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Stewart Cowley: Last tango in Buenos Aires
by Stewart Cowley on Feb 11, 2014 at 10:30
Amongst the signs that there is something seriously and fundamentally flawed about a society is the simultaneous existence of two national currencies; the official and the unofficial rate.
Maybe it’s something that Alex Salmond and the Scottish Nationalist Party should watch for in the future but the starkest current example is Argentina. The official rate has shot up to 8 Argentine pesos to the US dollar, unofficial rates of exchange have it closer to 13 pesos.
The devaluation that occurred two weeks ago, suddenly and without warning, has in reality been coming for some time.
Since 2008 when the peso traded at 3 to the US dollar there has been a managed steady decline. In the process Argentina’s foreign exchange reserves fell from a pitiful $45 billion to a negligible $25bn. Finally the elastic band snapped – they had run out of money to manage the decline and the markets took over.
The other sign of a flawed society is the existence of a self-consciously self-pitying administration that sees all of its victories as theirs and all its defeats as part of an organised conspiracy.
It’s even better if those you seek to blame are simultaneously invisible and paradoxically easily identifiable. So to hear cabinet chief Jorge Capitanich blaming unseen hands behind the peso collapse merely serves to confirm a dystopian society in all its glory.
When it happens again – and make no mistake there will be another devaluation – we should expect more rhetoric from wounded politicians seeking a scapegoat for their own mismanagement and moral corruption.
The human tragedy
But the real tragedy is a human one. Prices, once more, are spiraling and goods are disappearing from the shelves (for fear that retailers don’t know what the right price is any more).
The days when the price of a carton of milk rises between the time when you entered the shop and when you approached the till are back.
Argentina, resource rich and geographically beauteous has squandered the opportunity to put its house in order – unlike many of its near neighbours - for the sake of the egos of a few politicians.
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