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Neoliberalism Resurgent in Argentina

November 16, 2019 | News | No Comments

The election of businessman Mauricio Macri to the presidency in Argentina signals a rightward turn in the country and, perhaps, in South America more generally. Macri, the candidate of the right-wing Compromiso para el cambio (Commitment to Change) party, defeated Buenos Aires province governor Daniel Scioli (the Peronist party candidate) in November’s runoff election, by less than 3% of the vote. Macri is the wealthy scion of an Italian immigrant family that made its money on the basis of government contracts. He went on to work for the family business and later, defying his father’s wishes, became president of the popular professional soccer club Boca Juniors. In 2003, he won election as mayor of the capital city of Buenos Aires—the springboard for his eventual election to the presidency. This is a momentous change in Argentina’s history, since it is the first time that a right-wing party has won the presidency by electoral means. In the past, conservatives had only gained power through military coups or by disguising neoliberal policies under more progressive electoral promises and the mantle of a left-of-center party—as in Carlos Menem’s Peronist government in the 1990s.

What’s in Store

Macri’s economic team includes among its most prominent members Alfonso Prat-Gay, an ex-president of the country’s Central Bank who also worked for JPMorgan Chase. He will be the next finance minister. Federico Sturzenegger, secretary of economic policy in the Economics Ministry under infamous finance minister Domingo Cavallo—author of the main economic policies of the 1990s—is likely to be the next Central Bank president. In other words, the economic team clearly signals a return to the market-friendly policies of the 1990s. This is also true on the foreign policy front, were Macri has already announced that he intends to use the so-called “democratic clause” of the Common Market of the South (Mercosur), the regional trade agreement, to exclude Venezuela for alleged violations of democratic norms. (Macri has backed off that plan since the victory of the right-wing coalition in Venezuela’s recent parliamentary elections.) He has also signaled a closer alignment with the United States.

The economic program of the new administration is quite clear, even though Macri tried to hide his economic advisors before the election, to reduce the impact of their unpopular views at the polls. They will unify the foreign exchange market, in which there is currently a large gap between the official and black-market exchange rates. This implies a “maxi-devaluation” of the peso, from around nine to about 15 pesos to the dollar (assuming that the current black market level is their desired nominal exchange rate). The effects of a depreciation of this magnitude will be massive.

In contrast to previous devaluations—most recently in 2002, after more than ten years of a fixed one-to-one peso-to-dollar exchange rate under Cavallo’s so-called “Convertibility Plan”—this one is not caused by an external crisis. While it is true that Argentina’s current account balance is negative, and that its reserves are relatively low, there is no significant danger that Argentina will default on its external debt now.

The current account deficit is not big, by historical standards or in comparison to other countries in the region, and international reserves can cover the country’s immediate obligations. Besides, under current conditions, with low international interest rates, it would be relatively easy to attract capital flows with higher interest rates, and borrow in international markets. (That would certainly be easier if Argentina could finalize an agreement with the so-called “vulture funds,” the holdout bondholders that did not agree to the rescheduling of debt after the last default.) And, if anything, Macri’s (unnecessary) promise to give in to all the vulture funds’ demands and rapprochement with the United States and International Monetary Fund (IMF) would resolve any short-run problems in financing the current account deficit.

The Target Is the Working Class

The question, then, is why the Macri government would promote a huge depreciation of the currency with no clear external crisis on the horizon. The notion that the depreciation would solve the current account deficits is fraught with problems. Not only is the external situation not dire—so depreciation would be a “solution” to a non-existent problem—but there is also no evidence that exports will boom after a depreciation. Exports respond more to the growth of the global economy than to a change in relative prices. So for example, China will not demand significantly more soybeans from Argentina, as a result of lower prices, if the Chinese economy is not growing faster.

