- Published on Tuesday, 07 May 2013 12:36
by Nick Giambruno, Editor
Recently, an interesting video was released that has gone viral in Argentina. It shows the country's top economic official, Hernan Lorenzino, being asked some simple questions on inflation. A sensitive topic for a country that has price and capital controls.
According to independent observers and Argentines themselves, the official government inflation statistics are obviously cooked. It is believed that accurate inflation rates are about double the official numbers.
There is also a wide gap between the "official" exchange rate, which is around 5 pesos per US dollar, and the unofficial black market rate you will get on the street. That is now approaching 10 pesos per dollar, a level nearly double than that of a year ago.
The Economy Minister Lorenzino hilariously dodges the reporter's straightforward questions on these statistics. The conversation is summarized below.
"I have a very simple question for you, which seems very complicated these days: How much is Argentine inflation at this moment?" the female interviewer asked.
"Official Argentina statistics register monthly inflation rate. That's the only possible inflation rate. The only public office with technical ability to measure inflation is the National Institute of Statistics," the minister responded in Spanish.
"But, how much is it?" insisted the reporter.
Looking increasingly uncomfortable, Mr. Lorenzino said, "I think the cumulative inflation over the last 12 months is 10.2%. I might be off by a decimal."
The journalist then asks "The IMF in December said that it will impose sanctions for flawed (inflation) statistics that you are giving. What are you going to do about that?"
"Look… I'll repeat to you again. I think that, eh, it's a… I don't know, I don't know. Can we turn off the camera? I want to leave," Mr. Lorenzino said.
You can see the video here (starts at 0:47). It is in Spanish and there are no subtitles, though you don't have to speak Spanish to see how uncomfortable he was at the end. The incident quickly went viral on Twitter with the hashtag #MeQuieroIr (I want to leave).
Hernan Lorenzino's counterparts in the US are not that different. They are just more effective liars when it comes to official statistics. Anyone in the US who has been to the grocery store can see the disconnect between the actual inflation rate and the "official" inflation rate.
The whole episode somewhat reminds me of when Ron Paul asked a series of questions on whether gold is in fact money that made Ben Bernanke clearly uncomfortable.
After being repeatedly burned, most Argentines have already learned the lesson not to trust people like Mr. Lorenzino with information that could be relevant in making decisions related to their prosperity.
Americans and anyone else paying attention would be wise to learn this lesson, too. Developing the options to internationalize does not require you to leave your home country immediately, and will help you put your future prosperity back in your hands and out of the hands of crooks like Mr. Lorenzino and Mr. Bernanke.
Lastly, I would like to remind you of the "Best of the Web" section on the International Man website. It contains a veritable treasure trove of resources that are relevant to internationalization and will be updated constantly. If you have a resource that you think we are missing please let us know here.
Recent International Man Articles
Democracy or Ineptocracy? Protect Yourself Before It's Too Late– by Jeff Thomas
Anyone who perceives himself to be a net producer will understandably bristle at the concept that he may well be living in an ineptocracy.
Chinese Stocks: 2013 Forecast – by Gordon G. Chang, WMA
Can China’s equity markets sustain the impressive rally? The betting, not surprisingly, is that they will chalk up an impressive year as they build upon momentum. Yet there are three principal concerns.
What You Need to Know This Week
IRS Goes After Caribbean Bank with No US Presence
The US government won court approval for a summons on Wells Fargo, which maintains correspondent accounts for FirstCaribbean International Bank (FCIB). FCIB is a Barbados-based bank with no operations or offices in the US. The IRS has said it will pursue banks suspected of holding unreported US assets whether or not those banks have offices on US soil. The US government believes that the summons will force Wells Fargo to turn over account information regarding FCIB's American clients. Wells Fargo would have served as a conduit for transfers to and from FCIB accounts to US accounts. The (so-called) Patriot Act requires correspondent banks to establish procedures to detect and report known or suspected "money laundering activity."
Bermuda to Sign FATCA Agreements with US/UK
After the final documents are signed, the USA and the UK will receive financial information on an automatic basis directly from institutions in Bermuda.
Swiss Banker Arrested in US on Vacation
The arrest has revived fears that Swiss bankers could be arrested if they travel to the US and are suspected of helping Americans hide money in offshore accounts. Swiss bankers have been modifying their travel plans to avoid the risk of arrest or extradition to the US.
Mexico Set to Loosens Restrictions on Foreigners Buying Land
Longstanding restrictions on foreigners owning real estate near Mexico's coasts and borders were set to be loosened after a bill was passed in the Mexican Congress. Foreigners who want to buy beach front properties have had to use real estate trusts or Mexican front companies and were not able to take direct title of the real estate. The extensive paperwork and not being able to take title has deterred many potential foreign buyers.
French Government Blocks Sale of Startup
Yahoo had been looking to acquire a 75% stake in the French video-sharing platform Dailymotion. The French government intervened to stop the, objecting to its being bought by a foreign company. One commentator states:
The French tech community is left reeling. A few months ago, the government instituted a two-third tax on capital gain that left many would-be founders thinking "Why bother?". Investment plummeted, entrepreneurs rebelled, and the government eventually canceled the tax. It spent months trying to regain the trust of the business community, indispensible to the country's economic recovery. Back to square one.
Singapore Banks Scrutinizing Account Holders Amid New Law
Singapore is the world's 4th largest offshore financial center. With Western governments cracking down on tax cheats, Singapore is taking action to forestall the foreign pressure. Starting July 1st, 2013 all financial institutions in Singapore must identify and possibly close accounts they suspect hold proceeds of tax evasion. Handling the proceeds of tax crimes will become a criminal offense under changes to anti-money laundering law. The new rules fall in line with new global standards that treat tax crimes as a money-laundering offense. Clients who use complex corporate structures and those who have no other business or personal interests in Singapore will raise red flags. Previously, banks in Singapore never had a legal obligation to report on tax evaders, unlike in Hong Kong.
Rand Paul Not Backing Down on FATCA Fight
For over a year, Rand Paul has held up passage of tax treaties with Hungary, Luxembourg, and Switzerland on privacy concerns. Though the US has signed a FATCA agreement with Switzerland, it cannot be implemented until the tax treaty that Paul is blocking is passed. Paul believes that the treaties would allow the government to gather information about people without evidence that they were doing anything illegal. Paul's holding up of the treaties could leave a precedent, making other countries hesitant to enter into information sharing agreements with the US.
Popular Discussions on the Forums
*Must be logged into the IM network to access the IM forums
Top Internationalization Resources
*Click here to see the “Best of the Web” section on the IM site for many more resources.
Swiss P.O. Box
Information regarding setting up post office boxes in Switzerland.
Relocating to Switzerland
Useful information regarding taxes, real estate, and residency for those considering relocating to Switzerland.
The Best Countries to Retire Abroad
AARP ranks and describes some of the best countries in the world to retire.
Thought of the Week
"The Boston bombing provided the opportunity for the government to turn what should have been a police investigation into a military-style occupation of an American city. This unprecedented move should frighten us as much or more than the attack itself."
Sign-up here to join the International Man community for free and get the IM Communiqué delivered to your inbox.
International Man delivers the most important news and top resources on the internet regarding the world's last frontiers, internationalizing your assets, and diversifying your political risk, for new and experienced freedom-seekers, investors, adventurers, speculators and expatriates.