Lat/Am Daily » Cristina de Kirchner

Kirchner up against it

Peter Krupa — Thu, 04 Mar 2010 19:15:36 +0000

Cristina Fernández de Kirchner’s ballsy victory on Central Bank reserves is starting to look awfully Pyrrhic. The opposition reacted swiftly. Not only has a judge blocked the use of reserves to pay debt, but the opposition (now with a majority coalition in the Senate) is moving to fire her Central Bank president.

Today, in a characteristically flamboyant speech (video), Cristina lashed out at the opposition and the judiciary, accusing them of “revenge” and “abuse of power:”

There’s no “co-government” here. I am the president.

Hardball

Peter Krupa — Tue, 02 Mar 2010 02:14:16 +0000

Not afraid to use it.

If at first you don’t succeed, ram it through. When Argentine President Cristina Kirchner issued a decree earlier this year to pay US$6.6 billion in debt with Central Bank reserves, it caused an uproar. Congress objected, the Central Bank president rebelled, and the courts froze the funds. Even after Kirchner sacked the Central Bank head, the courts still wouldn’t unfreeze the cash, and Congress wouldn’t cooperate.

So she did what any good sore loser would do, which is cancel the first decree and immediately issue a second one that’s exactly the same:

Argentina’s central bank transferred $6.6 billion in reserves to accounts belonging to the Treasury that the government will use to make payments to multilateral lenders and bondholders, an official at the bank said.The bank transferred $2.2 billion to pay debt owed to multilateral lenders and $4.4 billion to pay bondholders, according to the official, who can’t be identified because of bank policies. The board of directors approved the transaction, following a decree ordering the transfer that President Cristina Fernandez de Kirchner announced today in a speech in Congress.

By ramming through the use of reserves instead of budgeted funds to pay the debt, Kirchner simultaneously weakens the currency by removing some of its backing, increases the risk of inflation by freeing up budget funds for spending domestically, and adds another example to The Economist‘s scathing critique of the Kirchners’ strongarm tactics.

Kirchners in the hotseat: Why buy US$2 million?

Peter Krupa — Tue, 02 Feb 2010 17:02:01 +0000

Though the power struggle over Argentina’s Central Bank has ended, the controversy hasn’t. Central Bank ex-President Redrado made good on his threat to release a list of “friends of the power” who had purchased dollars from the Central Bank. A more accurate description would have been “husband of the power.”

That’s right, in October of 2008, just as the world economy was imploding and President Cristina Fernández de Kirchner was admonishing her fellow citizens to have faith in their homeland, Nestor Kirchner was exchanging pesos for $2 million U.S. dollars. Clarín says that, depending on when exactly he made the exchange, he could have made the equivalent of about 366,000 pesos, since the Argentine peso lost quite a bit of value against the dollar that month.

The specter of insider currency speculation raises its ugly head. At first, the Kirchners argued that everything was “legal,” which is kind of beside the point. Now, Néstor tells Pérfil that he needed dollars to buy a hotel.

None of this explains how, in 2008, Kirchner declared about US$650,000 in income from “interest” on his savings. As Clarín points out, this would have to mean that: a) He was getting massively-preferential interest rates from banks; or b) he has way, way more money in savings accounts than he’s let on.

Or I guess c) he had some difficult-to-explain income that year that he reported as earned interest.