Well, it’s happened again. On Tuesday, a federal judge in Argentina, Julian Ercolini, ordered a trial of Cristina Fernández de Kirchner, who was president of that country from 2007 to 2015, on charges of corruption.
Also ordered to face trial were Julio de Vido, Kirchner’s sometime Minister of Federal Planning, and José Francisco López, former state secretary for public buildings.
According to the indictment, all three former officials are accused of forming an illegal association that was “created to commit crimes” involving the theft of “funds that were assigned to road works” – specifically, 52 projects in Santa Cruz province, where Kirchner’s late husband, Néstor Kirchner, served as governor before preceding her as president.
Lázaro Báez
Already in court is contractor Lázaro Báez, whose company Austral Construcciones profited from the corruption scheme. Austral, it is reported, received over $4 billion in road-construction contracts from the Kirchner administration; of that amount, about $1 billion is estimated to have constituted illegal surcharges.
Judge Ercolini also froze $893 million in Kirchner’s personal assets.
Cristina Kirchner with Axel Kiciloff
It’s the second time this has happened since she left office: in May, Kirchner, along with her former Economy Minister Axel Kiciloff and former Central Bank head Alejandro Vanoli, was indicted on charges of making illegal contracts to sell U.S. dollars at below market rates, supposedly with an eye to strengthening the peso. Instead of helping the Argentinian economy, these hijinks are said to have damaged it.
José Francisco López
Inveterate readers of this site may recall that López, a longtime crony of Nestor Kirchner and “right-hand man” to de Vido, was arrested in June while trying to hide plastic bags full of money at a Buenos Aires convent. In addition to the plastic bags, he had a suitcase full of money, and he had driven these bags and suitcase to the convent in a car whose trunk was also full of money. The total stash: about $7 million dollars in the form of U.S. dollars, euros, yen, and other denominations. He also had a bunch of jewelry and several watches. And was packing a gun.
Apparently, all that dough was just a fraction of the massive sum fleeced from Argentinian taxpayers by by Kirchner, de Vido, López, Báez and company.
Kirchner, who was indicted in May for incompetent administration, was not taken into custody.
Okay, this one is kind of funny. But first you need to know who José Francisco López is.
Who is he? He’s a civil engineer and a longtime member of the sleazy Kirchner circle in Argentina. In 1991, when Nestor Kirchner became governor of the state of Santa Cruz, he put López on the administrative board of the state’s roads authority. Later he named López to executive positions in other state agencies. When Kirchner was elected president in 2003, he took López with him to Buenos Aires, appointing him to serve as the federal Minister of Public Works. As such, López was the “right-hand man” of the notorious Julio de Vido, the Minister of Federal Planning.
De Vido, Cristina Kirchner, and López
In this position, which López retained under the presidency of Kirchner’s wife, Cristina, he wielded enormous power, had control of massive amounts of money, and was (along with de Vido) an object of widespread suspicion. Both were accused of a range of corrupt acts, such as pressuring construction firms for bribes and kickbacks and using federally funded construction projects to reward friends or punish enemies. One of de Vido’s and López’s associates, Ricardo Jaime, was eventually arrested, tried, and imprisoned for stealing evidence.
Wads of cash in the trunk of López’s car
Which brings us to what happened this past June 14. On that day, in a district of Buenos Aires known as General Rodriguez, López was arrested while in possession of approximately $7 million dollars in cash in a range of denominations, including U.S. dollars, euros, and yen. The money was distributed among six large plastic bags, a suitcase, and the trunk of López’s car. In addition, López had on him an unidentified amount of jewelry, a receipt from a Beijing bank, and several high-end watches, including Rolexes and Omegas.
Oh, and he was packing a gun.
After his arrest, López was fitted out with a helmet and bulletproof vest for his protection
There’s more. According to reports, López tried to hide the bags of money at a convent called Our Lady of the Rosary of Fatima; it was, in fact, the resident nuns who fingered him, phoning the cops and reporting that (no kidding) some man was throwing plastic bags over their convent wall. When officers arrived at the scene, the ever-intrepid López tried to hide in the convent, where he endeavored in vain to persuade the nuns, who were obviously no fools, that he’d brought all that dough to donate it to them and that the police were trying to steal it.
A still from The Sound of Music. Just in case you don’t know what a nun looks like.
It was unclear from news reports whether López also claimed to have intended to give the nuns the jewelry and watches.
In any event, the nuns didn’t buy it. When the cops turned up, López offered them bribes. That didn’t work, either.
Anyway, so it goes in Argentina in these immediate post-Kirchner days. Another day, another name added to the long roster of Kirchner functionaries being investigated for money-laundering –Néstor and Cristina’s favorite indoor sport.
We’ve spent this week poking through the curious professional history of American economist Mark Weisbrot, who’s been a loyal supporter of the destructive socialist policies of Venezuela and Argentina.
