Stiglitz: Austerity will slow down the Argentine economy and impose a high cost on ordinary people

The austerity measures imposed by the Argentine government will slow down the economy and impose a high cost on ordinary people, Nobel Prize in Economics Joseph Stiglitz said in an interview published on Thursday.

In statements to BBC World, Stiglitz considered that the budget cut provisions accepted by Argentine President Mauricio Macri, in practice, limits the country's scope for action and could have considerable social costs.

With a growing devaluation of the peso against the dollar since April, Argentina requested a stand-by loan of $50 billion from the International Monetary Fund (IMF). Some $15 billion have already been disbursed from the bailout, secured on June 8.

The bailout, however, requires up to $10 billion budget cuts - some 8% of the federal total - including an 81% cut in public works.

Critics note that the cuts, besides being unconstitutional, exacerbate the recession (GDP is down 6.7% just as of June) and do little to stem the true cause of the debt crisis: ballooning current account deficits and capital flight - $25 billion each so far this year.

Macri was charged by a federal prosecutor yesterday with abuse of power and malfeasance in signing the June 8 bailout.

"What worries me is that once a crisis is created, as these policies of bad management seem to be in a predictable way, the room for maneuver is very limited," Stiglitz added.

According to Stiglitz, Macri's measures favored the growth of the gap between rich and poor in Argentina, to the detriment of those with fewer resources.

Once the export taxes, which were an important source of income, were cut by decree within days of his taking office in late 2015, the deficit grew, while incentivizing an increase in the cost of food and a reduction in real wages, the expert considered.

Food and medicine prices have nearly tripled since Macri took office, and have risen over 30% in the first 8 months of 2018.

Stiglitz, who believes that Argentina should assess the possibility of restructuring its debt, does not rule out that the crisis could affect other nations in the area.

Neighboring Bolivia and Uruguay have already taken measures to protect their local business community from the fallout.

At: https://www.plenglish.com/index.php?o=rn&id=33348&SEO=austerity-measures-to-affect-argentines-expert-says

Prof. Joseph Stiglitz

Jair Bolsonaro, Brazil's presidential front-runner, stabbed at rally

Brazilian presidential candidate Jair Bolsonaro has been stabbed during a campaign rally.

The far-right politician was attacked in the midst of a crowd in in the city of Juiz de Fora, in the south-eastern state of Minas Gerais.

Hospital officials lsaid Bolsonaro had suffered a "deep" and life-threatening stab wound in his intestines and was in a "serious but stable" condition. He underwent surgery for injuries to his intestines and is expected to recover, hospital officials said.

The controversial politician, who has outraged many in Brazil with racist and homophobic comments, has performed strongly in recent polls since local courts barred former President Luiz 'Lula' da Silva.

Polls show that if da Silva fails in his attempt to overturn a ban on him, Bolsonaro, known as the 'Brazilian Trump' and the 'Hitler of the Tropics', would win the first round of voting on October 7.

He would, according to polls, likely lose in the October 28 runoff to either Marina Silva or Ciro Gomes, both center-leftists.

At: https://www.bbc.co.uk/news/world-latin-america-45441447

Bolsonaro winces in pain after being stabbed during a campaign rally earlier today. He is expected to make a full recovery.

São Paulo markets rose on news of the stabbing, on hopes the incident might bolster his far-right candidacy.

Booker releases 'confidential' Kavanaugh documents

Source: The Hill

Sen. Cory Booker (D-N.J.) on Thursday released emails from Supreme Court nominee Brett Kavanaugh's time as a White House counsel, escalating a heated fight over his documents.

Booker released approximately 12 pages of emails tied to discussions Kavanaugh had on racial inequality including one email thread titled "racial profiling."

The documents are marked "committee confidential," meaning they are not supposed to be discussed or released publicly.

Read more: http://thehill.com/homenews/senate/405345-booker-releases-confidential-kavanaugh-documents

Argentina: Police kills 13 year-old boy during food riot

A 13 year-old boy was shot dead by police Monday night while officers dispersed an attempted food riot in northern Argentina.

The boy, Ismael Ramírez, was reportedly shot in the chest with a rubber bullet. He was among a group of 50 locals who sought to force their way into a small supermarket in the city of Sáenz Peña. Several injuries were also reported, one serious.

The episode was the fourth such incident in Argentina since Friday - though the first involving a fatality.

The first took place Friday afternoon in a Carrefour supermarket in Comodoro Rivadavia, a normally prosperous coastal city in Argentina's southern Patagonia region whose economy has been hard hit by slowing oil and gas activity as well as cuts in federal utility subsidies.

The store was raided by a group of around 20, leading to nine arrests.

Later that afternoon, a group of some 30 attacked a small supermarket in the city of Guaymallén, in western Argentina's scenic Andes foothills, followed by a smaller attack on a store in nearby Godoy Cruz.

All three incidents were thwarted by police within minutes, with no injuries and only minor damage. Following today's tragedy however, authorities fear an escalation.

Economic crisis

These incidents mark a violent turn in a rapidly worsening financial crisis that began in April, when reports that Argentina's 2017 current account deficit had doubled to a record $31 billion touched off a wave of capital flight - some $25 billion so far this year.

Efforts to stem the flow, including raising the central bank discount rate from 27% in April to 60% currently, have thus far failed: The peso has since lost half its value, helping push inflation from 25% in 2017, to an offically projected rate of 42% this year.

The currency crisis intensified on August 29 after President Mauricio Macri falsely claimed to have secured IMF approval for an $18 billion advance on a $50 billion bailout package agreed to on June 8. Prices are now expected to rise 6% in September alone.

Higher interest rates are in turn exacerbating a recession that began in April, with GDP down 6.7% as of June and retail sales down 8% in August.

