies within the framework of the union, sometimes with treaties like the Fiscal Compact, it is far from clear that Brexit and the possible demise of the union, if the fever spreads to France, Germany and other countries with their populations demanding their own referenda, will lead to the abandonment of neoliberal policies. Aust…

A brief note on Venezuela and the turn to the right in Latin America

So besides the coup in Brazil (which was all but confirmed by the last revelations, if you had any doubts), and the electoral victory of Macri in Argentina, the crisis in Venezuela is reaching a critical level, and it would not be surprising if the Maduro administration is recalled, even though right now the referendum is not scheduled yet.

The economy in Venezuela has collapsed (GDP has fallen by about 14% or so in the last two years), inflation has accelerated (to three digit levels; 450% or so according to the IMF), there are shortages of essential goods, recurrent energy blackouts, and all of these aggravated by persistent violence. Contrary to what the press suggests, these events are not new or specific to left of center governments. Similar events occurred in the late 1980s, in the infamous Caracazo, when the fall in oil prices caused an external crisis, inflation, and food shortages, which eventually, after the announcement of a neoliberal economic package that included the i…

What is the 'Classical Dichotomy'?