Francisco Rodríguez
Back in 2008, Francisco Rodríguez, a Venezuelan economist who teaches at Wesleyan University and serves as Chief Andean Economist for Merrill Lynch, called out Weisbrot on his shameless shilling for Venezuela’s then president Hugo Chávez, charging that Weisbrot’s claim that inequality, poverty, and illiteracy had declined dramatically under the caudillo was “based on the use of heavily slanted data and on the misinterpretation of the existing empirical evidence.” We won’t soft-pedal this one: Rodriguez’s paper, which was entitled “How Not to Defend the Revolution: Mark Weisbrot and the Misinterpretation of Venezuelan Evidence,” definitively refuted absolutely everything Weisbrot had written about Venezuela up to that time, and aptly described the approach Weisbrot has followed ever since in his propaganda about the economic policies formulated in Caracas and Buenos Aires.
Mark Weisbrot
As the whole world now knows, the policies that Venezuela has followed – and that Weisbrot helped formulate – have made Venezuela look increasingly like Castro’s Cuba. And Argentina isn’t so very far behind on the road to disaster. But why should this trouble Weisbrot? By all indications, he’s as much of a fan of Castro as he was of Chávez and Nestor Kirchner. In a December 2014 op-ed, he celebrated President Obama’s new opening to Cuba, triumphantly trumpeting the fact that Fidel Castro had survived “11 U.S. presidents, at least eight CIA plots to assassinate him, and a few premature obituaries,” and had lived “to see the world’s most powerful country finally give in and recognize – in principle, at least – Cuba’s right to national self-determination.”
Oswaldo Payá
Some of us, of course, might find “national self-determination” an odd phrase to use to describe a country ruled by a dictator – a country whose government denies its citizens basic human rights, imprisons them for criticizing its policies, prevents them from traveling abroad and denies them Internet access. Then there are cases such as that of the heroic democracy activist Oswaldo Payá, who died in a 2012 “car accident” obviously staged by the Castro regime, and whose equally brave daughter Rosa María Payá, when testifying before the U.N. Human Rights Council, has been slammed by Cuba’s representative to that body as a “mercenary.”
But such is the “economics” of Mark Weisbrot. So what if Venezuela and Argentina, by following policies of which he heartily approves, “evolve” (as he would put it) into countries in which the cars will one day be dilapidated old wrecks, the buildings will eventually look like ancient ruins, and the people will be plagued daily by shortages of every imaginable staple? At least they’ll be “free” – like Castro’s Cuba – from the evil stranglehold of American capitalism.
We’ve devoted this week to Mark Weisbrot, who for years has served as an economic advisor to and ardent defender of the most notorious, incompetent, and corrupt regimes in South America. Since he’s the founder and grand poobah of something called the Center for Economic and Policy Research (CEPR), it’s not unreasonable to ask a few questions. For example: who, exactly, is providing the funds to pay Weisbrot’s salary and keep his “center” afloat? And who are the other powerhouses who make up this “center,” which represents itself as a hotbed of serious economic analysis?
Walden Bello
Well, as it turns out, most of CEPR’s staffers and directors have more of a background in organized left-wing activism on issues like global warming and women’s rights than in economics. No fewer than three members of CEPR’s small staff (John Schmitt, Deborah James, and Alexander Main) used to work for the “Information Office” of the Venezuelan government – which isn’t exactly famous for its world-class economic acumen. As for CEPR’s “board of directors,” it includes Filipino congressman Walden Bello, a critic of capitalism and globalization who’s written such books as Capitalism’s Last Stand?: Deglobalization in the Age of Austerity (2013). In a piece on free trade, Bello put the word “free” in scare quotes. In November 2010, Bello called Néstor Kirchner “remarkable,” “an exemplary figure in the Global South when it came to dealing with international financial institutions.” Pronounced Bello: “Along with Hugo Chavez of Venezuela, Lula of Brazil, Evo Morales of Bolivia, and Rafael Correa of Ecuador, Kirchner was one of several remarkable leaders that the crisis of neoliberalism produced in Latin America.”
Danny Glover
Also on the CEPR’s board is Julian Bond, an activist and former NAACP head who’s compared the Tea Party to the Taliban. Neither Bello nor Bond is a trained economist. The most familiar name on the list is Danny Glover – yes, that Danny Glover, of Lethal Weapon fame, whose love for Hugo Chávez, for Fidel Castro, and for Communism generally we’ve already discussed on this site. Needless to say, Glover isn’t an economist either.
Dan Beeton
Then there’s CEPR’s International Communications Director, Dan Beeton. In August 2014, he wrote a paean to Cristina Kirchner’s newly appointed Minister of the Economy that read less like the work of a sober economist than of an overly gushing publicist. Excerpt: “Alex Kicillof, the telegenic economy minister famous for his Elvis-style sideburns, has emerged on the international stage as a heroic figure championing the Argentine people. Kicillof is perhaps reminiscent of another bold, young economy minister in a different South American country: Ecuador’s Rafael Correa, whose public sparring with the World Bank in 2005 helped to launch his political career.”