Actually, the only significant way in which the depreciation will reduce the external problems of Argentina is by causing a recession. Depreciations tend to reduce real wages, since the increase in the price of imported goods leads to inflation, which is not fully recovered by workers. As a result, consumption declines, with a negative impact on economic growth. Macri and his economic team have been very explicit about the need for a huge devaluation and the closing of the gap between the official and the black-market (or “blue,” as it is known in Argentina) exchange rate. This has already triggered an inflationary surge, as noted by the outgoing Economics Minister Axel Kiciloff.

The reason for the devaluation is precisely to cause inflation and a recession, both of which would weaken working-class bargaining power and, as a result, lead to lower real wages. And that is the ultimate goal of the new Macri administration. He has explicitly said so, in one of the videos that his campaign tried to suppress. The video shows him suggesting that the way out of the problems of the 1990s—when devaluation was not an option due to the Convertibility Plan—was to reduce real wages to increase external competitiveness. The maxi-devaluation of the peso will most likely be accompanied by a “fiscal adjustment plan” or, simply put, austerity. This would push the economy further into recession, reducing the bargaining power of workers even more.

The Politics of Crisis

Some skeptics suggest that Macri cannot pursue the classic IMF economic package of devaluation and fiscal adjustment, since that would bring about both inflation and recession, a politically explosive combination. However, the administration will deflect political problems caused by the economic crisis that these policies will trigger by suggesting that both inflation and the recession are the results of the negative legacy of twelve years of “populism” under the previous two administrations. In fact, Macri is already doing this, with intensive media support, suggesting that the inflation since the announcement of the depreciation is just a correction to its true level. One can easily see how higher unemployment would be justified in the same fashion, as an adjustment to the true and sustainable level.

In other words, the Macri government will cause a crisis that does not exist right now—though the economic situation may be difficult and growth in the last three years has not been not high—but blame the effects of its neoliberal policies on the previous government. The idea would most likely be to weather a political storm over the next couple of years and then—after resolving the issues with the vulture funds and normalizing relations with IMF—start borrowing abroad again. That would help promote growth again in time for a re-election campaign in 2019. Growth would be also facilitated by the fact that the economy would be coming out of a crisis, with real wages considerably lower and the working class well-disciplined.

Also, Macri will reduce or eliminate export taxes on grain and soybeans (known as retenciones, or “retentions”), strengthening the position of the ruling elites. The reorientation of the economy toward primary-goods (agricultural and mineral) production, along with a larger role for finance, has been the strategy of the Argentine elites since the last military dictatorship. That is why there is such continuity between the economic plans of José Martínez de Hoz under the military dictatorship of the late 1970s and the early 1980s, Domingo Cavallo under Menem in the 1990s, and (one should expect) Adolfo Prat-Gay under Macri in the coming years.

The initial recession and cuts in retenciones would significantly reduce government revenue and most likely lead to larger fiscal deficits. Hence, austerity will actually worsen the fiscal balance, contrary to what the Macri and his advisors suggest. The key is to remember that austerity policies are not designed to reduce fiscal deficits, even if that is offered up as a rationalization; they are a political instrument for disciplining labor.

In fact, the coming larger fiscal deficits will most likely be used to try to cut social welfare expenditures, which increased significantly during the administration of the outgoing president Cristina Fernández and her predecessor (and husband) Néstor Kirchner. It would not be surprising if Macri tries to privatize social security once again, something that Menem accomplished in the 1990s, and which had to be reversed in the 2000s as a result of the private system’s complete failure to provide a decent retirement for seniors.

The Same River Twice?

But if the Macri administration is a throwback to the neoliberal era of Menem, it is important to remember that the current historical context is very different. Back in the 1990s, the fall of the Berlin Wall and the collapse of the Soviet Union gave the neoliberal policies of the infamous Washington Consensus a status of unquestionable truth. Supposedly, ideology had vanished and history had come to an end. No alternative was politically possible. Since then, the 2008 global Great Recession has shown the world the perils of unfettered capitalism, and even if the “Keynesian moment” was brief and austerity policies have reasserted themselves, at least it is widely understood that the “free market” is no solution for the problems of development in a globalized economy.

