Thursday, October 29, 2015

Wednesday, October 28, 2015

Investors Bet On Change In Argentina

Investors bet on change in Argentina

Unexpectedly close election raises hopes of more market-friendly government
randed an international financial pariah since what was then the biggest sovereign debt default in history in 2001, investors are optimistic that Argentina will soon come in from the cold.
A stunning performance in presidential elections on Sunday by Mauricio Macri, the centre-right mayor of Buenos Aires who campaigned for change, has raised hopes he could clinch a victory in a run-off vote on November 22.
The prospect of a break from rule by Argentina’s dominant Peronist party sent bond prices soaring on Monday.
“‘Macrinomics’ is now a distinct possibility. This would be a positive for the country,” says Edward Glossop, emerging markets economist at Capital Economics in London. “It’s clear that the tide is turning in Argentina and disillusionment with interventionist and populist policies is growing.”
Markets see whoever wins the run-off vote — Mr Macri is set to face off against the government-backed Daniel Scioli, the moderate Peronist governor of the province of Buenos Aires — as an improvement on the last 12 years of rule by President Cristina Fernández and her late husband and predecessor, Néstor Kirchner.
But Mr Macri, who some pollsters had predicted would not win enough votes to make it to the second round, has promised to move much faster to fix serious macroeconomic imbalances, which include a ballooning fiscal deficit financed by the central bank, precariously low foreign exchange reserves and one of the highest inflation rates in the world.


Argentina is heading for a presidential run-off after a turnround in the fortunes of the opposition candidate, Mauricio Macri. Jonathan Wheatley asks Benedict Mander, FT correspondent in Buenos Aires, whether the business friendly mayor of Buenos Aires has credible plans for fixing the economy.
“A Scioli victory in the first round would not have been bad, but a Macri victory in the second round would make this an economic normalisation trade, not just an ‘anybody but Cristina’ trade,” says Daniel Freifeld, principal of Callaway Capital Management, an investment firm.
“Equity valuations and yields should converge with regional averages, which will translate into significant gains.”
Mr Macri has pledged to remove strict capital controls immediately and allow the overvalued peso to float freely. The former president of the Boca Juniors football club would also tighten fiscal policy by cutting back on costly subsidies and attempt to resolve a long-running creditor dispute that has blocked Argentina’s access to the international capital markets since its $100bn sovereign debt default.
Meanwhile Mr Scioli has promised to implement more “gradual” reforms, and warns that Mr Macri would represent a return to the neoliberal economic policies of the 1990s that many see as responsible for the 2001 economic crash.

epa03630485 Argentina's President Cristina Fernandez de Kirchner (C-L) speaks during a news conference in Rome, 18 March 2013, on the eve of Pope Francis inauguration mass. Argentine-born Pope Francis on 18 March met with the leader of his home country, President Cristina Fernandez de Kirchner, on the eve of his inauguration mass in Saint Peter's Square. Kirchner said she had asked the Pontiff to intervene in the row between their home country and Britain over the Falkland Islands. EPA/ETTORE FERRARI
Whoever wins election inherits a ballooning fiscal deficit
Crucial to the final outcome will be those who voted for Sergio Massa, a dissident Peronist who came in third place on Sunday with 21 per cent of the vote and is positioning himself as kingmaker.
Observers are speculating that Mr Massa could throw his weight behind Mr Macri’s “Let’s Change” coalition.
It also remains unclear how Ms Fernández will respond after a humiliating defeat for her cabinet chief and inner circle member, who lost the key race for the governorship of the province of Buenos Aires, which holds almost 40 per cent of the electorate and is seen as Argentina’s second most powerful political office after the presidency.
According to Elypsis, the only pollster to predict the result on Sunday accurately, Mr Macri is the favourite to win the run-off vote. The consultancy assigns Mr Macri a 70 per cent probability of victory.
In a note to clients, Elypsis highlighted the positive momentum from the surprise result — especially the stunning victory in the traditionally Peronist stronghold of the province of Buenos Aires — and the fact that Mr Massa is closer to the “Let’s Change” coalition than to the ruling party, which he has criticised fiercely.
“Scioli is no longer the favourite in a run-off against Macri,” agrees Jimena Blanco, Latin America analyst at Verisk Maplecroft.
She says this is because the vast majority of the undecided voters ended up supporting opposition candidates, and that it was “improbable” that those voters would realign behind Mr Scioli in the second round.
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A Report From Patagonia