Robert Naiman
Finally, check out CEPR staffer Robert Naiman, who, after Néstor Kirchner’s death, eulogized him at the Daily Kos website for “defying Washington and the International Monetary Fund.” Naiman also recommended Oliver Stone’s documentary South of the Border, which represented Kirchner as a hero – and which, as we’ve seen, was written by Weisbrot. Who’s Naiman? In addition to his work at CEPR and his writing for sites like Daily Kos and the Huffington Post, he’s served as Policy Director for a website called “Just Foreign Policy,” and as head of the board of the “progressive” news website Truthout, as a member of the steering committee of Gaza’s Ark (which is all about repeatedly violating Israel’s sea blockade of the Palestinian territories).
A few months after Cristina Kirchner’s October 2011 re-election as president of Argentina, American economist Mark Weisbrot – whose career as a sycophant of socialist despots we’ve been charting the last couple of days – cheered her decision to nationalize her country’s largest oil company, the Spanish-owned YPF. This move was roundly condemned by other economists, who quite rightly recognized that it would drive sensible investors away from Argentina, at least until Kirchner was out of office. “Investors don’t like this, but does that matter?” Weisbrot asked, insisting that foreign investment isn’t “an essential ingredient of economic growth.” Indeed, he claimed, Cristina’s re-election was the result of a “success story” that’s “rarely told, mostly because it involved reversing many of the failed neoliberal policies…that brought the country to ruin in its worst recession of 1998-2002.” Her triumph, Weisbrot pronounced, was part of a process by which Latin America had “achieved its ‘second independence.’”
Cristina Kirchner
And that’s really what Weisbrot’s enthusiasm for both Venezuelan chavismo and Argentina’s Kirchnerism is all about. When he’s written about those two countries, he hasn’t served up objective economic analysis but propaganda against Western (especially American) capitalism. He doesn’t want to see South Americans thrive; he wants to see them win their “independence” from the international capitalist system – the “colonialists,” the “imperialists” – even if their so-called “independence” means that the people live under the thumb of a petty tyrant who’s made him- or herself the center of a personality cult.
Hugo Chávez
For Weisbrot, loyalty to these autocrats comes first. After Hugo Chávez’s death in 2013, Weisbrot eulogized him not only in print but at a February 2014 propaganda-fest, entitled “The Legacy of Hugo Chávez: At Home And Abroad,” at Venezuela’s D.C. Embassy. A month later he was in Caracas to head up another tribute sponsored by the Venezuelan government, this one called “Chávez, Communicator of the 21st Century.” Weisbrot also poured out the praise after Nestor Kirchner’s death in 2010, gushing that history would remember Kirchner “not only as a great president but also as an independence hero of Latin America.” Never mind that more and more Venezuelans and Argentinians felt that these leaders – far from giving them any kind of independence – had in fact been steadily robbing them of their freedoms.
Nestor Kirchner
Given his obvious sycophancy and ideological enthrallment to these characters, what gives Weisbrot’s economic pronouncements any validity, any authority? Why should anybody take them seriously? Well, as we’ve noted, he’s associated with something called the Center for Economic and Policy Research (CEPR), which is based in Washington, D.C. Certainly sounds legitimate, no? In fact, this “center” is something Weisbrot founded himself, in the way that your gardener or garbageman might appoint himself head of something called, say, the World Council of Cardiology or the International Center for Nuclear Research.
It may or may not be a coincidence, moreover, that the name of Weisbrot’s “center” closely echoes that of a respected British institution, the Centre for Economic Policy Research (no “and”), with which it has absolutely no connection. As one commentator puts it, Weisbrot’s “center” provides him with “an aura of credibility to journalists in the mainstream media who, when writing about Venezuela, want to get both sides of the story — including the leftist pro-Venezuela version that Weisbrot provides. And so they go to Weisbrot, an able propagandist.”
Indeed, when you come right down to it, CEPR is precisely what that commentator suggests – nothing more or less than a propaganda factory, an outfit that isn’t about carrying out responsible economic research but about churning out PR for the Venezuelan and Argentinian regimes.
Yesterday we began taking a long look at Mark Weisbrot, whose enthusiasm for chavista economics appears to know no bounds. In November 2013, he ruled out the possibility of a “Venezuelan apocalypse” of the kind that is now well underway. Then came last December’s parliamentary elections, when, as we’ve seen, the Venezuelan electorate registered its loathing for President Nicolás Maduro’s incompetent handling of the economy, his increasing restriction on civil rights, and other outrages. But Weisbrot hadn’t given up the fight. In an article headlined “What Next For Venezuela?”, he started out by trying to put a good face on the people’s verdict. For one thing, he applauded Maduro for accepting the results of the vote. (In short, he praised the prez for doing the right thing and not violating the constitution; one might, in the same way, give somebody a pat on the back for not committing murder or rape.) For another, he attributed the heavy anti-Maduro tally to the opposition’s supposedly greater financial resources and to media support.
