Wednesday, November 26, 2008

The Canary in the Coal Mine

Argentinean president Cristina Kirchner has announced a massive program to deal with the global financial crisis by infusing $21 billion dollars into rebuilding the country’s infrastructure. This program is expected to create 362,000 jobs. In addition, the Argentinean government has announced a plan of incentive for the repatriation of funds.

For the last several months the Kirchner administration has started an aggressive program that included the first steps in the nationalization of the country’s two largest airlines and the nationalization of 26 billion dollars of private pension funds.

Given the failure in the past of Argentina to run efficiently its government owned companies such as telephones, railroads and oil, and its inability to upkeep its infrastructure, one can look at the measures taken by the actual administration with skepticism. Furthermore, since some of these policies, such as the nationalization of pension funds have been launched as trial balloons by some of Obama’s advisors, Argentina should be used as the proverbial canary in the coal mine. If the past is any indication, the canary will not sing for too long.

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