Cristina Fernandez de Kirchner's leadership deteriorates in Argentina

Authors:
Luis Alberto López Rafaschieri and José Alberto López Rafaschieri
www.morochos.net

The growing conflict between Cristina Fernandez de Kirchner's government and Argentine farmers, who have several days of nationwide protest against medieval taxes on exports of soybeans, meat, corn, wheat and milk, only show one thing: Cristina Fernandez's leadership is in crisis.

This is also reflected in polls, placing Fernandez as one of the most unpopular leaders in Latin American -only 29% of Argentines have a positive view of their President- which explains the Fernandez's interest in advancing legislative elections, because she wants to avoid that her deteriorating public image is more harmful for her party's performance.

This also explain why the Kirchners are promoting a media bill that would weaken Argentine information companies, because like all bad politicians, they want to blame the press for the political and economic debacle her government is suffering.

All this, plus the loss of allies in the provinces, will result in a greater political instability. The end of the Kirchner era is near.

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Economic measures Venezuela 2009: Defects of Chavist plan announced on March 21

Authors:
José Alberto López Rafaschieri and Luis Alberto López Rafaschieri
www.morochos.net

On March 21, 2009, President Chávez presented to Venezuelans a package of measures to tackle the economic crisis that hit Venezuela. But after studying Chavez's plan, we have the following objections:

1) Increasing sales taxes in a recession is a mistake, because tariffs have an inhibitory effect on consumption. With the tax increase proposed by Chavez, people will consume less, intensifying the recession. What Venezuela needs are measures of economic stimulus.

2) The minimum wage increase is insufficient. Chavez will increase it by 20% but expected inflation for 2009 in Venezuela is 40%. As a result, the purchasing power of Venezuelans will decline, which will worsen the economic downturn.

3) No action is taken to reduce inflation in Venezuela. The highest in Latin America.

4) The Chavist plan does not take into account the private sector. During his speech on Saturday, the Venezuelan president did not speak about working with private companies to address crisis, nor took any decision in favor of the sector that generates more jobs in Venezuela.

5) These measures are based on the hope that OPEC cuts will return oil prices to high levels within a short time, which would solve the government's deficit. However, it is unrealistic to assume that the oil market is easily predictable and manipulable.

6) And finally, Chavez's economic policies are antidemocratic, because they were made behind closed doors. No other sector outside of the federal government was consulted. Neither universities, nor labor unions, nor employers, nor professionals, nor workers, nor common people were asked their opinion.

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Obama-Lula meeting, March 2009: Brazil offers to replace Venezuela as energy supplier

Authors:
Luis Alberto López Rafaschieri and José Alberto López Rafaschieri
www.morochos.net

While some believe that Lula met with Obama to defend Chavez, the truth is that there is one word that best represents what the United States and Brazil spoke last week: Energy.

And who can blame them? The United States has constantly expressed its discomfort about relying on foreign -and problematic- energy suppliers, and Brazil is a big energy producer that apparently has surpassed the backward ideas of the old Latin American left.

From the U.S. perspective, Venezuela has become an unstable country, whose government is incapable of ensuring a reliable energy supply for the future. Since the arrival of President Chavez, the Venezuelan oil production has shown a decline that seems to have no remedy. In addition, the Venezuelan government is constantly changing legal conditions and is an enemy of the United States.

And from the Brazilian perspective, the U.S. is the biggest market in the world. Brazil knows that this opportunity would only be ignored by an unprofessional government, so while others destroy their oil industry and reputation, Brazil emerges as the best alternative to replace Venezuela.

Brazil is less confrontational, is about as close geographically as Venezuela, has a very powerful oil industry and recently discovered new oil reserves offshore -estimated at 80 billion barrels- Besides, Brazil is the planet's largest exporter of ethanol, what gives it an advantage over the problematic supplier.

Ethanol is a cleaner-burning fuel than gasoline and is made from renewable sources. This is wonderful for the U.S., because Americans do not just want to minimize purchases of Venezuelan crude oil, but also reduce their overall dependency on petroleum. These are long-term plans that are already in development.