Jailed opposition leader Leopoldo López
Weisbrot strove throughout, in fact, to paint the chavista regime as responsible, law-abiding, and prepared to work harmoniously with its critics to fix the economy; meanwhile, he depicted those critics as violent, polarizing extremists who, unreasonably, refused to cooperate with the government in the interest of bringing the economy around. He also persisted in his now utterly ludicrous claim that life in the Bolivarian Republic had “changed substantially for the better” under Chávez and Maduro. Yes, he felt obliged to acknowledge the current economic crisis; but what he wouldn’t admit was that it was the predictable result of policies he himself had supported and helped devise. Nor did his pretty picture of the Maduro regime take into account such violations of human rights as the jailing of opposition leader Leopoldo López.
Late Argentine President Nestor Kirchner
All right. So who is Mark Weisbrot? He’s an economist who’s associated with the Washington, D.C.-based Center for Economic and Policy Research (CEPR). Sounds impressive, right? But his pronouncements on Venezuela and Argentina make it clear that Weisbrot is just about as far from the consensus on these nations’ economies as possible. Serious, objective members of his profession have been warning for years that Chávez, Maduro, and the Kirchners were leading their countries down the garden path. In September 2014, for example, The Economist ran an article about Venezuela subtitled “Probably the World’s Worst-Managed Economy.” It began: “A big oil producer unable to pay its bills during a protracted oil-price boom is a rare beast. Thanks to colossal economic mismanagement, that is exactly what Venezuela, the world’s tenth-largest oil exporter, has become.” A few months earlier, the same periodical ran a piece headlined “The Tragedy of Argentina: A Century of Decline.” A sampling: “Its standing as one of the world’s most vibrant economies is a distant memory….it trails Chile and Uruguay in its own back yard…. It has shut itself out of global capital markets…Property rights are insecure….Statistics cannot be trusted.”
Cristina Kirchner
Such, more or less, is the verdict of virtually all respected economists on these two countries. But Weisbrot sings a different tune. In 2007 – five years after Argentina defaulted on its sovereign debt – he toasted Cristina Fernández de Kirchner’s victory in that year’s election, calling it “not difficult to explain” given her husband’s glowing performance in office during the previous four years. In 2011, with the country’s inflation rate hovering at around 25%, Weisbrot – under the headline “Cristina Kirchner and Argentina’s Good Fortune” – assuredreaders of the Guardian that Argentina under Cristina, who was then running for re-election, was doing “remarkably well” and undergoing a “remarkable expansion.”
Back in October we spent a few days pondering the Nobel Prize-winning economist Joseph E. Stiglitz, whose curious views are taken far more seriously in the corridors of power than they deserve. Stiglitz, as we pointed out, has called for a socialist U.N. superstate; so preoccupied is he with income inequality, moreover, that he views the Great Depression more fondly than he does the 1980s. Financial analyst Peter Tenebrarum has legitimately ridiculed Stiglitz’s claim that corporate tax rates have “little effect on investment,” observing that only “a life-long leftist academic and bureaucrat who has never created one iota of real wealth in his life” could ever utter such drivel.
Then there are Stiglitz’s deep and longstanding ties to the corrupt Argentinian President Néstor Kirchner (2003-7) and his wife and successor, Cristina Fernández de Kirchner (who left office in December). Stiglitz, who’s been a paid Kirchner advisor and consultant, filed an amicus curiae brief when Argentina defaulted on its debt in 2001; when it did so again in 2014, he once more took the Kirchners’ side.
Quite admirably, Argentina’s new president, Mauricio Macri, is trying to clean up the mess that his crooked predecessors created. To this end, he’s reached an agreement with his country’s major creditors that will set Argentina back on the road to fiscal responsibility and international respectability. Any sensible observer who respects the rule of law would applaud.
Mauricio Macri
Not Stiglitz. In an April 1 New York Times op-ed, co-written with his protégé and frequent collaborator Martin Guzman, Stiglitz slammed Macri’s move – and Argentina’s creditors.
The very title of the op-ed was a lie: “How Hedge Funds Held Argentina for Ransom.” Ransom? When a government run by thugs – kleptocrats who’ve looted their country’s treasury – refuses to pay debts ruled legitimate by two U.S. courts, it’s not ransom. It’s the rule of law.
Let’s parse the op-ed’s first sentence. “Perhaps the most complex trial in history between a sovereign nation, Argentina, and its bondholders – including a group of United States-based hedge funds – officially came to an end yesterday when the Argentine Senate ratified a settlement.” Readers might assume, quaintly, that since this piece appeared in America’s so-called newspaper of record, there must’ve been some fact-checking. But apparently not.
First of all – and this is hardly a tiny detail – there has been no trial.
Martin Guzman
A trial generally indicates that there is some dispute over the facts of a case involving evidence that must be examined, typically by a jury. But no one ever disputed that Argentina defaulted on more than $80 billion in 2001 and refused to pay certain creditors in violation of their contractual agreements. The lawsuits over Argentina’s bonds were not disputes over these indisputable facts, but rather processes to determine the proper remedies for these violations. Furthermore, lest we be accused of being nitpicky about the terminology, it is also incorrect to say that this litigation “came to an end” last week. In fact, the litigation is ongoing, with important legal questions about Argentina’s settlement offers still pending before a U.S. Court of Appeals.
