Saturday, November 30, 2013

Defining Argentina's First Pope

November 29, 2013 5:50 pm

The New World Pope shifts Church politics south

Francis has figured out that people would rather hear about salvation than the wages of sin
From the way Pope Francis discusses sex and money in his first major papal pronouncement, you can tell a lot about his plans for Catholicism. He wants Church leaders to scold people less for their sexual arrangements. He thinks capitalism in its present, lightly regulated state is a “new tyranny”.
The Pope’s apostolic exhortation, Evangelii Gaudium (“Joy of the Gospel”), was released this week. He calls it a set of guidelines for a “new phase of evangelisation”. The election in March of Francis, a charismatic priest serving the working class of Buenos Aires, was a milestone in this phase.





For all the Church’s recent difficulties, its leaders believe it has vast potential for growth. They are right. The consumerism and materialism of the past decades have wrought economic marvels, but they have left a spiritual void – what Francis calls “the desolation and anguish born of a complacent yet covetous heart”. And yet every time the Church clashes with hedonism, it loses. So, at one level, Francis is making his self-abnegating religion more marketable in this consumerist age. He has figured out that people would rather hear about the joys of salvation than the wages of sin. “An evangeliser,” he writes, “must never look like someone who has just come back from a funeral.”
This shift should not be mistaken for all-out modernisation. On fundamental questions – which include sex and money – the Pope is not revising the Church’s beliefs, although he may change dramatically its attitude towards power.
The cornerstone of the Pope’s thinking is that the Church is a community of sinners, subject to “self-absorption, complacency and selfishness, to say nothing of the concupiscence which preys upon us all”. Francis is harder on hypocrites within the church than without. His tone is occasionally bilious and angry. His fellow clergymen are pretentious. They write lousy homilies. They are cliquish and snobby, which leaves people feeling unwelcome. “The Eucharist,” he writes, “is not a prize for the perfect but a powerful medicine and nourishment for the weak.”
Those who follow the Catholic Church primarily to root against its sexual teachings will find little to please them in this document, which lays out a number of non-negotiable points. No women priests, no reconsideration of abortion and (by implication) no gay marriage. The Pope is not at odds with the way previous popes understood these things. He is just a bit more savvy about how, on television and online, “certain issues which are part of the Church’s moral teaching are taken out of the context which gives them their meaning”.
On economic matters, the Pope’s thinking is radical, albeit somewhat less radical than it looks. There are passages in Gaudium that sound like the manifesto of some mid-20th-century revolutionary front. (“Solidarity is a spontaneous reaction by those who recognise that the social function of property and the universal destination of goods are realities which come before private property.”) But the Gospels have always been an uneasy match with free markets. At heart, the Pope is urging believers to pay more attention to the poor. Nothing could be more mainstream than that. The poor, and Christians’ duty to them, are all over the Gospels. Latin American theology since the 1960s has stressed that theme tirelessly. “For the Church,” Francis writes, “the option for the poor is primarily a theological category rather than a cultural, sociological, political or philosophical one.”
These ideas will be harder for the Pope to apply in more prosperous parts of the world, where today there are, broadly speaking, two ways to help the poor. You can help them directly, by giving alms or tutoring or ladling soup. The help this affords is genuine, but it takes the heat off the wider system, centred in the west, which the Pope attacks as a tyranny. The other way to help is indirectly, through politics. In advanced European and North American democracies, however, “the poor” tend not to speak for themselves. They are represented by the more “compassionate” of parties of the relatively wealthy, whose “compassion” often consists of pillaging the other party’s voters to compensate their own. The poor wind up an afterthought.
In less-developed political societies, such as, historically, those of Latin America, it is easier to tell rich from poor. And a lot more politically charged, too. Either the first New World Pope understands European and North American politics less well than his predecessors or he has revealed a historic shift in the Church’s culture. The Vatican may still be in Rome, but the heart of the church is on other continents. After centuries of projecting its attentions outward, Catholic Europe now finds itself on the periphery. It is missionary territory.
The writer is a senior editor at The Weekly Standard
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  1. Reportnow what | November 30 2:12pm | Permalink
    If the pope blames capitalism he should be consistent and open the Vatican riches to the poor and the migrants
  2. ReportJonathan Escott | November 30 1:29pm | Permalink
    From Yale’s Global Magazine “in 2011 there were 820 million people
    living on less than $1.25 per day, down from 1.37 billion in 2005. Whereas it took 25 years to
    reduce poverty by half a billion people up to 2005, the same feat was likely achieved in the six
    years 2005-2011. Never before have so many people been lifted out of poverty over such a brief
    period of time.”

