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peppertree's Journal
peppertree's Journal
June 28, 2019

Argentine candidate Alberto Fernandez takes aim at IMF deal: 'loans are financing capital flight'

Alberto Fernández, the main challenger to incumbent President Mauricio Macri in Argentina's elections this October, said today that if elected he would seek to "rework" Macri's bailout deal with the International Monetary Fund (IMF), calling it "harmful."

Fernández, whose center-left Front for All (with running mate and former President Cristina Kirchner) is leading in most polls, met with IMF executives Alejandro Werner and Trevor Alleyne today to discuss his "deep concern" over the $56.3 billion bailout negotiated by Macri in 2018.

"I conveyed to the IMF our willingness to rework the agreements without demanding more from our people," Fernández said. "We seek to stabilize the economy in order to grow as a necessary condition to paying our debts."

Centrist candidate Roberto Lavagna, currently polling in third place, reiterated Fernández's concerns to Werner and Alleyne this afternoon.

International Macri Fund

Fernández has accused the IMF of "financing Macri's campaign by indebting Argentina."

The bailout is the largest in IMF history and makes up 61% of its loan portfolio - leading local critics to refer to the IMF as the "International Macri Fund."

Fernández noted moreover that of the $39 billion disbursed so far, $30 billion were used to finance speculative capital flight.

"Article VI of the IMF states that 'no member may use the general resources of the Fund to face capital flight'," he pointed out.

"The objectives that were set at the time of granting the loan have been absolutely distorted."

From bubble to bailout

Macri turned to the IMF - who had supported his policies - when a $60 billion carry-trade debt bubble known locally as the "financial bicycle" collapsed in April 2018.

The crisis cut off Argentina's access to foreign credit markets, and forced the central bank to raise interest rates. The ensuing recession - the second since Macri took office in 2015 - has led to a 5.8% fall in GDP, a 24.6% collapse in fixed investment, and 261,000 registered job losses.

Inflation has meanwhile risen to 57.4% - the highest since 1991.

At: https://money.usnews.com/investing/news/articles/2019-06-27/argentine-presidential-candidate-alberto-fernandez-takes-aim-at-imf-deal

Argentine opposition leader Alberto Fernández (right) with IMF Western Hemisphere head Alejandro Werner and IMF Argentina division head Trevor Alleyne (left) during their meeting in Buenos Aires earlier today.

Fernández believes the IMF has been financing Macri's campaign at Trump's behest, leaving Argentines to foot the bill.

Of $39 billion borrowed from the IMF so far, moreover, 77% have been used to finance speculative capital flight - in direct violation of the IMF's own rules.
June 26, 2019

Crew member from Brazilian president's plane detained in Seville with 39 kilos of cocaine

The Spanish Civil Guard on Tuesday arrested a military crew member from a plane used by the Brazilian Air Force to fly President Jair Bolsonaro on international trips.

Sources from the Civil Guard confirmed that the man was in possession of 39 kilos (86 pounds) of cocaine when he was detained.

The arrest was made when the plane in which the suspect was flying made a stopover at around 2pm at Seville airport in the south of Spain.

The arrested man, a 38-year-old petty officer whose identity has not been supplied, got off the plane with a suit bag and an item of hand luggage. When Spanish officers checked the bag, they found it filled with 39 kilo packets of cocaine. “It wasn’t even hidden among clothes,” the same sources explained.

The aircraft was headed to Japan, where it was due to be used as a reserve plane for the Brazilian leader, who was to fly to the same destination in another aircraft to take part in the G-20 meeting taking place this week in Osaka.

The arrest is a blow for the right-wing Bolsonaro, who campaigned last year on toughening drug laws - including reinstating the death penalty, even for non-capital crimes - and who frequently praises Brazil’s armed forces.

At: https://elpais.com/elpais/2019/06/26/inenglish/1561557312_000835.html

Far-right Brazilian President Jair Bolsonaro during a recent Evangelical rally.

Today's arrest of a Brazilian presidential aircraft crew member carrying pure cocaine with a street value of around $1 million, contrasts sharply with Bolsonaro's law-and-order bluster.
June 24, 2019

Urged by Trump, U.S. Supreme Court rejects Argentina appeal over YPF energy firm

The U.S. Supreme Court on Monday rejected Argentina's bid to fend off a lawsuit by investment fund Petersen seeking retroactive compensation for shares in the now-nationalized energy firm YPF.

The cases, YPF v. Petersen, 18-575, and Argentine Republic v. Petersen, 18-581, involve a bankrupt Argentine investor (Petersen) suing Argentina and YPF for $1.74 billion over its 2012 renationalization.