It is now 20 days into my South American adventure. I am in the small town of Villa La Angostura. it is one hour from Bariloche and on a beautiful lake. it is small and charming. It is a place to escape from the pressures of life. I have had a wonderful two days here. Elena wanted me to take a close look at it. There is potential as a place to spend a part of the year. Later this morning I get on a bus for the five hour ride to San martin de los Andes. I will pass through one of the most beautiful parts of Patagonia, The Seven Lakes Region. Unfortunately the road is not always paved so I will be bouncing around a bit. I will spend a week in San Martin de los Andes. Then I will return to Bariloche. I will catch an Aerolinas Argentina flight to El Calafate. This is a beautiful small town with glaciers all about. Argentina's current president has her ranch there. I will spend a week in this beauty. I will then take a one hour flight to Ushuaia. This is the most southern town on earth. I will have a week there also. I will be back in California for Thanksgiving and a happy reunion with Elena.

In almost three weeks in South America, I have seen Peru that is still booming, Brasil hat is slipping into a Great Depression like the 1930's, and Argentina in the grips of inflation like the Weimar Republic in Germany in the 1930's. Despite the challenges people get on with their lives and have incredible spirit and resourcefulness.

Argentina just finished the first round of voting in a presidential election. Now there will be a presidentail debate and a run off election.

Sunday, October 25, 2015

The Tres Reyes Hotel In Bariloche, Argentina-A Part Of My Life For 25 Years

Everyone the Tres Reyes Hotel has a lot of memories for me. Exactly 25 years ago I was here with a woman from South Africa named Elsje Johanna Prasch. We had a wonderful time and the relationship did not work out. I had a broken heart for a while. In life it is so hard o find a good partner I had to wait 10 years after Elsje and I were here to find my wonderful partner in life-Elena.

Wednesday, October 21, 2015

Reflections On My Last Day In Rio de Janeiro And My First Night In Buenos Aires

Yesterday was my last day in Rio De Janeiro. I'm a lover of and collector of Brasilian music. I found an incredible shop called (ironically) Bossa Nova. I got some incredible new music. I relaxed on the beach and then had to leave to fly first to Sao Paulo. (The international terminal is incredible, by the way). I flew to Buenos Aires. That airport was disorganized. After clearing customs and immigration, I hired an excellent ramiss (upscale taxi driver) named Jose G. Arenas. As we left the airport, we got on the highway going to downtown Buenos Aires. We road was clogged with traffic and not moving. We first thought that a major traffic accident had happened. Closer observation showed that the main highway was closed off due to bon fires being set to shut down the highway. This was done by protestors unhappy with the Argentina economy and government. My driver was a very competent and honest man. He took me around all sorts of back roads with police cars everywhere with their lights flashing. Things were tense. I made it to the Hilton Hotel in Puerto Madero. I got checked in. I went downstairs to have dinner. It was a surreal feeling in the dining room. I felt like some British person dining at Raffles Hotel in Singapore in late 1941 or early 1942. I was having great food and wine. I was listening to beautiful music. Not faraway were some 140,000 Japanese soldiers who soon would end the privileged colonial life of the English there.

Monday, October 19, 2015

My South American Adventure

I have been missing from home for the last week. Last weekend I was in Lima, Peru. I was amazed at the boom there despite the fall in commodity prices. I then took "the red eye" to Sao Paulo where I spent some time with my daughter and her boy friend. Now I am in Rio reliving some of the happiest times in my life. Sadly the security situation is not good and one has to be careful of robbers. Tomorrow I fly to Buenos Aires to conduct business and have a birthday celebration with Elena's family and friend.