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Venezuela after February 15, 2009: Chavismo's political agenda and its potential effects

Authors:
José Alberto López Rafaschieri and Luis Alberto López Rafaschieri
www.morochos.net

In analyzing the actions and words of senior chavistas in the days after the referendum of February 15, we obtained the following conclusions:

At the ideological level, the recent speeches of President Chavez and his ministers confirm that the current Venezuelan government will insist on its strategy of dividing Venezuelans, promoting polarization between Chavistas -supporters- and opponents.

After the adoption of the reelection amendment, the President and his ministers have repeated they will not work with different sectors until the opposition does not understand that "socialism is the only option," with Chavez as president forever. Government representatives have made clear that negotiation for them is a "dialogue between elites" that should be avoided. Therefore it was understood that any proposal different from chavismo will remain persecuted in the Venezuela of Hugo Chavez.

At the legislative level, the statements of the current Venezuelan government show that new laws are coming -and possibly new constitutional changes- however, we must assume that they will not legislate to protect domestic workers, or to combat the uncontrolled crime that plagues Venezuela, because Chavez's legal changes tend to point always in the same direction: penalize dissidents, radicalize socialism and increase the president's powers.

In terms of public security, President Chavez announced on the night of February 15 that he would redouble his efforts in this area, but apparently the new Chavez's program to combat crime will also be based on the idea that "crime is a product of the media conspiracy”. And to this “plan”, the government will add the story that opponents are hiring hitmen to raise crime rates and then blame the Chavez regime. Heterodox ideas that, in practice, will justify the current mess and criminalize opponents. Consequently, we don't expect overwhelming improvements of safety levels in Venezuela.

And on the diplomatic level, the tendency of Hugo Chavez's government to associate with extremists around the world will continue its course. And with regard to relations with the Yankees, the verbal confrontation between Chavez and the new U.S. President -Barack Obama- seems increasingly inevitable.

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On Republican criticism of Obama's tax plan

Authors:
Luis Alberto López Rafaschieri and José Alberto López Rafaschieri
www.morochos.net

Obama has proposed a tax reform that reduces tax rates for less affluent classes and increases the contribution of the U.S. economic elite. The government estimates that with this initiative small business will be encouraged, student loans will be more available and a better health plan will be developed.

But most Republicans consider this idea "a Robin Hood plan," "socialist" and promoter of the "class struggle". Besides, they accuses the government of punishing investment and success with this measure.

However, the Obama tax plan is not new in the U.S., as it was part of the policies implemented during the Bill Clinton administration, who raised taxes from 31 to 36% for families with annual incomes over $140,000, and almost 40% for families with incomes over $250,000 a year -exactly the same numbers that Obama proposes- all with the goals of keeping taxes low for middle-class families and fund programs for the poor.

We must remember that the "Clinton Era" was one of the most prosperous periods in U.S. history, and that Clinton almost succeeded in establishing a universal health system but the project was rejected by Congress. So no one can argue that such a mechanism will destroy economic growth and private investment. On the contrary, if the less affluent population has better opportunities, the whole country will have a better chance to grow and generate prosperity for all.

And neither can we say this is a socialist proposal, because it doesn't violates private property, it just sets a small increase in the taxes of those who have large incomes. Moreover, even if Obama's tax plan is approved, the U.S. will continue being among the developed countries with lower taxes.

Ironically, part of the money collected under this tax hike will help fund bailouts of companies owned by rich people, because even if the funds do not go directly to firms at risk of bankruptcy, they will allow to stabilize the budget and devote more resources to companies in need.

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Chavez's nationalizations hurt the budget and reduce the venezuelan industry's productivity

Authors:
José Alberto López Rafaschieri and Luis Alberto López Rafaschieri
www.morochos.net

Since Chavez was reelected in 2006, he began a phase of nationalizations that included cement companies, utilities, communications, banks, shopping centers, farms, oil exploitations -Exxon Mobill/ ConocoPhillips cases- and entertainment corporations, as Avila Magica.

