A couple of views on Argentina - both from the Financial Times

first of all, a perspective on how argentina is trying to cope with a resurgence of inflation, a dangerous reminder of times past...

A troubling acceleration in the rate of inflation - the greatest threat to Argentina's spectacular recovery since the largest sovereign debt default four years ago - is becoming more of a factor. The threat is behind President Nestór Kirchner's vigorous imposition of price ceilings on a range of basic goods, including beef.

Discussions between the government and business leaders have led to the renewal of price agreements with dozens of companies this year, including Procter & Gamble, Unilever, Danone and Kimberly-Clark. Just this week, the government secured agreements with supermarkets, such as Carrefour, to freeze prices on 200 products.

Economists point out the obvious practical difficulties involved in such negotiations: "The president himself is sitting down with [for example] milk producers to discuss the price of yoghurt - it's insane," says Joaquín Cottani, of Macrovision Consulting, a former undersecretary of economic policy and chief Latin America economist of Lehman Brothers. "Argentina has not discovered a new economic model," he says, highlighting the country's unsuccessful past attempts at using price controls, which resulted in hyperinflation.

the next story highlights how a recent agreement between argentina and brazil may end up undercutting mercosur...

Brazil and Argentina have agreed on measures to protect their respective producers against each other in a further weakening of Mercosur, the customs union between Argentina, Brazil, Paraguay and Uruguay.

After a 21-hour meeting in Buenos Aires that ended on Wednesday, the two countries agreed to adopt a so-called "competitive adjustment mechanism" under which sectors in either country may demand protection if their members feel they are being harmed by rising imports from the other.

Imports affected by the mechanism will be subject to quotas, in excess of which they will incur tariffs equal to 90 per cent of those applicable to goods from outside Mercosur.

i'm a big fan of argentina and i'm really hoping they can figure out how to get out of their problems in one piece...

Submit To Propeller
Tweet