Wednesday, October 14, 2015

The True Story Of Paul Lir Alexander

Thursday, October 8, 2015

Pinochet-US Declassifies More Documents On The Letallier Case

Brasil's Watchdog Opens Way For Rousseff Impeachment

October 8, 2015 9:59 am

Brazil watchdog opens way for Rousseff impeachment

Brazil's President Dilma Rousseff looks on during the launch ceremony of the "Olympic Year for Tourism" in Brasilia...Brazil's President Dilma Rousseff looks on during the launch ceremony of the "Olympic Year for Tourism" in Brasilia, Brazil October 7, 2015.REUTERS/Adriano Machado©Reuters
Under pressure: Brazil’s president Dilma Rousseff is contending with corruption allegations and a faltering economy
Brazil’s federal budget watchdog, the TCU, has rejected President Dilma Rousseff’s 2014 public accounts in a historic decision the opposition is expected to use as the basis for an impeachment process against her.
The decision, announced on Wednesday night, is the second prong in proceedings that could result in the ousting of the president.
It comes a day after Brazil’s election watchdog, the TSE, opened an investigation into alleged illegal funding of Ms Rousseff’s 2014 election campaign — which could end her presidency if she is found guilty under Brazilian law. Ms Rousseff denies wrongdoing in both cases.
“This will definitely lead to an impeachment process,” said Sérgio Praça, a political scientist at FGV in Rio de Janeiro, of the TCU decision.
Only 10 months into her second four-year term, Ms Rousseff is locked in a battle for political survival.
With the economy slipping into deep recession as a result of the end of the commodities boom, the president of the left-leaning Workers’ Party, or PT, is trying to restore balance to Brazil’s sinking finances.
At the same time, members of Ms Rousseff’s ruling coalition have been accused of conspiring with company directors and contractors of state-owned oil operator Petrobras to extract bribes and kickbacks.
The combination of sinking economic growth and the stench of corruption has driven Ms Rousseff’s popularity to a record low, leaving her vulnerable to impeachment.
In a long session on Wednesday night, the judges of the TCU congratulated themselves on their hard work and independence in coming to their decision.
“The tribunal recommends to the National Congress the rejection of the accounts,” the TCU said in a statement. “A recommendation to reject the accounts has not occurred since 1937.”
The problem with the government is that it does not have control over the national congress
- Celso Mello, political scientist
The TCU cited illegal government manoeuvres, such as running up debts with the state banks for the payment of expenses such as social welfare that should have been included in the budget. These alleged pedaladas or tricks enabled Ms Rousseff to pretend the budget was in good shape during elections last year, critics say, when it was in fact heading further into deficit.
The TCU’s ruling will now go to the congress where it will land in the coming days on the desk of the house speaker, Eduardo Cunha, a sworn enemy of the Rousseff administration even though he is affiliated with its main coalition partner, the PMDB.
Ms Rousseff has been trying to prevent Mr Cunha and the opposition from getting the necessary numbers in congress to kick off the impeachment process byrebuilding her cabinet with more loyal PMDB figures.
Her position appeared to have been strengthened last week when Mr Cunha’s credibility was shaken by news Swiss authorities were investigating him for alleged money laundering and corruption. Mr Cunha, who has also been named by state witnesses in the Petrobras case, has denied any wrongdoing.
Despite her efforts, however, Ms Rousseff this week failed to muster a quorum in congress to force the lower house to pass presidential vetoes of budgetary measures introduced by lawmakers that would blow a hole in her austerity efforts. While the vetoes are likely to eventually pass, her weakness in congress so soon after the cabinet reshuffle is a bad sign.
“The problem with the government is that it does not have control over the national congress,” said Celso Mello, political scientist at business school Insper.
Even so, an impeachment process promises to be long and bloody with no assurance that it would result in the removal of Ms Rousseff, said Mr Praça of FGV.
He argues that there still does not exist enough support for an impeachment decision against Ms Rousseff. Such a decision would require two-thirds of the lower house to kick off the process and two-thirds of the senate to decide on its merits.
“The outcome could be the worst possible, which would be to start the impeachment process and then drag it out for months while Dilma remains in office,” he said.
Throughout the recent political turmoil, Ms Rousseff’s mentor and former president Luiz Inácio Lula da Silva has been rumoured to be working behind the scenes to secure her position, organising the cabinet reshuffle, for example.
But Mr Praça said if that was the case, Mr Lula da Silva appeared to have lost his touch. Ms Rousseff’s decision on the cabinet reshuffle was a case of too little too late.
“If Lula were still as influential as he claims to be or people claim he is, this series of mistakes wouldn’t have happened,” Mr Praça said.