To this we must add the militarization of some private food companies -like Empresas Polar- and the seizure of a rice plant owned by Cargill Inc., among others. However, the government has lost sight that all these companies will be a burden on the national budget in a time when it has been so beaten by the sharp drop in oil prices.

We say this because for every nationalized company, the government must pay compensation to the respective owners. Besides, the State is obliged to spend large sums of money periodically to keep them, and as most of these communized organizations will operate with losses -as often happens with public companies- the government must get money from the national budget every year to subsidize them.

For a better assessment, we must consider that last year the Venezuelan fiscal deficit was around 1% of GDP, but this year, due to falling international oil prices and Chavez's mismanagement of the whole economy, the deficit is expected to reach 5% of GDP.

We therefore have doubts about the government's financial capacity to keep these expropriated businesses running with the same efficiency they had under private management. Also, we think it's a bad idea to nationalize private companies when the public budget is in deficit, because these expenditures will erode the Venezuelan fiscal balance even more.

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Obama's "Buy American Plan" weakens the United States' image before the WTO

Authors:
Luis Alberto López Rafaschieri and José Alberto López Rafaschieri
www.morochos.net

When George W. Bush decided to invade Iraq in March 2003, analysts said the president had caused a great damage to the U.S. diplomacy, because that was an unilateral decision that ignored the international weapons inspectors' and the UN Security Council's recommendations.

Mistake that was exploited by Barack Obama -now president of the United States- and used by Democrats to say they would not commit the Bush administration's errors if they reached the presidency. In his election campaign, Obama promised to respect international agreements and take into account the views of U.S. allies.

But now as president, Obama seems to be forgetting his promises. At the end of February 2009, his government ratified the "Buy American Plan," a new law passed by the U.S. Congress, which consists in forcing public institutions to consume products preferably manufactured in the United States. A measure taken in an unilateral way, which will allow U.S. producers to artificially surpass their international competitors.

The "Buy American Plan" is a proposal that, analyzed in the light of the World Trade Organization agreements, makes it clear that the U.S. violates the WTO's rules on unfair competition and government buying.

So we can say that if the Bush's Iraq invasion in 2003 ignored the UN, the Obama's "Buy American Plan" in 2009 do the same with the WTO, harming the progress that his own country reached on free trade. Then, what is the difference between the new government's policies and the former U.S. president? Is this how Obama will regain the world's trust?

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Ecuador presidential and legislative elections, April 26, 2009: Polls

Authors:
José Alberto López Rafaschieri and Luis Alberto López Rafaschieri
www.morochos.net

On September 28, 2008, Ecuadorans approved a new constitution by popular referendum, consequently, elections for President and Congress must be held and Ecuadoran authorities set the date for those elections on April 26, 2009.

The new constitution will not count the current term of office of President Rafael Correa for the purpose of reelection -Ecuador allows one immediate reelection- so if Correa is elected in the upcoming elections, he may be reelected for a second term in 2013.

According to an opinion poll taken in January by CEDATOS and Gallup, Rafael Correa will be elected president again in next April, as his popular support is around 70%. This survey was conducted by interviewing 1250 Ecuadoran adults and has a margin of error of 3.4%.

Regarding the race for Ecuador's congressional seats, Rafael Correa's party -Alianza PAIS- also has wide popular support, suggesting that this political figure will continue guiding Ecuadorans toward his centralist system.

Update of March 6, 2009

A poll released by Informe Confidencial, conducted from February 28 to March 1, showed these results: Rafael Correa had 47% support, Alvaro Noboa 13%, Lucio Gutierrez 10% and 13% of respondents said they would spoil their ballots.

The poll surveyed 854 people in Quito and Guayaquil, Ecuador's two largest cities. Margin of error is 3,4%.

Update of March 29, 2009

Santiago Pérez Investigaciones y Estudios made a survey on March 21, 2009. According to this poll, Rafael Correa has 52% of voters, Lucio Gutiérrez 12%, Álvaro Noboa 11%, Martha Roldós 8% and 17% would vote blank. Sample size of 1700 Ecuadorians. Margin of error of 3%.

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