Tues May 16: Crisis in Brazil, Chaos in Venezuela, the Kirchners under fire in Argentina…click to listen.. https://t.co/JQArX21U6z
— Silvio Canto, Jr. (@SCantojr) May 17, 2016
All of a sudden, the lefties of South America are running for cover.
Let’s start in Argentina, where ex-President Fernandez has just been indicted:
A judge in Argentina on Friday indicted former President Cristina Fernández de Kirchner and other officials on charges of manipulating the nation’s Central Bank during the final months of her administration.
Mrs. Kirchner and the officials are accused of entering into contracts to sell the Central Bank’s dollars at below-market rates during her presidency in order to shore up the Argentine peso.
The judge, Claudio Bonadio, said that it was “unthinkable that a financial operation of this magnitude” could have been carried out without the explicit approval of “the highest political and economic decision makers of government.”
Judge Bonadio will now deepen his investigation, legal experts said, to decide whether the case goes to trial or is dismissed. Mrs. Kirchner can appeal her indictment.
Mrs. Fernandez followed her late husband Mr. Kirchner in the presidency. I guess that corruption finally caught up with them. At the same time, the couple has a lot of supporters in the public bureaucracy so don’t count your chickens yet.
By the way, Nestor and Christina Kirchner remind me a lot of the Clintons.
Over in Brazil, President Rauseff will be watching the Olympics from home rather than presiding over the opening ceremony as head of state. A trial has begun that could remove her permanently from the office. In the meantime, there will be an interim president.
Over in Venezuela, the situation has now hit the “expletive deleted” fan. President Maduro has declared a 60-day emergency because of what he defines as threats from the US government.
These 3 crises have a few things in common beyond the fact that the leaders where once the darlings of the left.
First, corruption is rampant, a natural consequence of concentration of power or using state resources to win elections. It worked great in Venezuela and Brazil as long as commodities and oil prices supported the inefficient state operations.
Second, the economies of Argentina, Brazil and Venezuela are basket cases.
Brazil, one of the top 10 GDPs in the world, is mired in a deep recession.
Argentina is a better off but still paying the price of the Kirchner-Fernandez disregard for the rule of law.
And Venezuela is such a disaster that we won’t cite numbers because the country is indeed falling apart.
Argentina will be the first to improve because President Macri is already correcting the excesses of his predecessors.
Brazil and Venezuela could descend into chaos.
As my late father used to say, socialism is great as long as the subsidized get their subsidies. If not, the subsidized turn on the ones who made the promises, as is the case in Venezuela and Brazil.
P.S. You can listen to my show (Canto Talk) and follow me on Twitter.
You probably saw a lot of celebrations around the theme of “Cinco de Mayo” in Dallas and elsewhere. Count me in. I love the day because there is Mexican food all over town as well as those little girls dancing in their traditional dresses.
This is what real diversity is. In other words, Americans celebrating their ethnic origins.
So what’s the big deal about “Cinco de Mayo”? What do we have these parties?
Allan Wall has a good summary for those of us who are not Mexican or studied Mexican history in school:
“Cinco de Mayo, literally “May the 5th,” is the holiday celebrating the Mexican victory over the French army on May the 5th, 1862, at Puebla, east of Mexico City.”
In the U.S., specially in the Southwest, “Cinco de Mayo” has turned into a Mexican version of St. Patrick’s Day in Boston, Columbus Day in New York or Polish Day in Chicago.
“Cinco de Mayo” is a Mexican-American celebration. Every year, our parades have gotten bigger and bigger.
As Mr. Wall writes, “Cinco de Mayo” is a very good day for local retail merchants :
“Cinco de Mayo is also a big beer-drinking day, with Mexican beer brands doing 5-10 percent of their U.S. sales for the occasion.”
So pass the beer, the chips and those wonderful enchiladas. I’ll catch the Rangers in Toronto and tell my friends again that “Cinco de Mayo” is not Mexico’s July 4th!
“Cinco de Mayo” is just a fun day to eat Mexican food!
José Niño wrote a great post over at Latin American Post, a wonderful website about Latin America.
His article is about the 3 big problems facing most of the countries south of the border. He calls them “the three myths”. They are:
1) Who Creates Wealth?
2) “Good Socialism”; and the most important, in my opinion,
3) Corruption Is Just A Symptom.
The corruption point really hit the target:
Many analysts and experts mistakenly believe that the rampant corruption that characterizes Latin America is the region’s cause of unrest.
Actually, corruption is just the result of interventionist policies that increase the power and size of the state to lord over people’s needs.
It is easy to talk about corruption, which is merely a symptom of the real disease — an oversized state — without providing an alternative to addressing the existing problem.
When offering a solution, many often refer to government run by enlightened experts or officials.
Crony capitalism and rent-seeking through privileges granted by the government are the disastrous results of an administration that operates out of its rightful role in society. When a nation exceeds its limitations, that becomes an incentive for businesses to resort to corruption.