Opposition lawmakers have demanded not only policy changes; but a full list of those known to have taken advantage of central bank dollar sales to offshore billions in capital - particularly government officials.

At: https://translate.google.com/translate?hl=en&sl=es&tl=en&u=http%3A%2F%2Fwww.infonews.com%2Fnota%2F318208%2Fel-ajuste-muestra-su-cara-mas-cruel-un

Police surround the site of tonight's deadly incident, a grocery store in a poor neighborhood in the small northern city of Sáenz Peña.

Authorities fear more such incidents as the nation's economic crisis intensifies.

Beset by crisis, Argentina's Macri reshuffles cabinet and raises export taxes

Amid the most serious financial crisis since the 2001 collapse, Argentine President Mauricio Macri announced a series of further cost-cutting measures including an increase in export taxes, as well as the elimination of nine of the nation's 20 ministries - including the Health Ministry.

The measures are designed to expite IMF approval for an $18 billion advance Macri requested on August 29 from the $50 billion, 3-year credit line agreed to on June 8. The advance is in addition to $15 billion borrowed from the credit line on June 22.

Markets reacted negatively to Macri's announcment, with the dollar gaining another 2.7% to 39.04 pesos - nearly erasing Friday's recovery. The dollar had reached 39.63, easing only after the Central Bank sold $100 million from its reserves.

From bubble to bailout

The June IMF bailout was approved amid a wave of capital flight of some $25 billion so far this year, triggered by official data showing the nation's 2017 current account deficit doubling to a record $31 billion.

Efforts to stem the flow, including raising the Central Bank discount rate from 27% in April to 60% currently, have thus far failed: The peso has since lost half its value.

Higher interest rates are in turn exacerbating a recession that began in April, with GDP down 6.7% as of June and retail sales down 8% in August. Auto sales plummeted 25.5%.

Fuming farmers

The announcement was panned by not only the opposition - which notes that, like many of Macri's past measures, these are being imposed by decree and without congressional review - but also by his most influential supporters: the agro-export and landowner lobbies.

Tax hikes on agricultural exports, which Macri estimated would raise up to $7 billion next year, have angered the Argentine Rural Society (SRA), which represents large landowners and has long been one of the nation's most influential groups.

"Changing the rules of the games would be bad for agricultural potential," SRA head Daniel Pelegrina said.

Export tax cuts, which Macri decreed within days of taking office, have, however, failed to boost export income despite rising commodity prices.

They instead added to budget deficits, which under Macri rose 40% in dollar terms to $34.4 billion in FY2017. The nation's trade deficit meanwhile ballooned to $8.5 billion as trade deregulation led to soaring imports.

Departments and deck chairs

Macri's decision to shed nine of the nation's 20 ministries, to be subsumed into others, received mixed reactions.

Some changes were welcome by most observers - particularly the elimination of the "Modernization Ministry," which created 146 new, top-level patronage posts since Macri established it (including the minister's wife).

Macri reportedly sought replacements for the Foreign, Defense, Education, and Economy ministries - but all prospective appointees refused.

The elimination of the Health and Labor ministries was in turn condemned by the medical community and the labor movement.

Provincial health ministers and doctors' associations warned that demoting the Health Ministry would lead to smaller budgets, less independence in public health decisions, and fewer federal health programs.

Spending on vaccines, they note, has already been cut.

At: https://www.bloomberg.com/news/articles/2018-09-03/argentina-unveils-new-crop-tax-as-macri-seeks-to-balance-budget

And: https://translate.google.com/translate?hl=en&sl=es&tl=en&u=https%3A%2F%2Fwww.france24.com%2Fes%2F20180902-macri-eliminara-ministerios-gabinete-argentina

A protrait of famed former First Lady Evita Perón looks out from the Health Ministry in Buenos Aires.

Macri's demoting the Health Ministry to a sub-cabinet department has been especially controversial.

"They are ideologically convinced that the way is austerity, and returning favors to speculators," CGT labor federation head Héctor Daer said. "What they don't talk about is the social crisis that follows."

Brazilian court bars Lula from presidential election

Brazil’s top electoral court has ruled that jailed former president Luiz Inácio 'Lula' da Silva is barred from running in October’s presidential elections.

The ruling came after a dramatic and gruelling late-night session broadcast live on television and across news sites, and defied a request from the United Nations human rights committee that he be allowed to stand.

Lula is serving a 12-year sentence for corruption and money laundering - a conviction, supporters note, was based solely on hearsay from a prisoner held under duress. The court also banned him from campaign advertisements. His defence said it would appeal the decision to Brazil’s supreme court.

From behind bars, Lula, the hugely popular, two times former leftist president and union leader leads polling in Brazil’s most unpredictable and polarised presidential election in decades.

The decision to bar his candidacy plays to the advantage of extremist right-wing candidate Jair Bolsonaro, running second in polls and ahead without Lula.

The UN human rights commission ruled on August 17 that Lula cannot be disqualified, stating that its decision was “an urgent measure to preserve Lula’s right, pending the case consideration on the merits, which will take place next year.”

Despite being legally binding in Brazil, a majority of the seven judges voted to disregard th UN ruling.

Lula’s vice-presidential nominee Fernando Haddad, a former academic and mayor of São Paulo, is widely expected to take over the candidacy.

“What's in play is the foundation of democracy,” Haddad tweeted on Friday. “The right of the people to choose their president.”

At: https://www.theguardian.com/world/2018/sep/01/brazilian-court-bars-lula-from-presidential-election

Brazil's Lula da Silva, his country's most prominent political prisoner, has been barred from running on his Workers' Party (PT) ticket - an election polls show he would have won in a landslide.

Vice-presidential nominee Fernado Haddad is widely expected to become the PT candidate in his stead.