How I wish I lived in Argentina

I KNOW you are probably fed up listening to me banging on about government interference and how damaging it is to the real economy, but please just read the quote below...

"These figures reflect the failure of past policies, which plunged millions of Argentines into precarious conditions while promoting the idea of helping the poor, even as poverty continued to increase," Milei's office said in a statement following the release of the INDEC report.

"The current administration has shown that the path of economic freedom and fiscal responsibility is the way to reduce poverty in the long term”

In case you are wondering, the INDEC report basically says poverty in Argentina has fallen from 41% to about 35% between early 2024 and now. The gap between the black-market peso-dollar rate and the official rate is slowly closing, inflation is down from over 200% to just 2.4% last month, rents are coming down, more houses are available, investment is beginning to return… I could go on. More importantly, these numbers are continuing to move in the right direction.

I don’t know about you, but I ask myself almost every day WHY our leaders insist on wasting money and paying lip service to all sorts of things whilst our poor and neglected basically get no help.

The number of civil servants in this country is up about 20% since before COVID. Why? What are they doing?

And don’t forget not one of them actually adds one penny to the economy. They are in fact draining cash every second from the productive economy – and will continue to do so even when they are retired with their entirely spurious index-linked pensions. We are remorselessly starving our businesses of money, people and opportunity at every level.

And what of Trump’s Tariffs? My view (I think held my many) is that the real play here is to effectively devalue the dollar and enable a large drop in interest rates.

Quite apart from the gargantuan sums this would save the US Treasury, it should (and of course you can never be sure but hey) it should release more money at cheaper prices for the productive, flexible and worth-emulating American economy.

At the very least it is making those countries that have long deliberately run a large surplus with America stop and think – and a good thing too. If it is true that over 50 countries are rushing to do a deal that is a very good thing.

Some of the deficits are truly staggering. Vietnam – Vietnam – is in surplus to the US by more than $200 billion – almost as much as China. And what is it they are sending? A very large chunk of that is Nike and other trainers.

This is what globalisation has done. It has had many positive outcomes but in essence it has meant that the West – and particularly America - has put itself in a permanent fiscally losing position to countries that produce cheaply.

I remember many years ago a rubber boot manufacturer in the UK taking his union reps to (I think) Korea, but it would equally apply today to Vietnam and others. The unions saw all those people working like stink making boots that could be exported to the UK and sold for less than 50% of the manufacturing cost in the UK. The owner said unless the union would do a deal, he would close the company.

The Union said they couldn’t allow their members to work as hard as the Koreans, and that was that – practically the end of Welly Boot production in the UK. And before you tell me I’m wrong, yes I know there are some upmarket boots produced but the total value and numbers are nothing like what they used to be.  

It looks as if some kind of balance is returning to the markets (which it always does of course) at a more sensible level. I note Barclays has decided to go overweight in FTSE 100 shares, which is an extremely interesting development.

Is this an inflection point where the long decline in London markets and UK investing in them inverts? It just might be.