Second, the mention of hedge funds was a slick move, plainly intended to set knees jerking among anti-capitalist types for whom hedge funds are, by definition, pure evil. Never mind that there are other people – some of them citizens of Argentina – who also hold Argentinian bonds. In fact, it is precisely these small Argentinian bondholders who continue to litigate against Argentina due to the fact that Argentina has for some reason offered them less than it offered the hedge funds. (Stiglitz and Guzman would know this if they bothered to read the news sections of … the New York Times!) Thus, these small bondholders are doubly inconvenient for Stiglitz and Guzman – their existence both contradicts the pair’s erroneous declaration that the Argentinian debt saga has ended while simultaneously undermining their blatant attempt to blame the “evil” hedge funds for all of Argentina’s problems.
Judge Thomas Griesa
Third, the Argentinian Senate did not ratify a settlement. What it did was agree to lift the Kirchner-era laws that were intended to frustrate U.S. court rulings – and that led New York District Judge Thomas Griesa to hold Argentina in contempt.
The op-ed’s first sentence, then, was a minor masterpiece of misrepresentation. Perhaps we should thank Stiglitz and Guzman for making it clear from the git-go that what followed wasn’t going to be factually reliable.
“The resolution,” Stiglitz and Guzman went on to say, “was excellent news for a small group of well-connected investors, and terrible news for the rest of the world, especially countries that face their own debt crises in the future.” No: it was excellent news for the health of the international credit market, and terrible news for irresponsible governments that are inclined to pursue serial defaults.
At the World Economic Forum
Stiglitz and Guzman proceeded to describe Argentina as “[u]nable to pay its creditors” (a questionable contention) and to describe holdout investors as having “earned the name vulture funds.” Funny way to put it: these investors didn’t “earn” that name; it was coined by their debtor, the Argentinian government, and was taken up by Stiglitz and his ilk as a glib way of smearing creditors who’ve asked only to be paid what they’re owed. By obscuring the origins of the term “vulture funds,” of course, Stiglitz and Guzman were giving legitimacy to it – and providing themselves with a veneer of justification for repeatedly (and childishly) hurling this slur throughout their piece.
At another forum, this one called Forum Invest
In what was perhaps the most dishonest part of their op-ed, Stiglitz and Guzman purported to sum up Griesa’s 2012 ruling. As they put it, he “threw the game in the vulture funds’ favor” by “blocking Argentina from paying” creditors who’d agreed to reduced settements “until it had paid the vultures in full.” The ruling “gave the vultures the weapon they needed: Argentina had to either pay them off or renege on the default they had negotiated, ruining the country’s credit in the future and threatening its recovery.” Omitted entirely from this tendentious summary – which makes it sound as if Griesa did something shady – is Griesa’s rock-solid legal reasoning: under the pari passu (or “equal footing”) clause in the bond agreement, Argentina was strictly forbidden from paying off some creditors while stiffing others. What Stiglitz and Guzman neatly sidestepped, in other words, is the fact that if Argentina had honored the pari passu clause, all its creditors could have been paid. The point, quite simply, is that Cristina Kirchner didn’t want to pay.
At yet another forum, this one called the, er, World something-or-other Forum
The op-ed’s mendacity continued with the claim that Macri’s deal “will carry a high price for the international financial system, encouraging other funds to hold out and making debt restructuring virtually impossible.” Nonsense. In fact, the market has already adjusted: in place of paripassu clauses, sovereign-debt agreements now include collective-action clauses. Stiglitz and Guzman would have us believe that nations like Argentina can’t protect themselves and can’t structure loans as they wish; instead of worrying about that, we should be concerned about those nations’ continued ability to default and force terms on bondholders.
“Most countries,” maintained Stiglitz and Guzman, “are intimidated by the creditors and accept what is demanded.” Intimidated? Was Cristina Kirchner intimidated when she maligned her creditors as “vultures” and basically gave Judge Griesa the finger? Our heroes then called sovereign-debt restructurings destructive – after all, they’re are often “followed by another restructuring or default within five years.” And what example did they cite? That of Greece, which underwent restructuring in 2012 and is already “in desperate need of more relief.” But the case of Greece doesn’t prove anything about restructuring; all it proves is that if a country is economically irresponsible on a colossal scale, the chickens will eventually come home to roost.
How, then, to resolve sovereign-debt conflicts? Easy: Stiglitz and Guzman touted a set of sovereign-debt “principles” that they themselves proposed to the U.N. General Assembly, which approved them overwhelmingly last September. Among those “principles”: that indebted nations should be immune from foreign courts’ verdicts and that creditors should be compelled to accept restructuring deals approved by a majority of their fellow debt holders. Predictably, the six countries that voted against the resolution were those whose citizens tend to be on the creditor end of these arrangements – Canada, Germany, Israel, Japan, Britain, and the U.S. The countries that approved the measure were, in effect, asserting their own right to dodge repayment of debts – not just debts owed to hedge funds, but debts owed to mom-and-pop investors, too. Some justice.
