Argentina: Overdue on becoming broke?

Feb 17, 2015

- By Bill Bonner

Bill Bonner
Buenos Aires, Argentina

"Viva el cancer!"

    Graffiti that appeared on the walls of Buenos Aires as 'Evita' lay dying in 1951
Dear Diary,

We were happy to get back to Sao Paulo after a weekend in Rio. In comparison, Sao Paulo is clean, quiet, and dignified. Rio is none of those things, especially on Carnival weekend.

And it is hot. Sweaty hot. Wilting hot. So hot you don't want to leave the lobby of the Fasano Hotel. We were not staying at the Fasano. Instead, we found an inexpensive room with a view...that is, a view onto an air shaft. Our hotel was on Copacabana Beach. But you would never know it from inside the hotel. It could have been on the poor side of Chicago.

So, when we discovered the Fasano on nearby Ipanema, we decamped...at least for a few hours.

Copacabana and Ipanema beaches were crowded with bodies, in various forms of indecency and decay. Young, old, fat, skinny...fetching and repulsive. It was too much input for us. We were overwhelmed by it.

So, it was good to be back in Sao Paulo. Also, Sao Paulo is cooler than Rio.

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But we left Sao Paulo yesterday in order to come to Buenos Aires.

We know Buenos Aires better than Sao Paulo. It is a prettier city. But less dynamic. In Sao Paulo you see new buildings, new cars, and new restaurants almost everywhere you look. Buenos Aires doesn't change so much. It is an older city, more elegant and more timeworn.

It is also the capital of a country that is much smaller geographically, with an economy that has been in decline, relatively, for more than half a century. But what the Argentines lack in size and wealth they more than make up in conceit. To make a long story short, the Italian proletariat discovered Buenos Aires in the early 20th century. At the time, the city was so open...so free...so beautiful...and so bustling with activity that an immigrant from Venice or Naples could get off the boat in the morning and have a job and an apartment by the afternoon.

The city had more trees than Paris...a bigger opera house...the widest avenue in the world.

But the Italians thought they could make it better by applying the latest creeds from Europe - syndicalism, communism and anarchism. Then, in the '30s, Juan Peron, a young army officer, was sent to Italy as a military attache. He admired Mussolini's fascist/socialist ideas so much he brought them back to Argentina with him. Then he got lucky. He married Eva, who became the nation's Firstest lady ever. She handed out presents to the poor on Christmas. Her brother handed out passports to the Nazis, when the war turned against them. The Nazis were happy to immigrate, and showed the Argentines a thing or two about operating a police state. Peronists have been in power ever since - always relying on the urban working classes for the votes they needed to stay in power.

"The story is always the same," explains our local analyst. "They make promises to get elected. The promises cost more money than they have. They borrow. And they go broke about once every 10 years. The last crisis was in 2002. We're overdue."

In the interest of full disclosure, we're not above taking advantage of people who do stupid things. After all, when Humpty Dumpty gets up on a wall, you should give him a push. Otherwise, how will he ever learn to stay on the ground?

So it was that we came to Argentina in 2005 on the hunch that there may be something worth seeing. In the event, we found a mountain ranch which we were able to buy for a song.

There were three reasons the property was so inexpensive:

First, the nation had not yet recovered from its most recent crisis.

Second, there were no other buyers looking in the area of the Northwest Argentina.

Third, even at prices barely a 10th of those in the US, it was still probably not worth what we paid for it.

So you see, Humpty got the last laugh, after all. And the locals have been laughing ever since, as we puzzle over what ever made anyone think they could make a ranch work up in such barren, inaccessible, and god-forsaken country in the first place.

Poor Evita died in 1952. Then 59, Juan took up with a girl, rumored to be under-aged, named Nelly Rivas. When asked how he could carry on an affair with a 13-year-old, he replied: "I'm not superstitious."

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

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