Posted by DrJohn on 29 May, 2013 at 8:07 am. Be the first to comment!


Argentina and Venezuela may one day grow weary of being global laughingstocks and turn to sensible policies, but at least for now the socialist dream lives on.

The BBC reports that product scarcity has forced Venezuela’s “only wine maker” to stop selling wine to the Catholic Church, which is already suffering from a shortage of consecrated bread as flour is increasingly hard to come by and wheat is only imported from abroad. Milk, sugar and cooking oil have also been affected by the country’s currency controls and centralized control of the economy or, as the government likes to call it, the “opposition-led conspiracy.” On the bright side, however, the country’s crippling toilet paper shortage is now (temporarily) under control.

Not to be outdone, Argentina is facing an economic collapse of its own in which inflation, import taxes, and import restrictions have made goods either impossibly overpriced or impossible to find. Worse, the Economist reports, restricted access to foreign currency has forced ordinary Argentines to buy dollars on the black market at nearly double the official rate. Fortunately, many Argentines are exploiting a loophole which, if nothing else, will keep the airlines in business:
Economists attribute the [increase in travel] to a loophole that allows Argentines with credit cards to access attractive exchange rates abroad. “It’s not like a debit card,” explains Daniel Marx, who runs an economic consultancy called Quantum Finanzas. “You don’t need to have dollars in your account in order to pay for dollar-priced goods outside the country.” When an Argentine travelling abroad makes a credit-card purchase, the payment is converted at the official exchange rate—a rate virtually impossible to access in Argentina. Even though the payments are then hit by a 20% tax, the spread is much smaller than that between the official rate of 5.23 pesos per dollar and the black-market rate that recently spiked to 10.45.

Walter Russell Mead

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