The socioeconomic situation in Argentina is also very different. Back then, the economy was coming out of two bouts of hyperinflation, a whole decade of very low growth with very high unemployment levels and very low real wages, two decades of social conflict with a considerably weakening of the trade unions, several military coups, and an unresolved human-rights crisis from the last dictatorship. Now, the economy has grown at a healthy pace over the last decade, though with slower growth over the last three years. Unemployment remains at relatively low levels, and though inflation is relatively high, real wages have still grown significantly over the decade, with a considerable reduction of inequality.

Further, not has only the reorganization of the economy strengthened the working class, but civil society has managed to bring violators of human rights to justice, and finally come to terms with the nefarious legacy of the dictatorship, something unique in the region. The new government does not control congress, and the election was close, signaling a divided country. In short, society is more organized and better prepared to face the onslaught of neoliberal policies this time around.

Matías Vernengo is a professor of economics at Bucknell University and visiting professor of economic development at Universidad Nacional de San Martín (UNSAM).

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Oscar-winning actress Brie Larson is seemingly on top of the world.

On Saturday at Comic-Con, the 26-year-old Room actress landed a major gig and was confirmed to portray Captain Marvel in Marvel Studio’s first female-driven flick, set to drop in 2019. And while her talents are for sure what has scored her one major role after the next, Larson is making sure to thank her fans along the way.

The new redhead took to Instagram Tuesday morning to not just share a gorgeous image of herself cozying up on the couch, but also voice her appreciation of her followers and dismiss any hateful naysayers.

“Woke up this morning thinking about the tidal wave of support I got this weekend,” she wrote in her caption, moving on to explain why being herself whole-heartedly can oftentimes be frightening. “We should all have the freedom to be our authentic selves without fear or judgment. It’s scary to chip away at all the hardness we coat ourselves with to protect that perfect little being inside. Yeah, people can be mean, but they can also be so many other wonderful things too.”

Larson also welcomed her new followers and teased about upcoming takeovers that she’s planning for her account. The post comes just a few days after she also used the social media platform to share an epic throwback image next to which she dishes on all things self confidence. “I worried I was too fat, too ugly, too depressingly banal to be honored,” she wrote of the moment in which the image was captured. “But today I see this moment and feel only love for myself.”

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Now that’s a total 180.

Purple might just be the perfect color for the Queen of England. After all, it is the color of royalty and Queen Elizabeth is pretty much as royal as it gets.

Queen Elizabeth and Prince Charles looked as though they thoroughly enjoyed themselves at the annual Braemar Gathering, a day-long festival founded by the Braemar Royal Highland Charity, the oldest surviving Friendly Society in England.

The gathering is held every year on the first Saturday in September and attracts Brits from all over the country, thanks to the various fun events played throughout the day, including tug of war, multiple relay races, a children’s sack race, and even dancing.

Queen Elizabeth and Prince Charles make an appearance at the event every year, one that is considered “world famous for its friendship and hospitality.” Prince Charles fit right in wearing his signature kilt, and was clearly enjoying the lovely day outdoors with his mother.

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Prince William and Duchess Kate have also been busy fulfilling their royal duties, making the rounds in Cornwall and other British coastal regions, and are set to head to Canada later this month.

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After their emotional debut performance of their new Orlando tragedy-inspired song, “Love Make the World Go Round,” on The Today Show this week, Jennifer Lopez and Lin-Manuel Miranda took their poignant hit to late night TV with a performance on The Tonight Show on Tuesday.

Teaming up with Tonight Show house band The Roots in a mostly dark studio, Lopez looked incredible in a long cape that looked like it was made of stained glass. Every download of the song on iTunes raises funds for the Hispanic Federation’s Proyecto Somos Orlando initiative, which will “address the long-term needs for mental health services that are culturally competent and bilingual.”

