Back from sabbatical and reckoning today from Baltimore, Maryland…
Do we have a faraway look in our eyes? Do we seem “spacey”…perhaps a little “out of it?”
Up in the high Andes sensations hit you hard, like an adobe brick. Now we are feeling a little letdown. A few days ago we had the hot sun beating down on us. Now, we are back to the dim light of a computer screen.
A few days ago, we rose before dawn in order to ride 8 hours on horseback to visit ancient Indian ruins…crossing streams…breaching mountain passes…discovering hidden Shangri-La valleys. Now, we cross the street to buy a café latte and settle into our comfy desk chair.
We have come back from our sabbatical. Older, certainly. Tanner and leaner? Yes. Wiser? Probably not. But surely distracted. The smell of the sage is still fresh on our nostrils. The weight of the big adobe bricks…the open fires and juicy meat…grapes on the vine, nuts on the trees, flies on the open wounds…the smoky kitchens…and Gone with the Wind sunsets – it is all still so vivid. So real. So unlike the latest GDP or CPI statistics!
What part of it will we tell you about? What would you like to know? How can we make sense of it?
Why would a 63-year-old man, who has spent his entire career in front of a keyboard, at sea level, take a retreat to 8,000 feet and spend 10 hours a day doing hard work with a team of leathery gauchos? Why would he build a house of sun-baked bricks and chiseled stones, a house he didn’t need, using Roman-era construction techniques? Why didn’t his wife or children stop him?
Some of these questions we cannot answer. We have struggled to make sense of them. Perhaps they have no answer, other than… “it seemed like a good idea at the time.”
So, all we can do is to tell the story…but which story?
…of how he got caught in a flash flood and had to beach his pick-up truck on the rocks?
…or how he met an eccentric European aristocrat who bought 30,000 acres of Argentina farmland for $250,000?
…or how he and a Dear Reader took off their pants and waded across the Calchaqui River in broad daylight?
…or how this same Daily Reckoning reader ended up in possession of the only castle in Northern Argentina…
…or how Elizabeth rode 12 hours on horseback to a hidden mountain valley in order to give Holy Communion to a 95-year-old blind woman …and discovered the Inca’s “natural Viagra?”
And where to begin?
Oh yes, let’s begin with a little economic update. The former head of Argentina’s central bank had a run-in with the elected government. The politicians insisted on using the bank’s financial reserves — that is, the nation’s vital foreign currency reserves — in order to pay its debts.
The banker, to his credit, refused…and was fired in February 2010. He was replaced with a banker cast more in the mould of Ben Bernanke or Mario Draghi. That is, a more modern, pliable, flexible banker —a scoundrel, in other words.
The new head of the Argentine central bank recently asserted that there was “no correlation” between money-printing and inflation. That’s the kind of goon we want at the head of a central bank. Not some namby pamby economist who beats around the bush, talks out of both sides of his mouth, obfuscates and confuses…not a guy whom you never know when you can believe him or not. No, we want a guy we can trust…who is a 100%, four-square fool. Then, we know when he is talking nonsense — whenever his lips are moving!
That’s what’s nice about Argentina. You know where you stand. You know the politicians are crooked and the bureaucrats are incompetent, if not completely mad. You know you have to find a way around them…a way to dodge their rules…a way to protect yourself. You know the government’s figures are lies and its promises are empty. You know what to do with its currency too — try to get rid of it at the earliest opportunity.
That’s why the federales in Argentina have new dogs on the job at the international airports. They’re not trying to stop people from bringing in weapons or contraband. They’re trying to stop people from taking out dollars!
Yes, dear reader, the papers tell us that the Argentines have trained dogs to sniff out dollars — striking fear in the hearts of those who would try to convert their pesos to dollars and take them where they might be safe.
Meanwhile, back in Argentina, the Kirchner government has announced the forced nationalization of the nation’s biggest oil company — YPF. Naturally. The government said it was unhappy with the way the owners were (not) investing in new development. So, they’re taking the company into their own hands — as if the penniless pampa feds will invest more!
What better way to convince foreign investors NOT to invest their money in Argentina; take away their assets. Heck, it worked for Cuba and Venezuela.
Seems transparently nutty. But that’s what’s so good about it. You know what is going on in Argentina. You know for a dead certainty that the government is corrupt and incompetent. And you know you have to watch out!
*** Fortunately, while the Argentines close doors publicly, they leave doors open privately. That is, it is a society like Sicily, where there are laws…and there are ways around them.
We were worried about the effects of another stupid law passed recently by the Argentine government. It prevents foreigners from owning large parcels of farmland. Since your editor owns two large parcels…and since even a blind, deaf and dumb man could not mistake him for an authentic Argentine…he would seem to be the very person the law is meant to restrain. So, we put the question to our lawyer.
“Yes,” he said. “That’s what the law says. But this is Argentina.”
We do not always draw the correct meaning…or the full meaning…from someone speaking in Spanish. But we think we know what he had in mind.
Yes, a law was passed by the central assembly, apparently aimed at stopping foreign landowners from accumulating substantial holdings. But, no, there was nothing to worry about. For there is a wide river between passing a law and implementing it…and often, in the far northwest of the country, the river can’t be crossed.
“In 200 years of foreign property owners, Argentina has never expropriated land,” he went on.
“Yes, but it just expropriated an oil company…”
“Well, this is Argentina…”
We love Argentina. It is so quirky…whacky…and out-of-control. For example, it has recently banned the importation of foreign books. Why? It says it can’t be sure the ink used in foreign books meets its lead standards. What next? We can’t wait to see….
*** But our adventures in the northwest were of an entirely different quality. There, we were not confronted by a nutty government or a Three Stooges bureaucracy. No, up there…nature…and human nature…rule. They are magnificent. They are hard. They are sweet and indomitable. More to come…
for The Daily Reckoning Australia
From the Archives…
What the News on Bond Yields Say About the “Resolved” Eurozone Crisis
2012-04-13 – Eric Fry
The Art of Selling Stocks
2012-04-12 – Chris Mayer
Misguided Faith in an Economic Recovery
2012-04-11 – Joel Bowman
Beware the Big Government Debt Switcheroo
2012-04-10 – Dan Denning
The Discount Rate: Borrowers, Lenders and Bonds
2012-04-09 – Nick Hubble