The justices left in place a lower court ruling that allowed Petersen to sue after Argentina's government refused to buy back its shares. The Trump administration in May urged the Supreme Court not to take up the appeals.

Petersen, controlled by Argentina's Ezkenazi family but now based in Madrid, owned 25% of YPF stock at the time of its renationalization.

The Argentine Government expropriated 51% of YPF's shares (all from Madrid-based Repsol) for $5 billion; but declined to tender an offer to buy out other shareholders - something Petersen claims YPF's by-laws required.

Petersen later sold its stake in the lawsuit to London-based third-party litigation funder Burford Capital for $18 million; Burford took advantage of today's news to sell a 10% stake for $100 million.

Burford would reportedly net most the proceeds from the lawsuit (around $1 billion). They also own lawsuits from the former Spanish owners (some currently in prison) of Aerolíneas Argentinas, which was likewise renationalized in 2008 after years of mismanagement.

YPF, with $15.5 billion in annual revenue, produces 45% of Argentina's oil and gas, sells 56% of its gasoline and is the nation's largest firm of any type. Founded in 1922 as the first state-run oil company in the world, YPF grew to supply 75% of Argentina's oil needs by 1968 but was privatized in 1993.

Following Repsol's majority acquisition in 1999, investment and output at YPF fell even as profits rose - ultimately prompting former President Cristina Kirchner to renationalize the firm in 2012.

At: https://translate.google.com/translate?hl=en&tab=wT&sl=auto&tl=en&u=https%3A%2F%2Fwww.pagina12.com.ar%2F202307-fallo-contra-argentina-por-la-expropiacion-de-ypf

Former Argentine President Cristina Kirchner, with (from left) Petersen Group chair Sebastián Eskenazi and Repsol chair Antoni Brufau, shortly before YPF's 2012 renationalization.

Eskenazi, who controlled a 25% stake in YPF, claims his share should have been bought out when Repsol's was.

He later sold his lawsuit for $18 million to third-party litigation funder Burford Capital - which stands to net around $1 billion.

The case recalls Argentina's long-running vulture fund dispute, in which hedge funds led by Paul Singer's Caymans-based NML demanded payouts of up to 1600% for old, defaulted bonds bought from resellers (NML netted an estimated 1180%).

Local energy policy observers believe the Burford suit is being encouraged by the Trump administration to force YPF to sell its stake in the Vaca Muerta formation, whose technically recoverable 3,244 trillion ft³ of shale gas and 27 billion barrels of shale oil make it among the leading such sources in the world.
June 23, 2019

Unemployment is rising in eight Trump states; polls show some have turned on him

Unemployment rates edged up year over year in Mississippi, Arizona, North Carolina, Indiana, South Carolina, Kansas, Missouri and Nebraska, according to the latest numbers from the Bureau of Labor Statistics.

All eight states went to Trump in 2016.

Trump’s net approval rating remains high in most of these states. But more people in Arizona and North Carolina disapprove of his job as president than approve, according to the latest Morning Consult poll.

It's unlikely that all eight states, which have a combined 73 electoral votes, would flip to the Democratic candidate in 2020.

Trump lost the popular vote in 2016, but won in the Electoral College thanks in large part to victories in Pennsylvania, Ohio and Michigan, which all voted for Democrat Barack Obama twice. Employment edged up year over year in all three states.

At: https://www.cnbc.com/2019/06/21/unemployment-rising-in-8-states-that-voted-for-trump.html

Trump regales Mississippi supporters with his tall tales last year.

At +17%, his net approval in Mississippi is the highest in the nation. The state's stagnant economy tells a different story.
June 22, 2019

Berlin backs five-year rent freeze amid housing pressure

Berlin's left-wing government of Social Democratic Mayor Michael Müller has approved a plan to freeze rents in the German capital for the next five years.

Rents have risen sharply in the city and there have been rallies urging the authorities to keep housing affordable.

The plan is expected to become law in January. It could apply to 1.4 million properties, but not to social housing - regulated separately - or new builds.

The average monthly rent for a furnished Berlin flat is about €1,100 (£983; $1,232).

Berlin rents however rose by 7% in the first quarter of this year, and in the past decade rents have doubled as the booming city has become a magnet for job seekers.

At: https://www.bbc.com/news/world-europe-48677393

Berlin's Social Democratic Mayor Michael Müller: Cohesiveness counts.
June 21, 2019

New York lawmakers OK marijuana decriminalization

Source: Washington Times

Lawmakers in New York state have voted to eliminate criminal penalties for public possession and use of marijuana after efforts to legalize pot stalled.

The measure would reduce low-level criminal charges for unlawful possession of marijuana to a violation, which comes with a fine similar to a parking ticket. The penalty would be $50 for possessing less than one ounce of pot or $200 for one to two ounces.