On The Today Show, Lopez said of the song, “When everything happened in Orlando, I kind of heard it in a different way,. The world needs this right now. The world really needs the message of love being the answer. And that’s what really matters and that’s what really makes the world go round.”

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RELATED: Jennifer Lopez Takes Her Twins to Lin-Manuel Miranda’s Last Hamilton Show

The song was made available for download July 8 on iTunes. Miranda, who just wrapped up his amazing starring run in his hit Broadway show, Hamilton, tweeted about the performance showing a picture of the two. He wrote, “J.Lo. The Roots. Yours truly. Tonight.”

Watch the epic performance in the clip above.

Chrissy Teigen’s 2-month-old daughter is getting quite the culinary education. The model mom, who published the bestselling cookbook Cravings earlier this year, is introducing her daughter, little Luna Simone, to a world of food—although she’s not ready to eat it quite yet!

Grandma Teigen shared a sweet snap to Instagram of the new mom at lunch with her newborn. In the photo, the model is forking a piece of chicken while Luna looks on longingly. “Can’t wait to eat grow up food!” Vilailuck Teigen captioned the sweet photo.

The Sports Illustrated model also took to Snapchat to share some adorable pics of their lunch date. In one photo, Teigen holds up Luna’s little baby toes, writing, “This will never cease to make me melt.”

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She also shared a video, using the double puppy filter on herself and her baby girl. 

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While Luna isn’t eating from the table just yet, she’ll certainly be exposed to an extensive culinary palate when her talented mom and grandma get behind the stove. 

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It’s been two years since George and Amal Clooney tied the knot and it appears that the couple still can’t get enough of each other.

Mrs. Clooney took time out of her busy schedule to visit her actor husband on set in Los Angeles on Tuesday, and at once offered us a glimpse at the pair’s too-cute relationship as well as her always-flawless style.

The 38-year-old human rights lawyer donned a loose, shoulder-baring black and white polka-dot top with a corresponding miniskirt that showed off her lithe legs. Amal wore her brown hair in fuss-free natural waves and shaded her eyes with oversize white sunnies as she walked their couple’s rescue dog, Millie, around the lot in a gorgeous set of white ankle booties—the perfect addition to her early fall ensemble.

George—who repped his tequila company in a black Casamigos Tequila T-shirt—snuck away between scenes of Suburbicon, a dark comedy he’s directing that stars Matt Damon and Julianne Moore.

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When the 55-year-old Hollywood star isn’t making movie magic, apparently he’s busy in the kitchen cooking for his gorgeous wife—sort of. The Oscar-winner recently told E! that Amal wasn’t exactly impressed with the meal he whipped up in honor of their second wedding anniversary on Sept. 27.

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“I don’t think she’s ever quite impressed with my cooking,” he revealed. “If I slap something together—spaghetti and meatballs—she doesn’t know that it comes in a jar, so I can just fool her with that one,” the actor joked.

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Something tells us she’s not too bothered by the occasional jar of spaghetti sauce …

They grow up so fast! Neil Patrick Harris reminded us of this bittersweet fact on Sunday by documenting the loss of his 6-year-old daughter’s first tooth on Instagram. In the smiling ‘gram, Harper—who is one half of Harris and husband David Burtka’s impossibly cute set of twins—displays her fallen tooth proudly while flaunting the new gap in her pearly whites.

“Very exciting—Harper lost her first tooth!” Harris, 43, captioned the sweet snap.

“AND she woke up to find that the Tooth Fairy had left a Lin-Manuel Miranda under her pillow! #rich,” he added.

The last few months have held a lot of excitement for Harris, Burtka, Harper, and her twin brother, Gideon. In addition to starting kindergarten and celebrating their sixth birthday, the couple recently took their little ones on an envy-inducing family vacation to the Dominican Republic. And we can only imagine the anticipation they’re feeling leading up to their epic annual family Halloween costumes later today.