Instead of creating commissions or Byzantine bureaucracies to investigate corruption, states must simply strive for the rule of law, repealing all bad legislation so that equality before the law and free competition flourish in society.
Frankly, the real problem with corruption is that most Latin Americans have put up with it. They’ve paid the price of corruption, bribes, for example, in exchange for political stability.
It’s like buying protection from an intrusive state: I pay a bribe and you stay out of my life.
Unfortunately, it has now become a way of life, for example in Brazil, where the cost of corruption is estimated at US$ 53 billion or about 2% of GDP. It also makes it more difficult to encourage foreign investment, such as U.S. companies forced to explain to their shareholders where the money is spent.
It corrupts the police and people can literally buy justice.
In Brazil, they used to say: “Rouba mas faz,” (“He steals, but gets things done”) They are probably saying now that he steals too much and does too little!
Yes, corruption is the biggest threat to growth in Latin America. Clean up crony capitalism and you will see a lot of the region’s problems disappear. Of course, I am also an optimist by nature.
Guests: Fausta Rodriguez Wertz, the edtitor of Fausta’s Blog…..plus Orestes Matacena, filmmaker and Cuban American activist……we will hear Orestes’ reaction to President Obama’s trip to Cuba as well as efforts to increase travel to the island………Fausta will update us on the impeachment proceedings in Brazil and the deterioration of Brazilian politics…..Venezuela the land of shortages and more shortages……Ecuador and the aftermath of the earthquake…..Puerto Rico and bankruptcy..…and other stories of the week………..click to listen:
Wednesday Apr 27: Brazil update, Cuba today and other US-Latin America stories this week…. https://t.co/7VwTX9nFWc
— Silvio Canto, Jr. (@SCantojr) April 27, 2016
Former President Cristina Fernandez was back in the news this week.
She is under investigation, as we see in the New York Times:
Former President Cristina Fernández de Kirchner testified in a Buenos Aires court on Wednesday as part of an investigation into allegations of misdeeds at Argentina’s Central Bank during the last months of her administration.
But the court hearing and Mrs. Kirchner’s return to the public eye quickly turned into a display of political theater as she claimed that she was being persecuted by her foes and reignited a debate about the independence of the country’s judges and prosecutors.
“I am not scared of you,” Mrs. Kirchner wrote in a statement she filed to the court. Even as her political capital has been ebbing, Mrs. Kirchner turned the hearing into a show of strength, speaking afterward to a large crowd of supporters outside the downtown courthouse. “We will return,” they chanted.
Frankly, there was indeed a lot of corruption in the last administration. It is the kind of corruption that happens when government has its fingers in everything. We call it crony capitalism. In Latin America, specially Argentina and Brazil, it is the corrupt relationship between a centralized government, public sector unions and big companies happy to go along to protect market share.
My guess is that nothing will happen to ex-President Fernandez. I think that President Mauricio Macri, a good guy, knows that this is a “lose-lose” game. It will turn Cristina into a victim and energized the left after the December defeat.
Here is my suggestion to my friends in Argentina: Get over Cristina and do something about a political system infected with crony capitalism. The answer is to blow up the system not put Cristina in jail.
Can I take you back to the Clinton impeachment of 1998-99? What if President Clinton had accused VP Gore of pushing for his impeachment?
Well, something like that is happening in Brazil, the world 7th largest GDP and host of the Olympics later this year.
According to news reports, there is a lot of “he said, she said” going on down in Brazil:
President Dilma Rousseff of Brazil said on Tuesday that her vice president was orchestrating a conspiracy to topple her, as efforts to impeach her gained momentum in the National Congress.
Aided by her mentor and predecessor, Luiz Inácio Lula da Silva, Ms. Rousseff scrambled to secure enough support from a dwindling array of allies to block impeachment in a lower-house vote set for Sunday that analysts predicted she would lose.
A congressional committee voted on Monday by a larger-than-expected margin to recommend that she be impeached for breaking budget laws to support her re-election in 2014, a charge Ms. Rousseff says was trumped up to remove her from office.
It may be true that VP Michel Temer wants her out. Frankly, he is not alone. President Rousseff has become one of the most unpopular politicians in Brazilian history.
Back in 2014, our friend Monica Showalter wrote an amazing analysis of how the left had bought reelection with dependency programs. It got President Rousseff reelected but it set the table for the party’s current mess. They threw so much money around that it backfired.
Impeachment is compounded by the nation’s economic problems. The collapse of oil and commodity prices mean low growth for the region’s biggest economy. As they say in Argentina and other neighbors, whatever happens to the Brazil economy affects all of us.
Finally, the corrupt leftist government has simply run out of luck. The corruption is so rampant that even Brazilians can’t put up with it anymore, from colossal bribes to back room deals from a party that came into office promising transparency. (A party with a new face promising transparency sounds a bit familiar to what we saw up here in 2008?)
As a Brazilian friend told me, we overlook the politicians and live around their corruption.
Unfortunately, the economy is now so bad that even Brazilians are complaining about crony capitalism.