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Tuesday, May 23, 2017

Bourse Bet-Argentina's New Stock Exchange

Bourse bet: Argentina’s new exchange
​Shares in BYMA, a new stock-exchange operator, begin trading in Buenos Aires today. The company is a product of the merger of several exchanges in cities across Argentina. Unlike its forerunners, BYMA—Bolsas y Mercados Argentinos—is “demutualised”: its shares will be publicly traded rather than restricted to a number of brokers. The change is overdue. The demutualisation trend began in Stockholm in 1993; big exchanges including Deutsche Börse and the London Stock Exchange soon followed. Shares in BYMA are likely to prove popular with investors, many of whom hope President Mauricio Macri’s market-friendly reforms will encourage higher trade volumes. Interest in Argentina has jumped since its return to capital markets last April. Next month MSCI is expected to re-admit Argentina into its emerging-market index. But confidence remains fragile. Last week shares fell after new corruption allegations swirled around Michel Temer, Brazil’s president. Argentines hope their northern neighbours don’t spoil the party.
May 23rd 2017
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Argentina To Modernize Its Air Force With 34 Turboprop Airplanes From Textron

https://www.fool.com/investing/2016/08/20/textron-lands-contract-for-texans-in-argentina.aspx

Monday, May 22, 2017

Argentina's Future

Sour Paolo

Sour Paolo

As many as 20,000 protesters marched on Sao Paolo’s main art museum to call for the impeachment of Brazilian President Michel Temer.
Other cities across the country also held protests against the president and other politicians besmirched by the long-running investigation of a corruption scandal involving the state-owned oil company Petrobras, the Los Angeles Times reported.
Unlike past protests, these demonstrations included people from both the political right and left coming together against Temer, who was allegedly caught on tape encouraging a powerful businessman to bribe the jailed former speaker of the Lower House to keep him quiet.
In plea-bargain testimony given to Brazil’s Supreme Court, Joesley Batista, the head of the meat-packing giant JBS, accused Temer and former Presidents Dilma Rousseff and Luiz Inacio Lula da Silva of receiving millions in bribes. Temer became president in September when Rousseff was impeached.
The testimony is expected to derail the controversial pension reform that Temer was attempting to push through Congress. However, he has denied any wrongdoing and vowed he will not step down.
“The only future for Brazil now is an election,” the Times quoted a protester as saying.

Thursday, May 18, 2017

Brasil's President Temer Hit By Bribery Allegations


Brazil’s President Temer hit by bribery allegations Leader denies report he was taped approving payments to silence former coalition ally Read next Pensions at centre of Brazil’s reality check Michel Temer is facing the biggets crisis of his presidency but denies wrongdoing © AP Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Email1 Save 3 HOURS AGO by: Andres Schipani in São Paulo Brazil’s Michel Temer is facing the biggest crisis of his short presidency after one of the country’s leading newspapers alleged he had been taped endorsing bribes to buy the silence of a former coalition ally in corruption investigations. O Globo reported that Joesley and Wesley Batista, respectively chairman and chief executive of Brazil’s largest meatpacker JBS, had presented a secret recording of Mr Temer approving bribes to Eduardo Cunha, the disgraced former speaker of the lower house, as part of plea bargain negotiations. The report comes as the country’s political and corporate establishment is still reeling from sprawling corruption investigations into state oil company Petrobras in a scandal known as Operação Lava Jato, or Operation Car Wash, which has implicated senior politicians, police, union bosses and indigenous leaders in a vast web of bribery. According to the O Globo report, Mr Temer heard from Joesley Batista that JBS was paying Cunha to keep silent. The president is alleged to have responded: “You’ve got to keep this up, OK?” The report did not specify what Cunha — who was crucial in the impeachment of former president Dilma Rousseff that brought Mr Temer to power last year — was alleged to have been asked to keep silent about. The president’s office said in a statement that Mr Temer had “never asked for payments to obtain the silence of the former deputy Eduardo Cunha”. Confirming the meeting with Joesley Batista at Mr Temer’s official residence, it added that “there was nothing in the dialogue that compromises the conduct of the president”. JBS declined to comment. Cunha, who is in jail, could not be reached for comment. FT Special Report Reinventing Brazil Brazil appears to be on the move again. After a rocky 2016, there are signs that the deep recession could be coming to an end.