    If one cares to lift people out of poverty, is it wise to undermine the system that has done more than any other to do so?

    Charity has its place, but as a practical solution to lifting the mass of humanity from poverty, no.
  3. Reportstonebird | November 30 11:51am | Permalink
    If the Pope leaves Politics and High-financier dictatorships aside, (such as anti-democratic meddlers, ie Koch etc) then he can re-align the Church as a "moral" and "ethical" authority for the 99% to adhere to. In which case he could actually start something new.
  4. ReportPaul Munton | November 30 10:20am | Permalink
    It is quite extraordinary in western capitalist countries the way in which people pursue and value freedoms in their private lives but ignore the tyranny of employers, who in the work place, strip them of those same freedoms under threat of dismissal and impoverishment. Surely this is what Pope Francis is bringing to our attention?
  5. ReportIvan Turgenev | November 30 3:50am | Permalink
    "The Auditing Integrity And Job Protection Act Of 2013"

    Bought and paid for with 4 million dollars by KPMG and Deloitte & Touche; spread out to the us congress and 85 thousand to Obama and 115 thousand to Romney in the 2012 election cycle. A bill to prevent the PCAOB from implementing audit rotations among the now big 4. The real slap in the face though is that "And Job Protection Act".
  6. ReportIvan Turgenev | November 30 3:44am | Permalink
    (“Solidarity is a spontaneous reaction by those who recognize that the social function of property and the universal destination of goods are realities which come before private property.”)

    I know at least one University and its surrounding community that will definitely be at odds with those Lenin/Marxist undertones - and many of them are catholic. hehe.
  7. ReportIvan Turgenev | November 30 3:37am | Permalink
    He almost makes me want to join the brotherhood, this guy.
  8. ReportIvan Turgenev | November 30 3:33am | Permalink
    "He wants Church leaders to scold people less for their sexual arrangements. He thinks capitalism in its present, lightly regulated state is a “new tyranny”."

    Oddly enough this fits nicely with the article on the proposed fines for paying for sex in France - Lenin placed the blame of prostitutes in Europe on Capitalism and Marx always said that Capitalism would need to run its natural course in order for the tyranny and inequities of it to be felt by enough people - Before the Utopia could be realized.
  9. ReportFelix Drost | November 30 2:15am | Permalink
    Not a bad article. But if the Vatican were to really pivot, a review of Pope John Paul II's visit to Nicaragua ought to be leading. So far John Paul II remains a leading saint of the Church and Nicaraguan priest Ernesto Caridinal is not. Liberation Theology has no place in this vatican. Positions advance but it still is all politics.
  10. ReportJohn Schaffer | November 30 12:00am | Permalink
    I liked the article, but the banner at the top of the first page is misleading and also wrong. It states:

    "Is the Pope a capitalist? Preaching salvation beats the wages of sin."

    As you point out, the Pope is not denigrating capitalism, but the abuse thereof. Perhaps, impolitic as far as North American and European feeling might be tilted. So it it too harsh to criticize the Envangelii Gaudium as being against capitalism.

    However the second sentence is flat wrong, as least as far as the subject of abortion as same sex marriage. In such cases the condemnation is much easier to proclaim and rant about because those are the sins of another person who is vulnerable and until recently without much hope of a defense or pardon. So easy to be sanctimonious about what one feels safe from. Without worries of an unwanted pregnancy (like being a man) or proclivities toward the same sex (heterosexual) it is easy to throw stones.
  11. ReportVicente Espeche;Gil | November 29 9:29pm | Permalink
    There is another possible conclusion:
    The first New World Pope has perfectly understood certain global effects from European and North American politics, which has prompted a historic shift in the Church’s attitude. The Vatican is always in Rome, and the heart of the church is wherever there are poor people. True it is, also Europe is missionary territory.
  12. Reportmotinow6700 | November 29 7:52pm | Permalink
    this article might usefully have referred to the online questionnaire which the Vatican earlier this month asked all Catholics to complete ahead of the Extraordinary Synod on the Family 2014.