“Many countries have bankruptcy laws,” concluded Stiglitz and Guzman. “But there is no equivalent framework for sovereign bankruptcies….The United Nations has taken the lead to fill this vacuum, and as Argentina’s case proves, the initiative is more important than ever.” Saying this, however, doesn’t make it so. What Argentina’s case proves is that some countries, like some people, are deadbeats; if permitted to do so, they’ll default repeatedly on their debt for no other reason than that the law lets them.
None of this is new, of course – we already knew where Stiglitz stood on Argentina’s deadbeat behavior. In fact, he’s become something of a broken record on the subject. Take his hyperbolic claim in the op-ed that “[t]he resolution … [will make] debt restructuring virtually impossible.” He’s plagiarized this same claim from himself many times in commenting on various cases, at least once using virtually identical language in the same newspaper. Each time, he is proven wrong by subsequent sovereign debt restructurings that are successfully concluded via constructive, good-faith negotiations with creditors (i.e., the opposite of the coercive approach that he and Cristina Kirchner favor) – most recently in Ukraine.
Axel Kicillof
So why now? Why has Stiglitz chosen this moment to repeat the same tired justifications of the Kirchners’ behavior and vilifications of Argentina’s creditors? For answers, look at the headlines surrounding the deal, and it seems clear at once: As the praise for Macri’s economic policies in general and his handling of the debt dispute in particular pours in from around the world, defenders and abettors of the Kirchners’ disastrous policies are looking worse and worse in retrospect. And, as you might expect, some have lashed out with desperate attempts to justify their actions and/or sabotage the Macri administration. Each is doing it with the tools at hand: For instance, former Kirchner Economy Minister Axel Kicillof now has a seat in Congress, so he is trying mightily to derail Macri’s settlement and keep Argentina mired in default. By contrast, Stiglitz has a standing invitation to bloviate on the op-ed pages of the Times. So bloviate he does.
Stiglitz meeting last October with Kicillof, who tweeted afterward that they’d had a “great dialogue…about the debt-restructuring process and the fight against the vulture funds”
But no amount of retrospective whitewashing can change the fact that the policies Stiglitz advocated as an advisor to the Kirchners were followed, and followed faithfully, with disastrous consequences for Argentina’s citizens. The Kirchners’ refusal to fully resolve the 2001 default in order to spite its creditors led directly and indirectly to the years of grinding legal battles, the punitive interest rates that Argentina was forced to pay as a result of its status as the world’s worst deadbeat, the falsified economic statistics that undermined its government’s credibility with everyone except for a handful of despots, the cozying up to said despots that further undermined its global reputation, the spiraling inflation that punished its citizens as access to dollars became scarcer and scarcer – Stiglitz was there every step of the way, cheering for Cristina in the international media. And now that she’s gone and someone more responsible is trying to clean up the mess that he helped make, Stiglitz is still there, jeering from the sidelines, and pointing the finger of blame somewhere else.
Christmas came early for fans of freedom in South America.
Mauricio Macri
It almost seems too good to be true. On November 22, in an upset election, opposition candidate Mauricio Macri beat out Daniel Scioli, whom the current head of state, the dictatorial Cristina Kirchner, had supported fully to replace her as president of Argentina. He took office on December 10.
His election, wrote Agustino Fonteveccia at Forbes, “blew new wind into the sails of South America’s second-largest economy” and “led to a flurry of optimism across the country, and particularly on Wall Street.”
Cristina Kirchner
Twelve years of Kirchnerism (Cristina’s eight years in power followed four years of rule by her late husband, Nestor) brought the Argentinian economy to its knees with excessive social-welfare spending, shameless government bloat, sky-high tariffs, massive corruption, and the imposition of a whole raft of destructive socialist economic ideas – all of which led, inevitably, in 2014, to the country’s second sovereign-debt default in fourteen years. Kirchner, as we’ve seen several times on this site, surrounded herself with stooges who propped up her power while enriching themselves at the expense of the Argentinian people. Macri, who has been mayor of Buenos Aires for eight years, promised to turn the country back in the direction of the free market and to fight institutional corruption.
Macri voters celebrating
Kirchner has called Macri a tool of corporate interests. “A country is not the same as a business,” she chided in one speech. Macri, for his part, when asked what he would change about Kirchner’s foreign policy – which has emphasized close relations with Cuba and Venezuela, said: “Everything!”
Alfonso Prat-Gay
After his victory was secured, he “immediately made a call for Venezuela to be booted from South America’s continental trade union Mercosur,” citing the chavistaregime’s habit of imprisoning its critics, most famously opposition leader Leopoldo López. He’s also expressed an eagerness to strengthen ties to Mexico, Colombia, Peru, and Chile. And he’s vowed to enact “a rapid and wide-ranging burst of reforms designed to dismantle the thicket of socialist controls” put in place by the Kirchners. “We will experience the start of a new era,” promised Alfonso Prat-Gay, Macri’s choice for Minister of the Economy (and a former top official at J.P. Morgan in the U.S.). “The tyranny of authoritarian populism is over.”
