Extravagant people have always attracted attention. The histrionic has always been attractive. But with the emergence of social networks and digital journalism, the anecdotal has found a vantage point that it never had before and that catapults all kinds of characters who previously would have been the laughing stock of people, the brother-in-law of a lifetime. It would not have greater relevance if it were not for the fact that some, champions of a new populism, can access the highest levels of political power. Donald Trump in the United States, Jair Bolsonario in Brazil, Rodrigo Duterte in the Philippines… and Javier Milei in Argentina.
Everyone assumed that he was going to sweep the polls last Sunday. That his anti-system speech was going to convince a population whose purchasing power is falling at breakneck speed due to inflation that exceeds 100%. Argentines demand a magic potion for the chronic illness they suffer from, and Milei is their shaman. The most skeptical only predicted that his main opponent, the Peronist Sergio Massa, would at most achieve the possibility of contesting a second round. However, the polls have brought a resounding surprise.
For this reason, today we put the international focus on Argentina, on how we accept forecasts that are nothing more than a tool that increasingly fails.
These are the three topics we will address.
These are the three topics we will address today:
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The Milei bubble deflates in Argentina
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China continues to shape its worldview
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The Malaysian project that reflects the Chinese brick problem
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Argentina
The Milei bubble deflates
That inflation skyrockets and the peso is worth less and less, since we close the central bank and adopt the dollar as currency. That State institutions are expensive and seem inefficient, since we get rid of a good handful of ministries. That crime is increasing, largely as a consequence of the horrible direction of the economy, since we legalize the possession of weapons so that citizens can do their own ‘cleanup’ in the style of ‘The Purge’. Maybe we even save on the Police this way.
The solutions that the anarcho-capitalist Milei offers for very complex problems are as simple as they are visceral, they are destined to provoke the applause of the angry masses, but they do not offer any certainty that they will work. Not even that they can be carried out. It doesn’t matter, because that’s how 21st century populism works, regardless of its ideology.
Trump demonstrated it well with an example from which reliable conclusions can already be drawn: if China beats us in the commercial field, we impose tariffs to benefit local producers. The result has been a substantial increase in the Chinese trade surplus, just the opposite of what the former president was looking for, and no real benefit for American companies. The only thing he has achieved is that consumers pay more for the same thing.
As if that were not enough, the sanctions it approved, especially in the technological field, have made China launch itself into developing its own technology to gain self-sufficiency and for its companies to compete with Western counterparts. That confrontation with the rival superpower gave Trump many votes, but those who offered him their trust at the polls have been harmed.
In any case, these headless initiatives captivate the press. What better than a presidential candidate saying “if I have to choose between the State and the mafia, I’ll choose the mafia” or “the streets and justice could be private,” as Milei said. They are resounding phrases that are amplified on social networks and polarize society. Maybe that’s why they give the impression of having more support than they really get. Fortunately, it seems that the population is still more sensible and ends up ousting Trump or Bolsonaro from power.
In the case of Milei, the forecasts and polls have taken a hit, as he ended up losing to Massa. Some claim that she “has staged a comeback”, but the truth is that she has been imaginary. She has risen only if the smoke – ‘hype’ they say in English – that she has raised prematurely is considered real.
It is true that Milei can still beat Massa in the second round on the 19th and reach the Casa Rosada, but the road is not going to be rosy. The problem is that his rival does not guarantee Argentina’s success either. Quite the contrary. Massa is not only considered the worst Minister of Economy in the country, but he belongs to the party that has led the country to ruin and is incapable of getting it out of it. That is the true Argentine drama: having to choose between bad and worse without knowing who is which.
All of this leads to an unpleasant conclusion: perhaps Argentina’s problem is the Argentinians. Perhaps we should begin to conceive that there are countries without a solution. On many occasions, citizens criticize their politicians – Spain is a good example – when in reality they are a true reflection of those who populate the country. But, of course, self-criticism is always much more unpleasant than blaming someone and feeling blameless.
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The new Silk Road
China continues to shape its worldview
When Xi Jinping came to power in China, many of us thought that he would continue to deepen the reforms that had been opening the country to the world for three decades. That the freedoms that began to appear in 2008, with the Olympic Games, would extend to different areas. But we got confused. Xi began his first term with an anti-corruption campaign to get rid of his political adversaries, and since then he has clenched his fist and opened the door to becoming president for life.
But this is what he has done on the national level. For the world he came with an even more ambitious plan: to structure it in an alternative way to that of the traditional colonizing powers. His great project aims to revive the Silk Road and take it to all continents through ‘a Belt and Road’ that will serve to increase its economic influence over the developing world and translate it into political influence. All through a web of agreements for the construction of infrastructure and the promotion of commercial relations.
Last week, as bombs rained down on Gaza, an important meeting in Beijing went unnoticed in the West. But it was possibly more relevant in the formation of a new world order than the reactivation of the Israeli-Palestinian conflict. Because 23 heads of state attended the event organized by Xi to start the second decade of this project that, like all others, has lights and shadows.
It is evident that, on the one hand, it is serving to develop countries in Asia and Africa, above all. But it is also true that, on the other hand, it is creating a mountain of debt that can lead to the submission of national sovereignty. It has happened, for example, in Sri Lanka. Because China finances the projects and imposes that its companies carry them out, often even with their own labor.
Thus, countries like Italy have turned around after having enthusiastically received Xi’s initiative, which is beginning to be a reflection of the growing bipolarization of the world: the new leaders of the axis of evil have met in Beijing, from Vladimir Putin to the Taliban. Among the most democratic was the Hungarian Prime Minister Viktor Orbán, a good example of the existing level. Countries like Portugal and Switzerland, which did attend in 2019, were absent last week, reflecting that the New Silk Road may end up becoming the Route of Authoritarianism.
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Real estate crisis
The Malaysian project that reflects the Chinese brick problem
Forest City was going to be a dream development. The example that a Chinese construction company, Country Garden, could develop gigantic luxury projects very far from its border. Specifically, in Johor Bahru, a town in Malaysia a stone’s throw from Singapore. It was marketed as a magnet for rich Chinese who don’t know where to put their dirty money and are looking for residence outside the Asian giant, and it promised to house up to 700,000 people in a parallel city with all the services for what, de facto, was a Chinese colony. in Southeast Asia.
That was the plan, in which the second largest construction company in the country, surpassed only by Evergrande, was going to invest no less than 100,000 million dollars. In the seven years that have passed since the approval of the project, it has disbursed almost 4.5 billion, but what it has raised so far is completely empty. And there are well-founded suspicions that the rest, which was to be completed by 2035, will end up remaining an off-plan utopia.
In the end, Forest City has become a reflection of the problems suffered by the brick sector in China, plagued by companies that have created a pyramid system in which the payments of some financed the acquisition of land for the next, and not the construction of their houses. In China, housing is paid in advance, when there is still only one plot of land, and everything is fine if prices continue to grow and demand remains strong. But the pandemic ruined everything and made the cracks in the system come to light.
Don’t worry. China is not the United States, nor is Country Garden Lehman Brothers. Even though it has a debt of 11 billion dollars. The fact that the second world power is an island in the financial field, with institutions barely connected to the rest of the world and peculiar rules, guarantees that the effects of this crisis are limited to the national territory, and that international contagion is negligible. . So, in the event that the Chinese real estate bubble bursts, which remains to be seen, it would not cause a tsunami similar to that of 2008.
Is all for today. I hope I have explained well some of what is happening out there. If you are signed up, you will receive this newsletter every Wednesday in your email. And, if you like it, it will be very helpful if you share it and recommend it to your friends.
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