    (i won't post a hyperlink as the FT system will then exclude this comment, but easy to find by feeding that title into a search engine)

Wednesday, November 27, 2013

Repsol Likely To Accept Argentina's $5bn YPF Compensation Offer

Last updated: November 26, 2013 6:51 pm

Repsol likely to accept Argentina’s $5bn YPF compensation offer

The board of Repsol is poised to accept an offer of $5bn compensation from the Argentine government for the nationalisation of its YPF subsidiary in a move that will draw a line under a bitter year-long diplomatic stand-off with Madrid.
The Spanish oil company’s management, under pressure from its largest shareholders, has agreed in principle to settle the legal battle over Argentina’sseizure of its majority stake in YPF but is demanding guarantees over how the $5bn will be paid, people close to the situation said.





While the final details of a deal have not yet been decided ahead of a Repsol board meeting on Wednesday, Argentina has indicated to the company and the Spanish government that it would pay the $5bn using its own government debt.
As a consequence of Argentina’s default at the turn of the century, the country is still being pursued by a long line of international creditors and Repsol’s management is seeking legal assurances that any payment would be enforceable, people close to the talks said.
Repsol, which saw its shares jump more than 4 per cent on news of a possible deal, declined to comment.
If the deal goes ahead, it could help to unlock billions of dollars of investment that YPF is seeking to develop its Vaca Muerta shale reserves, which are among the world’s largest unconventional oil and gas deposits.
An increase in energy production would help Argentina reverse a growing energy deficit, which is putting pressure on rapidly dwindling foreign exchange reserves, jeopardising the stability of the government of President Cristina Fernández.
The populist government seized majority control of YPF, the country’s former state oil company, after accusing Repsol of failing to invest sufficiently in its assets as Buenos Aires moved to alleviate rising fuel prices.
The heads of Repsol’s two largest investors, the Catalan bank Caixabank and Pemex, Mexico’s state oil company, attended a meeting in Buenos Aires on Monday with Argentina’s economy minister Axel Kicillof, Spain’s industry minister José Manuel Soria and three Repsol executives.
The meeting marked a conciliation between Buenos Aires and Madrid after months of tension, with Mr Kicillof having led the drive to nationalise YPF last year and Mr Soria having warned Argentina of “serious consequences” before the seizure took place.
The position of Antonio Brufau, Repsol’s executive chairman, is less clear. Tense relations with its large shareholders in recent months spilled out in public, as Pemex attacked his salary.
While Mr Brufau was not present at the meeting, people close to Repsol’s management said he had personally approved the envoy being sent to Argentina and welcomed an agreement.
In June Repsol’s board voted against an earlier $5bn compensation proposal from YPF which involved the payment of $1.5bn in Argentina-backed debt, and a stake in the Vaca Muerta shale formation, valued by Buenos Aires at $3.5bn.
Relations between Mr Brufau and Isidro Fainé, chairman of Caixabank and deputy chairman of Repsol, who brokered the earlier rejected deal, have been strained by disagreement over how to settle the YPF issue.
Mr Fainé, who had previously travelled to Argentina to meet Ms Fernández, did not turn up to the Repsol board meeting when the proposal he had helped design was unanimously rejected.
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Monday, November 25, 2013

Chile Economic Prospect Have Clouds

November 24, 2013 6:02 pm

Chile: Just deserts

Politics poses the latest threat to the country’s copper industry
More education. More equality. Those are nice things for Michelle Bachelet, hoping to return as Chilean president after December’s run-off vote, to be promising. But here is another challenge for her if she wins. Chile, the world’s top copper producer, will struggle to stay economical as a place for red-metal miners to invest in new capacity.
Another Bachelet promise – to raise the corporation tax – may not help here. A planned increase in the rate from 20 per cent to 25 per cent would lop 5 cents off earnings per share next year of Antofagasta, a London-listed Chilean miner, reckon Investec. The remaining 61 cents would already price in higher payments by miners to smelters next year. There is more to smelt: mined supply is rising as a previous wave of industry investment in capacity comes online.





One question for Antofagasta’s high multiple then (it trades at 16 times forward earnings) is where it can still find low-cost production growth. Two new projects in Chile would need future copper prices above $7,000/t and ambitious annual production levels to make them worth building, Goldman Sachs estimates. Antofagasta’s Antucoya mine, set to start operating in 2015, is already the industry’s most capital-intensive.
Chile’s older mines are humming along in the short term. In the last quarter production leapt a third at Escondida, the ageing warhorse of the Atacama Desert, and the world’s largest copper mine. But further ahead, Escondida is running dry – of water. BHP Billiton, the majority owner, is paying $2bn toward a desalination plant. This will not come online until 2017. Ms Bachelet might be around to cut the ribbon. But water scarcity overall (will miners or parched voters get first dibs?) will define her challenge.
Email the Lex team in confidence at


Thursday, November 21, 2013

One Brave Fund Manager Is Investing In Argentina!!!