Macri with his cabinet
During her final days in power, La Kirchner did not, shall we say, develop anything remotely resembling class. Instead of working with her successor to ensure a smooth transition for the country’s own good, she threw upso many obstacles for Macri’s incoming administration – making last-minute appointments and appropriations that will cause lasting damage not only to him but to the citizens of Argentina – that even some of her ardent supporters cried foul.
Macri
Fonteveccia, to be sure, offered cautionary words. “Not only is Macri not the freewheeling markets capitalist he suggests he is,” maintained the Forbes writer, “but the challenges his administration faces—rampant inflation, a bankrupt central bank, a fractured political system, and a stagnant economy, to name a few—suggest more pain is in the cards before Argentina can spread its wings and become a fully functioning member of the world economy and the global financial system.”
Nor, admittedly, does it help that the Kirchnerites retain a majority in both chambers of the National Congress. Then again, many observers are a good deal more optimistic than Fonteveccia. There is particular enthusiasm, not only in Buenos Aires but in Washington and on Wall Street, over the people he’s selected for his cabinet. It certainly looks more promising than the gang of useful stooges with which the Kirchners surrounded themselves.
In any event, the Argentinian vote was only the first part of a terrific one-two punch. We’ll get to that tomorrow.
Yesterday, as part of our portrait of powerful, anti-capitalist economist Joe Stiglitz, we took a look at his outspoken support for Greece in its current budget crisis – and his close friendship with Greek leaders, who’ve paid him scads of (other people’s) money either for his advice or (could it be?) for his public advocacy on their behalf.
Joseph Stiglitz
Then there’s Argentina. Stiglitz’s relationship with the corrupt Kirchner regime goes back a long way. He was a paid advisor to the late President Néstor Kirchner, who was in office from 2003 to 2007, and has played the same role for Kirchner’s wife and successor, Cristina Fernández de Kirchner. He’s traveled frequently to Buenos Aires to advise the Kirchners and been paid handsome sums to deliver lectures there. Argentina defaulted on its sovereign debt in 2001, and Stiglitz took its side, filing an amicus curiae brief when Argentina appealed a U.S. court ruling ordering it to pay creditors $1.3 billion.
In 2012, he served as a paid consultant for the Kirchner regime in a case before the World Bank’s International Centre for Settlement of Investment Disputes. In the same year, he held a speech at the Casa Rosada in which he bashed the free market and praised Cristina Kirchner, head of a grotesquely kleptocratic government, for the wisdom of her economic policies; Cristina, for her part, sat there applauding Stiglitz.
It’s worth asking: is Stiglitz being paid by the Kirchners for his advice – or for allowing them to use his name and reputation to whitewash their inept and criminal economic activities?
Thomas P. Griesa
Then, last year, after being ordered by New York judge Thomas P. Griesa to pay off not just some but all of its creditors, Argentina defaulted again. It was the country’s second default in 13 years. Stiglitz again stood up for Argentina, publicly giving Cristina Kirchner a thumbs-up and calling for – what else? – “an international convention for sovereign debt restructuring to resolve these issues.”
With Cristina Kirchner
In an August 2014 article written with Martin Guzman, Stiglitz ardently defended Cristina Kirchner – who, in collusion with her rapacious army of cronies, comrades, and confidantes, has stolen her nation blind – and instead viciously slammed everyone else in the picture. He slammed Griesa, whose only offense was to make a ruling that strictly adhered to the law. (Stiglitz and Guzman even promoted a Twitter hashtag, “#Griesafault,” as a way of deflecting responsibility for Argentina’s economic chaos from the crooked Kircherites to the U.S. judge.)
On October 9 with Argentinian economics minister Axel Kicillof, who tweeted: “Gran diálogo con @JosephEStiglitz sobre los procesos de reestructuración de deuda y lucha contra los fondos buitres.”
He also slammed Argentina’s holdout creditors, whom, directly echoing Kirchner’s own rhetoric, he smeared as “vultures,” their only crime being that they expected to be paid in full for the debts they were owed. “Repayment on Griesa’s terms,” pronounced Stiglitz, “would devastate Argentina’s economy.” No, what has devastated Argentina’s economy has been years of governance by the unscrupulous, thieving Kirchner regime – including economy minister Axel Kicillof, who on October 9 tweeted a picture of himself and Stiglitz, writing: “Great dialogue with @JosephEStiglitz about the debt-restructuring process and the fight against the vulture funds.”
As with Greece, then, how can Stiglitz expect anyone to take his pronouncements on Argentina seriously?
