Since the start of the global economic crisis, socialist leaning Latin American politicians and political pundits have been foretelling the end of the capitalist system in their part of the world.
It is a well known fact that many Argentinians will pay for almost anything in installments – from a dozen eggs to a plane ticket. Credit cards are the most widely used payment method. For some, that’s because they have no alternative but to go deeper into debt, but others pay with credit to beat escalating inflation. Indeed, over the past decade prices have been climbing by an average of 21 percent a year. Salaries decreased along with the fall in GDP growth rate, but inflation skyrocketed and prices rose by 8.16 percent, said Argentinean media group’s Clari in, citing government data; however, analysts and unions said that inflation was actually at 25 percent, Spanish newspaper El Pais said.
Amid the turmoil, the government made a decision that seemed to acknowledge the issue: In February, it announced the first price freeze, which would keep the retail cost of basic products in supermarket chains controlled until this past April.
And that is why many Argentines are buying more gold and silver than ever to protect their savings from the Western Hemisphere’s fastest inflation reported Bloomberg.
Banco de la Ciudad de Buenos Aires, Argentina’s only bank offering gold bullion coins and bars to investors and savers is negotiating with mining companies to purchase gold direct as surging demand depletes the scrap supply.
But now, five years after the collapse of US bank Lehman Brothers, we may instead be witnessing the twilight of economic “neo-leftism” in Latin America.
And before the end of the year, voters in both Argentina and Venezuela will have the chance to express their frustrations at the ballot box – although not yet to change their respective governments.
Argentina holds mid-term congressional elections on Sunday, while Venezuela has local elections on 8 December.
After nearly 15 years of the late Hugo Chavez’s “Bolivarian revolution” – now in the hands of his successor, Nicolas Maduro – Venezuela faces chronic shortages of basic goods, intermittently alleviated by emergency imports from more productive nations.
Venezuela’s Nicolas Maduro and Argentina’s Cristina Fernandez de Kirchner Nonetheless, the government has accused its political opponents of causing the shortages, as part of what Mr Maduro calls an “economic war”.
Venezuela has long been Latin America’s inflation league leader, but its rate has surged strongly this year and is now close to 50%.
Mr Moreno is also in charge of forcing Argentina’s supermarkets to sell staple goods at artificially frozen prices.
Argentina and Venezuela are travelling on similar political and economic paths.
The country is still expected to register GDP growth of more than 3% this year, while Venezuela appears to be heading for recession again, with negative growth expected for the first time since 2010.
Argentina’s supermarket price freezes are due to expire at the end of this month, once the mid-term elections are out of the way. I cannot help and wonder what the future holds for Argentinian and Venezuela.
Another factor which may contribute to the delay in the global economic recovery is the fact that both China and India have slowed down in terms of concrete economic growth, and I would add India to my watch list of countries that have a massive government spending deficit, that added with the falling value of the Rupee. Anyway down below is a video which will hopefully give you a better understanding to what is going on.