Back in April, we saw that merely asking the local economy minister what Argentina’s rate of inflation is, was enough to prematurely terminate any interview and result in a mocking, viral twitter meme. Since then, things for Argentina haven’t exactly worked out too well: a recent Appeals court ruling found in favor of Elliott and the holdout bondholders, resulting in a downgrade of the country to CCC+, and leaving it with the possibility of having to fund billions in deferred obligations. “The lawsuit could result in the interruption of payments on bonds currently under New York jurisdiction, or it could prompt Argentina to undertake a debt exchange that we could view as distressed,” S&P said in the statement. “There is at least a one-in-three chance of either occurring within the coming 12 months.”
Of course, to many the fact that Argentina has still not redefaulted is even more surprising. The reason for that is that despite president Fernandez ongoing rose-colored glasses PR campaign, the domestic economy has been deteriorating at an accelerating pace with runaway inflation destroying local purchasing power for years. As a result of the ongoing authoritarian crackdown on not only individual liberties, but economic data, it has gotten to the point that the government is criminally prosecuting anyone who dares to publish independent inflation data.
Because when the truth conflicts with propaganda, either the “truth” is made up, as the BLS showed last week, or it becomes a crime to report the truth.
AP attempts to explain this surreal turn of events:
Argentina is trying again to criminally prosecute people who publish independent inflation data, just as Congress opens debate on a 2014 budget that assumes economic good times next year.
The government is predicting strong annual economic growth of 6.2 percent, inflation of just 10.4 percent and a peso dropping only 10 percent against the dollar.
Independent economists call these numbers wildly optimistic, and say that Argentina’s growth prospects are troubling and inflation is actually running more than twice as high. They maintain that illegal currency trading reflects much greater pressure to formally devalue the currency than the government has acknowledged.
So what is a country on the precipice of a full “faith and credit” collapse to do? Since there is no downside, just take it to the next level.
As Economy Minister Hernan Lorenzino proposed the budget to Congress, Commerce Secretary Guillermo Moreno went to court, accusing four different consulting firms of criminal “speculation” for publishing inflation data that contradicts official reports.
Among those Moreno targeted Thursday was economist Orlando Ferreres, who estimates inflation is rising by 23.8 percent annually. He called the accusations against him “ridiculous” in an interview with Radio La Red on Friday, and said they only make sense in “an upside-down world.”
Moreno also asked the judge to approve similar charges against economists with M&S, Buenos Aires City and Finsoport SA consultancies. If charged, tried and convicted of “speculation,” they could face two years in prison.
But Moreno also faces potential charges himself that carry a two-year prison term. He’s accused of abusing his authority as a public official by levying fines of $500,000 pesos (roughly $87,700 at today’s official rate) against these economists for publishing independent data. Courts annulled the fines on appeal, but the legal battle is headed for the Supreme Court.
That Argentina has had a long-running tradition of lying about its economy is no secret:
Argentina’s inflation numbers have been in doubt since 2007, when President Cristina Fernandez’s late husband and predecessor, Nestor Kirchner, had political appointees change the methodology of the official statistics agency, INDEC.
To protect themselves from Moreno, the private economists have been giving their monthly estimates to opposition lawmakers, who announce an average inflation rate each month in Congress. That rate has consistently shown prices increasing at least twice as fast as official numbers, which are in such disrepute that the International Monetary Fund no longer reports them.
“INDEC is the real fraud,” Ferreres said. “That’s the only one the judges should consider, because it is easily proven.”
Something tells us the Billion Prices Project would not flourish in Argentina. And since the “judges” in this particular Banana republic belong to the administration, they will only do what they are told from above, which is the diametrical opposite of actual justice. Finally, speaking of Banana republics, at least for now, the BLS merely endorses the “computer upgrade” of its systems on weeks when the data does not comply with the fiction, or simply dumps a massive one-time adjustment in one month and hopes it will all be forgotten. The good news, is that reporting the truth is still not punishable by jail. At least not yet.