At one time he was the NYSE’s senior managing director for international relations – “the face of the New York Stock Exchange outside of the United States.” But he left the Big Board, along with a couple of other higher-ups, in the wake of a controversy over compensation packages. Today, after decades at places like Morgan Stanley and Kidder Peabody, the Belgian-American investment banker Georges Ugeux runs his own store, Galileo Global Advisors, in New York.
He also contributes regularly to both Le Monde and The Huffington Post – and the first thing that needs to be said about his contributions to the latter organ (his Le Monde pieces are presumably run past an editor before they see print) is that the prose is downright execrable. It’s riddled with grammatical errors and, even when he’s apparently making a simple point, can be hard to make total sense out of.
Take a March 2014 HuffPo piece about the dust-up in Ukraine. “Does the Parliament votes [sic] to join Russia?” he wrote. “It is illegal. Will Crimea, who [sic] disposes [disposes?] of a special status, vote whether they [sic] want to be reunited with Russia or not?” There’s more: “For all its weaknesses,” he writes, “Europe has to live with borders with Russia and Ukraine. It has to resolve its neighborhoods [sic] problems. There is no need, however, for them to supersede what the Crimea’s people will decide.”
Look at those last two sentences. Presumably both “it” and “them” are meant to refer back to “Europe.” Okay. But “supersede”? What does it mean to say that Europe doesn’t need “to supersede what the Crimea’s people will decide”? None of the accepted meanings of “supersede” makes sense here. You can kind of guess what Georges Ugeux is driving at, but this isn’t a paper for a remedial high-school English class – it’s an opinion on international events delivered by a world-class thinker, a guy with a stellar CV, someone we’re supposed to take seriously as an authoritative voice on these matters. This being the case, wouldn’t you think a dude at this level would give his own prose a careful read-through before sharing it with the world? Or hire somebody competent to do so?
To be sure, the thrust of his March 2014 piece was clear enough. In the conflict between Putin and Ukraine, Georges Ugeux stands with Putin. No, really. He also sympathizes, as he put it, with “the people of Crimea who do not want to remain under the fascists who dominate Ukraine and prohibit them from speaking Russian.” As if all that weren’t enough, he took the opportunity to smear Russia’s anti-Putin opposition as being “under the influence of extreme right and neo-Nazi groups” and to describe Putin as having been “legitimately elected.”
All of which raises the question: is a guy with this kind of political acumen and moral judgment – to say nothing of his slovenly prose – somebody you’d ever want to trust with your money?
Another example. In September 2013, Georges Ugeux weighed in on Obamacare:
The Republicans do not seem to understand that when Congress votes [sic] a law, it is the law of the land. It is sacred in a number of ways that they like. When they don’t like it, they ignore their obligations.
Yes, tea party blackmailers, the Affordable Health Act is the law. By using budget or debt ceiling to trap the credit of the United States of America, you are being in-civic.
Some writers manage – every now and then, anyway – to hit on le mot juste; Georges Ugeux repeatedly misses it by a mile. “Trap the credit”? (And this is a financial expert?) “In-civic”? And of course the law is called the Affordable Care Act, not the Affordable Health Act. He goes on:
You are guilty of not respecting the United States institutions, and the value of your own votes. This creates in turn a total discredit of congressional votes and the institution of Congress in the eyes of our citizens and the world.
Time and again, reading Georges Ugeux’s prose, you get the impression that it’s gone through at least two incompetent translations, from language A to language B to language C, before it ended up in English – or a rough approximation thereof. Think this is unimportant? Think again. Clear, coherent prose reflects clear, coherent thinking. Prose like his is the mirror of a more than moderately muddled mind.
Georges Ugeux (center) with fellow investment bankers Yves-André Istel and Jean-François Serval
Which brings us to his financial commentaries. Georges Ugeux has written about a number of topics related to international finance, but of late he’s made a specialty of slamming the so-called “vulture funds” and the U.S. courts that have ruled in their favor in the matter of Argentina’s sovereign debt. “Are Sovereign Ratings a Legacy of Colonialism?” asked the headline of one piece he published in 2011. In another article, deploring the judiciary’s support for the “vulture funds,” he actually compared the U.S. Supreme Court to Pontius Pilate. But he reserves his real venom for Paul Singer of Elliott Management, whom he accuses of having brought grief to the Argentinian people by insisting that their government pay Elliott the entire amount owed to it.
Georges Ugeux, you see, is deeply concerned about the Argentinian people. Yet instead of getting exercised about the wholesale corruption committed by the regimes of the late President Néstor Kirchner and his wife and successor, Cristina Férnandez de Kirchner, as well as by their shameless (and, it sometimes seems, countless) cronies – who have ripped off billions upon billions of dollars from that once-prosperous country’s hapless citizens – Georges Ugeux places the blame for Argentina’s suffering squarely on the shoulders of Singer, whose activities he condemns as “the capitalist system at its worst.” Not only is he quick to join the vile Cristina Kirchner in using the term “vulture funds”; he also calls Singer & co. “scavengers” and accuses them of “heinous behavior” – all this for the supreme offense of purchasing debt fair and square and expecting to have it paid back in full.