Despite protests, the government is trying to cut back on spending and introduce changes that will ensure a more sustainable future. The unverified report is already rattling the unpopular government. Protesters gathered on Wednesday night outside Brasilía’s modernist presidential palace and in São Paulo’s main thoroughfare honking horns and shouting “Temer, out!” “If true, this is a bomb,” said Thomaz Favaro, political analyst at Control Risks, adding that if the recordings were confirmed, Mr Temer faced an investigation, public pressure to resign and impeachment proceedings in Congress. “The development substantially increases the risk of an unscheduled government change before the 2018 election,” he said. If Mr Temer left power, the next in line would be Rodrigo Maia, head of the lower house of Congress who is also implicated in the probes. Plea bargains in Brazil allow suspects to receive lighter sentences in exchange for giving evidence, which in the case of Operation Car Wash has led to investigation threads that have reached ever higher echelons of power. The latest batch of plea bargains prompted the Supreme Court to open probes in April into many politicians, including eight government ministers.

 Mr Temer, already suffering from an approval rating of just 9 per cent, is battling to introduce an ambitious reform agenda including deeply unpopular changes to the pension system. Not only could the latest revelations trample on his plan — they could conceivably topple him. Alessandro Molon, an opposition lawmaker, said he had filed an impeachment request against Mr Temer. Janaína Paschoal, a jurist and co-author of the impeachment request against Ms Rousseff, said on Wednesday night that if the recordings were confirmed, Mr Temer could not remain in office. Columnist Igor Gielow wrote in Folha de São Paulo newspaper that while a mixture of luck and skill had allowed Mr Temer to get through the car wash investigations so far, “now he can at the very least be accused of a crime . . . obstruction of justice”.

Wednesday, May 17, 2017

How Venezuela Stumbled To The Brink Of Collapse

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Opposition supporters confronted riot security forces while rallying against President Nicolas Maduro in Caracas, Venezuela, on Friday. CreditCarlos Garcia Rawlins/Reuters
Venezuela, by the numbers, resembles a country hit by civil war.
Its economy, once Latin America’s richest, is estimated to have shrunk by 10 percent in 2016, more than Syria’s. Its inflation that year has been estimated as high as 720 percent, nearly double that of second-ranked South Sudan, rendering its currency nearly worthless.
In a country with the world’s largest proven oil reserves, food has grown so scarce that three in four citizens reported involuntary weight loss, averaging 19 pounds in a year.
City streets are marked by black markets and violence. The last reported murder rate, in 2014, was equivalent to the civilian casualty rate in 2004 Iraq.
Its democracy, long a point of pride, became the oldest to collapse into authoritarianism since World War II. Power grabs, most recently to replace the Constitution, have led to protests and crackdowns that have killed dozens just this month.
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Established democracies are not supposed to implode like this. Steven Levitsky, a Harvard University political scientist, said Venezuela was one of “four or five, ever.” Among those, none was as wealthy or fell so far. “In most cases,” he said, “the regime quits before it gets this bad.”
Venezuela’s crisis came through a series of steps whose progression is clear in retrospect, and some of which initially proved popular.

A Two-Party Establishment, Ready to Break

At democracy’s founding, in 1958, the country’s three leading parties, later narrowed to two, agreed to share power among themselves and oil revenue among their constituents.
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Venezuelan national police officers at a march on May 1. CreditFederico Parra/Agence France-Presse — Getty Images
Their pact, meant to preserve democracy, came to dominate it. Party elites picked candidates and blocked outsiders, making politics less responsive. The agreement to share wealth fostered corruption.
Economic shocks in the 1980s led many Venezuelans to conclude the system was rigged against them.
In 1992, leftist military officers, led by Lt. Col. Hugo Chávez, attempted a coup. They failed and were imprisoned, but their anti-establishment message resonated, catapulting Mr. Chávez to stardom.
The government instituted a series of reforms that were intended to save the two-party system, but that may have doomed it. A loosening of election rules allowed outside parties to break in. The president freed Mr. Chávez, hoping to demonstrate tolerance.
But the economy worsened. Mr. Chávez ran for president in 1998. His populist message of returning power to the people won him victory.