In an effort to address decades of racial disparities in drug arrests, the bill would also allow for the expungement of past convictions for possession of small amounts of marijuana.

Gov. Andrew Cuomo, a Democrat, proposed his own plan for legalization earlier this year. He said he’ll sign the decriminalization bill, noting that he called for a similar step five years ago.

Read more: https://www.washingtontimes.com/news/2019/jun/21/new-york-lawmakers-ok-pot-decriminalization/

New York Sen. Jamaal T. Bailey, D-Bronx (left) fist bumps Sen. Timothy M. Kennedy, D-Buffalo, after Bailey’s legislation expanding decriminalization legislation for marijuana passed on June 20.

Gov. Cuomo has indicated he'll sign the bill.
June 20, 2019

Argentina's Macrisis: Unemployment reaches 10.1% - highest in 13 years

Data published today by Argentina's Statistics and Census Institute (INDEC) show that the nation's unemployment rate rose in the first quarter to 10.1%.

The rate represents a 1.0% increase from the 9.1% recorded in the previous quarter - and the highest since a 10.2% rate in the third quarter of 2006, as the country was recovering from its 2001-02 collapse.

INDEC also reported GDP fell 5.8% in the first quarter of 2019 from the same time last year. Domestic demand fell 12.4%, of which fixed investment (construction and machinery) collapsed by 24.6%.

Some 296,000 registered jobs were lost between January 2018 and March 2019 - equivalent to 2.2 million jobs lost in the U.S.

The data showed that the incidence of unregistered labor rose from 33.9% of the total to 35% - indicating that unemployment would be higher but for growing reliance on often precarious self-employment.

Inflation in May meanwhile reached 57.4%, with wholesale prices up 68.5%. Real wages were down 11.3% in March from the same time last year - and 18.6% from their high point in November 2015.

Some 58% of Argentines fear losing their job according to a recent study, while 75% report losing purchasing power.

Bicycle crash

The latest unemployment data represent a sharp increase from the 5.9% inherited by Macri in late 2015, when he was narrowly elected on promises to spark sluggish growth with deregulation and tax cuts.

Costly corporate tax cuts failed to spur investment or exports, and $68 billion has instead left the country since he took office. Macri resorted to foreign borrowing to cover said losses, more than doubling Argentina's public foreign debt to over $200 billion.

A $60 billion carry-trade debt bubble known locally as the "financial bicycle" ultimately collapsed in April 2018, triggering the current crisis and forcing Macri to resort to a record, $57 billion IMF bailout.

At: https://translate.google.com/translate?hl=en&tab=wT&sl=auto&tl=en&u=https%3A%2F%2Fwww.politicargentina.com%2Fnotas%2F201906%2F29495-el-peor-dato-el-gobierno-de-macri-llevo-la-desocupacion-a-los-2-digitos.html

Pedestrians walk by a homeless encampment in Buenos Aires' financial district.

The city's living standard was second only to neighboring Montevideo among large Latin American cities. But rising unemployment and 60% inflation rates has doubled the number of homeless since Macri took office in late 2015.
June 18, 2019

EU court declares Germany's highway tolls illegal

The European Court of Justice ruled Tuesday that highway tolls in Germany are illegal because they unfairly penalize drivers from other European Union countries.

The Luxembourg court’s ruling means Germany will have to drop or revise its highway toll system.

The case was brought by Austria, which complained that the levies of up to 130 euros ($146) a year are discriminatory and therefore illegal under EU law.

All motorists have to pay the toll according to their vehicle’s size and engine type - but German taxpayers can file for refunds.

At: https://www.washingtonpost.com/world/europe/eu-court-declares-germanys-highway-tolls-illegal/2019/06/18/78577fbe-91b6-11e9-956a-88c291ab5c38_story.html

Complicit bureaucrats and locals get fast-track treatment from then-Transport Minister Alexander Dobrindt in a Austrian cartoon lampooning German toll roads.
June 17, 2019

Argentina's nationwide power outage puts Macri electricity interests in spotlight

The historic blackout that left nearly all of Argentina - and parts of neighboring countries - without electric power most of Sunday, June 16, could not be explained by the government.

"There are no reasons for this to have happened; but the reality is that it happened," Energy Secretary Gustavo Lopetegui noted - a full 7 hours after the blackout began.

But the nationwide blackout - unprecedented in Argentine history - has raised new questions about the role of President Mauricio Macri's business interests in his country's electricity market, as well as those of close business associates and personal friends.