November 21, 2013 9:14 am

Frontier bonds ride out Fed debt squalls

Kyle Bass, a hedge fund manager who made a fortune betting against Greek bonds and US subprime, dropped a bombshell at a conference in September.
He is investing in Argentina, Latin America’s perennial problem child and a nemesis of hedge funds.





Mr Bass is unfazed by the country’s reputation, and confidently predicted that pro-business politicians would take over after presidential elections in 2015. “Argentina’s problems can be fixed in two years,” he argued. “Now is the time to start investing.”
The US hedge fund manager is not the only one intrigued by the investment opportunities of Argentina. The Merval stock market index has rallied almost 50 per cent in US dollar terms this year, as a smattering of intrepid fund managers have put money into the Argentine bourse.
Indeed, Argentina is part of a broader phenomenon. While many emerging markets have disappointed investors in recent years, so-called “frontier markets” have on the whole performed well. Even the US Federal Reserve’s plans to scale back its monetary stimulus – which triggered turmoil across the developing world last summer – only dented this year’s returns.
The MSCI Frontier Markets index has risen more than 17 per cent this year, compared with the 2.9 per cent loss of the bigger MSCI Emerging Markets gauge.
Ironically, frontier markets’ lack of size, depth and maturity is a major reason behind their resilience.
Low liquidity means positions are often small and difficult to sell, so many fund managers focus on trimming bigger holdings in mainstream markets in times of stress, says David Grayson, chief executive of Auerbach Grayson, a brokerage. “Unless you’re liquidating your entire portfolio you tend to leave your frontier positions.”
Sven Richter, head of frontier markets at Renaissance Asset Managers, says the gains are also a result of past losses being clawed back. While frontier markets have performed well over the past year, they remain almost 50 per cent below their pre-credit crunch peak. Emerging markets are down less than a fifth.
But frontier market bonds – which unlike equities have performed well since the financial crisis – have also proved unexpectedly sturdy in the face of the Fed’s plans to “taper” its quantitative easing programme.
Despite the summer squall, JPMorgan’s Nexgem index of frontier bonds has returned 4.6 per cent this year. In contrast investors have lost 5.4 per cent on the dollar bonds of mainstream emerging markets, and 5.5 per cent in local currency debt.
Frontier and emerging bond markets are converging. The average spread, or difference, between JPMorgan’s flagship EMBI index of mainstream emerging markets and a frontier bond gauge constructed by Exotix, a brokerage, recently went below 100 basis points for the first time.
“You would think that talk of Fed tapering and the flight from risk would hit frontier markets, but they have kept on tightening,” says Gabriel Sterne, an economist at Exotix.
The lack of liquidity has been an even bigger factor in insulating frontier debts markets. Some bonds are almost impossible to shift even with a deep discount, so investors have no choice but to stick to their positions.
Benoit Anne, head of EM strategy at Société Générale, argues that it was “more luck than smarts” that got frontier markets through the testing summer, but predicts that the future looks bright. “They managed to get through the storm and now things are looking up,” he says.
Many fund managers are now staying in safer, more stolid markets such as South Korea or Mexico, in the expectation that the Fed will reawaken the summer’s turbulence by moving to scale back its $85bn-a-month bond purchases.
But Brett Diment, head of emerging market debt at Aberdeen Asset Management, argues that some of the frontier bonds will, counter-intuitively, perform better when the Fed finally tapers – as they did in the summer.
Mr Diment points out that frontier bonds generally have shorter maturities and higher yields than more mainstream, typically investment grade emerging market bonds. That makes them less vulnerable to shifts in US Treasury yields, the underlying pricing benchmark.
Still, frontier markets are considered esoteric for a reason. When they do slump they tend to slump precipitously. Valuations are now beginning to look punchy. Some analysts fret that consumer company stocks look particularly frothy.
Other asset managers stress that frontier bonds provide high returns because the creditworthiness is low. Rising Treasury yields may be less of a risk, but that will be of little solace if the country decides to skip any payments.
“Frontier markets should not be the hot new thing,” Mr Grayson warns. “It’s not for everybody and should only be seen as a long-term investment.”