Populism’s Unwinnable War With the State

Despite Mr. Chávez’s victory, the two parties still dominated government institutions, which he saw as antagonists or even potential threats.
He passed a new Constitution and purged government jobs. Some moves were broadly popular, like judicial reforms that reduced corruption. Others, like abolishing the legislature’s upper house, seemed to have a broader aim.
“He was reducing potential checks on his authority,” said John Carey, a Dartmouth College political scientist. Beneath the revolutionary language, Mr. Carey said, was “pretty savvy institutional engineering.”
Distrust of institutions often leads populists, who see themselves as the people’s true champion, to consolidate power. But institutions sometimes resist, leading to tit-for-tat conflicts that can weaken both sides.
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A line formed in front of a state-run grocery store, as hundreds of people looked for food on a recent morning in the port town of Puerto Cabello. A day earlier, there were beans, flour and milk for sale. On this day, there was only cooking oil and powdered milk. CreditMeridith Kohut for The New York Times
“Even before the economic crisis, you have two things that political scientists all agree are the least sustainable bases for power, personalism and petroleum,” Mr. Levitsky said, referring to the style of government that consolidates power under a single leader.
When members of the business and political establishment objected to a series of executive decrees in 2001, Mr. Chávez declared them enemies of the people’s revolution.
Because populism describes a world divided between the righteous people and the corrupt elite, each round of confrontation, by drawing hard lines between legitimate and illegitimate points of view, can polarize society.
Supporters and opponents of a leader like Mr. Chávez come to see each other as locked in a high-stakes struggle, justifying extreme action.

A Coup Escalates Conflict Beyond Ideology

In 2002, amid an economic downturn, outrage against Mr. Chávez’s policies swelled into protests that threatened to overwhelm the presidential palace.
When he ordered the military to restore order, it instead arrested him and installed an interim leader.
Mr. Chávez’s foreign policy shifts, aligning with Cuba and arming Colombian insurgents, had angered some military leaders. His war on the elites turned out to carry risks.
The coup leaders overstepped, dissolving the Constitution and legislature, sparking counterprotests that quickly returned Mr. Chávez to power.
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A bakery worker behind empty bread shelves in Boca de Uchire, Venezuela. CreditMeridith Kohut for The New York Times
But his message of a revolutionary struggle against internal enemies no longer felt like a metaphor for reducing poverty.
Mr. Carey called it a “hugely polarizing moment” that allowed Mr. Chávez to portray the opposition as “trying to sell Venezuelan interests out.”
He and his supporters now saw politics as a zero-sum battle for survival. Independent institutions came to be seen as sources of intolerable danger.
The licenses of critical media outlets were suspended. When labor unions protested, they were weakened by blacklists or replaced outright. When courts challenged Mr. Chávez, he gutted them, suspending unfriendly judges and packing the Supreme Court with loyalists.
The result was intense polarization between two segments of society who now saw each other as existential threats, destroying any possibility of compromise.

Converting Oil Into Loyalty

Shortly after the coup, Mr. Chávez faced another battle that would prove just as fateful. Workers went on strike at the state-run oil firm, Petróleos de Venezuela, or PDVSA, which he had long denounced for its associations with business elites and the United States.
The strike threatened to destroy the economy and Mr. Chávez’s presidency. But it also presented an opportunity to stave off another uprising.
After the strike collapsed, he fired 18,000 PDVSA workers, many of them skilled technicians and managers, and replaced them with some 100,000 supporters.
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At a protest in December, a man burned a 100-bolivar bill, all but worthless because of high inflation.CreditCarlos Eduardo Ramirez/Reuters
Much of the firm’s operating budget was diverted into programs for Mr. Chávez’s political base, payoffs for government cronies and subsidies to keep his promise of affordable food.
In 2011, $500 million from a PDVSA pension fund found its way into a pyramid scheme run by government-linked financiers, none of whom faced prosecution. After running on smashing the corrupt elite, Mr. Chávez had merely established his own.
As an oil company, PDVSA was ruined. Production dropped despite a global boom in oil prices. The injury rate, measured in lost man-hours, more than tripled.
In 2012, a refinery exploded, killing at least 40 and causing $1.7 billion in damage, suggesting that even maintenance budgets had been siphoned.
Its cash reserves depleted and development projects stalled, PDVSA, and by extension the Venezuelan economy, was left without a cushion when oil prices dropped in 2014.
Mr. Chávez had set up Venezuela for not just economic collapse but also a political crisis. If his support relied on oil-fueled patronage, what would happen when the money ran out?