The Argentine Interconnection System (SADI) is managed by Transener, owned by Macri's friend and partner, Marcelo Mindlin - whose Pampa Energía conglomerate is one of the largest Argentine private firms of any type.

The firm that connects Argentina's largest hydroelectric dam, Yacyretá, with SADI is Yacylec - owned by the Macri Group since the electric grid was first privatized in 1993.

Sunday's systemic power failure was determined to have originated in Transener and Yacylec lines running from the Yacyretá and Salto Grande dams, both in NE Argentina.

Macri's sale of the state's 25% share of Transener to Mindlin last year led to a criminal complaint for conflict of interest; Yacylec, for its part, is reported to owe $10 million in unpaid taxes.

The nation's two largest electric utilities are likewise controlled by close Macri associates: Edenor (the largest) by Mindlin; and Edesur by Nicolás Caputo - Macri's best friend, and the beneficiary of the president's latest privatization: the 420-MW Brigadier López power plant.

The result has been underinvestment: Power utility watchdog CEPIS noted that outages this summer (January) had jumped 59% despite 3000% electricity rate hikes in the three years up to that point.

This despite a relatively mild summer, and a 16.5% fall in power demand as a result of both the rate hikes and the worst recession since Argentina's 2001-02 collapse.

At: https://translate.google.com/translate?hl=en&tab=wT&sl=auto&tl=en&u=https%3A%2F%2Fkontrainfo.com%2Fapagon-historico-la-desmentida-de-yacyreta-macri-y-mindlin-detras-de-la-corrupcion-de-yacylec-y-transener%2F

Macri and his chief business partners Marcelo Mindlin (left) and Nicolás Caputo (right).

Mindlin and Caputo are the chief shareholders in Argentina top electric companies, making them the chief beneficiaries of Macri's 3000% rate hikes. The Macris, in turn, are minority partners with each.

The distributors directly tied to today's blackout, Transener and Yacylec, are controlled by Mindlin and Macri respectively.
June 16, 2019

Mothers of Plaza de Mayo leader Nora Cortinas: "Thanks to cannabis, I can still march"

In an interview with the Buenos Aires online journal Infobae, Mothers of Plaza de Mayo leader Nora Cortiñas revealed that "thanks to cannabis, I can still march."

"I told someone my left leg hurt a lot," the renowned, 89 year-old Argentine human rights advocate recalled. "That person mentioned to me that cannabis could help me."

Cortiñas co-founded the Mothers of Plaza de Mayo days after losing her then-24 year-old son, Carlos, in April 1977 - at the depths of the Dirty War against dissidents.

According to dictatorship officials themselves, at least 22,000 perished from 1975 to 1978. They are known worldwide as the "disappeared."

Forty-two years of marches on the Plaza de Mayo (the square facing Argentina's presidential offices) and elsewhere in the Mothers' quest for justice took their toll however:

Frequent leg, hip, and sciatic pain threatened to sideline the tireless Mrs. Cortiñas, or to relying on a wheelchair. She credits her friend's gift of a container of cannabis cream for her recovery.

"I started applying it, and within a month or two, the pain subsided. When I get severe sciatic nerve pain, I apply it and in a couple of days it calms the pain. It works."

While Cortiñas "never liked the idea of marijuana," she revealed she now keeps a few plants at home and has become a vocal advocate for its medicinal use.

High-handed tactics

Argentina legalized cannabis oil for medicinal purposes in 2017 - a bill signed by President Mauricio Macri but opposed by his hard-line Security Minister, Patricia Bullrich.

Bullrich was recently revealed by the ongoing 'Extortiongate' case (into the alleged use of intelligence services to both frame opponents and extract payoffs) to target cannabis and narcotics for political credit.

"Bullrich is so ignorant that she says any nonsense," Cortiñas asserted. "She's only good at repression, brutality and to buy weapons - but she doesn't know the reality of health in Argentina."

Former President José “Pepe” Mujica made neighboring Uruguay, in 2013, the first nation in the world to legalize the cultivation, sale, and use of marijuana - medicinal or not.

At: https://translate.google.com/translate?hl=en&tab=wT&sl=auto&tl=en&u=http%3A%2F%2Fwww.infonews.com%2Fnota%2F323953%2Fnora-cortinas-gracias-al-cannabis-puedo

Mothers of Plaza de Mayo leader Nora Cortiñas gives a thumbs up during a 2017 march commemorating the 40th anniversary of the foundation of the renowned human rights advocacy group.

The 89 year-old Cortiñas, who in 1977 lost her 24 year-old son to the dictatorship's Dirty War against dissidents, feared that worsening chronic pain would sideline her from future marches.

A friend's gift of cannabis cream changed all that. "I wish I could buy it in the pharmacy," she says.

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