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We know we’re counting down the seconds until the great reveal!

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(TULSA, Okla.) — Federal prosecutors say a Chinese national employed by a U.S. petroleum company has pleaded guilty in federal court to stealing trade secrets from his employer.

Authorities say 35-year-old Hongjin Tan pleaded guilty on Tuesday in federal court in Tulsa to theft of a trade secret, unauthorized transmission of a trade secret and unauthorized possession of a trade secret.

A plea agreement calls for Tan to serve up to two years in prison and pay restitution of $150,000.

Tan’s attorney, Ryan Ray, hasn’t returned a telephone message seeking comment.

Court documents indicate Tan worked for Phillips 66 when he stole secrets related to the development of “next generation battery technologies” worth more than $1 billion.

Sentencing is set for February 2020.

Kimi Raikkonen’s early pit stop in Sunday’s Australian Grand Prix that partially undermined the Finn’s race was not part of Alfa Romeo’s game plan.

Raikkonen held his own in ninth position in the openings stages of the race, but soaring rear brake temperatures forced him into the pits after 11 laps for a tyre change and a fix to the overheating issue.

Alfa Romeo’s mid-field rivals were thrown off by the premature move, believing it was strategic, with several teams taking their cue from the Swiss squad.

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“We had an issue with the temperature of the rear brakes as one of the tear-offs from the visor went in and that’s why we had to pit earlier than planned,” explained Raikkonen who was otherwise satisfied with the speed of his C38.

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“Our car was pretty strong in the race, but then we got stuck behind cars and there is not much you can do.

“It seems that it is easier to get closer to the car in front of you but it’s still very hard to overtake.”

Raikkonen’s efforts yielded P8 and four points, a result that also contented Alfa Romeo team boss Fred Vasseur.

“For the first race of the season, it was an okay race,” said the Frenchman.

“We had some small issues which we could not have anticipated and both drivers put up a good fight.”

Raikkonen’s team mate Antonio Giovinazzi was less impressed with his return to the F1 fray, having battled from the outset with a car that had been damaged on lap 1 by debris from Daniel Ricciardo’s Renault and a contact with McLaren’s Carlos Sainz.

“It was not a positive race,” said a downbeat Giovinazzi.

“I had damage on the front wing from lap one, we did a touch I think with a McLaren. After that it was just a difficult race, especially on the first stint with the first tyres.

“Then on the pitstop we tried to repair the front wing a little bit to not lose too much time.

“In the end I think the pace was better, but the car just had a lot of damage.

“We need to focus on the next rounds.”

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Saudi Arabia woos Formula 1 with big buck offer!

November 15, 2019 | News | No Comments

Saudi Arabia has allegedly made a massive offer to Liberty Media to host an F1 Grand Prix in the city of Riyadh in the near future.

According to Germany’s Auto Motor und Sport, Saudi Arabia is offering $60 million for the right to organize a round of the F1 world championship in the country’s capital, a hefty amount that must have surely got Liberty Media’s full attention.

While Riyadh would be the venue of choice for an F1 Grand Prix, no specific location for a track has yet been determined.

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Saudi Arabia is eager to jump on the F1 bandwagon as part of its Vision 2030 plan, a strategic social, economic and cultural program spearheaded by Crown Prince Mohammed bin Salman which ambitions to diversify the oil-rich kingdom’s revenue streams and promote international tourism.

Riyadh recently hosted motorsport’s annual Race of Champions event and the opening round of the ABB FIA Formula E Championship.

As enticing and lucrative as Saudi Arabia’s offer may be for Formula 1, it’s likely to generate controversy among the public and the sport’s fans given the conservative country’s poor human rights record and the shortfalls of bin Salman’s reforms.

However, Liberty Media will likely remain tone deaf to the criticism, and humbly accept the big bucks that could come its way.

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