Replacing Urban Unrest With Urban Chaos

The 2002 coup taught Mr. Chávez that an alliance of convenience with armed groups known as colectivos could help him control the streets where protesters had almost brought him down.
The colectivos, funneled money and arms from the state, became political enforcers. Protesters learned to fear these men, who arrived on Chinese-made motorcycles to disperse them, often lethally.
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President Hugo Chávez in 2002, when he was briefly ousted by a coup but quickly returned to power. He died in 2013 and his successor, President Nicolás Maduro, inherited an economy that was a shambles.CreditAFP/Juan Barreto
The colectivos grew in power, challenging the police for control. In 2005, they expelled the police from a region of Caracas, the capital, that had tens of thousands of residents.
Though the government never officially approved such violence, it publicly praised colectivos, granting them tacit impunity. Many exploited this freedom to participate in organized crime.
Alejandro Velasco, a New York University professor who studies colectivos, said the groups were later joined by criminal “opportunists” who learned that “adding a little ideology to their operations” could win them impunity.
Criminality and lawlessness flourished, spiking murder rates.

Selling Off the Economy

President Nicolás Maduro, who took power when Mr. Chávez died in 2013, inherited an economy that was a shambles and tenuous support among elites and the public.
In desperation, he parceled out patronage. The military, with which he had less sway than his predecessor, got control of lucrative drug and food trades, as well as gold mining.
Unable to pay for subsidies and welfare programs, he printed more money. When this drove up inflation, making basic goods unaffordable, he instituted price controls and fixed the currency exchange rate.
This made many imports prohibitively expensive. Businesses shut down. Mr. Maduro printed more money, and inflation grew again. Food became scarce. Unrest deepened, and Mr. Maduro’s survival grew more contingent on handouts he could not afford.
This cycle destroyed Venezuela’s economy.
It also worsened street violence. With government stores empty, black markets mushroomed. Colectivos, less reliant on government support, took command of the informal economy in some areas. They grew more violent and harder to rein in.
Mr. Maduro tried to restore order in 2015, deploying heavily armed police and military units. But the operations became “blood baths,” Mr. Velasco said. Many officers turned to criminality themselves.

Neither Democracy Nor Dictatorship

The political system, after years of erosion, has become a hybrid of democratic and authoritarian features — a highly unstable mix, scholars say.
Its internal rules can shift day to day. Rival power centers compete fiercely for control. Such systems have proved far likelier to experience a coup or collapse.
Mr. Maduro has struggled, as leaders of such hybrid systems often do, to assert control.
Without Mr. Chávez’s personal connections or deep pockets, Mr. Maduro has little leverage with authoritarian elements dominated by political and military elites. Because he is deeply unpopular, his hold over democratic institutions may be even weaker.
After opposition groups won control of the legislature in 2015, tension between those two systems exploded into outright conflict. The Supreme Court, stacked with loyalists, briefly sought to dissolve the legislature’s powers. This month, Mr. Maduro said he might seek a new Constitution.
Venezuela’s paradox, Mr. Levitsky said, is that the government is too authoritarian to coexist with democratic institutions, but too weak to abolish them without risking collapse.
Protesters have spilled into streets, but appear deadlocked with security forces and colectivos. Francisco Toro, a Venezuelan political scientist, said it was unclear whose side the military would take if called to intervene.
With neither side able to exert control, little in the way of an economy or public order to take over, and a political system seemingly unable to break or bend, Venezuela has brought itself from wealth and democracy to the brink of collapse.
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