The Rio 2016 games will be a disaster for Brazil, and so was the World Cup

Despite majorf43342b886d89f64b6d92581c183775c concerns heading into the tournament, most observers concluded that, apart from the 7-1 semifinal disaster against Germany, the 2014 World Cup in Brazil proved to be a success. At least in the sense that the games all started on time, and the visitors and media were able to make it all the games without incident. Nevertheless, much like the Brazilian national team’s by the skin of their teeth journey to the semifinals of that tournament, the relative success of the World Cup and the fact that, in the end, Brazil will likely pull of the Rio 2016 Olympic Games smoothly, has masked serious problems with the way Brazil had prepared for the two mega-events. And even if it doesn’t end with a spectacular collapse like defeat to Germany, even if the games come off well for those that compete and attend them, they, like the World Cup, will be a disaster on par with the 7-1 loss.

The important starting point when judging mega-events like the World Cup or Olympics is that they are always a massive waste of money. The general economic consensus indicates that whatever benefit a city or country gets from the event is massively outweighed by the costs of preparing for it. This is particularly acute with the Olympics, where it’s necessary to have venues available for sports that might not even be popular in the country hosting the games (i.e. baseball stadiums in Greece). The one argument in favor of hosting a World Cup or Olympics in spite of this fact is that, while the event is not worth the money in strict monetary terms, hosting a prestige event that will draw in lots of foreigners can help cities overcome bottlenecks to push through necessary infrastructure projects that might otherwise get bogged down. Accordingly, while it might be a waste to build that giant new soccer stadium, at least you’ll finally be able to overcome the NIMBYs and get that new public transit line built.

To a certain degree, this is what happened
with the 2012 London Olympics. It served as a catalyst to redevelop an underdeveloped part of east London more quickly than would have happened otherwise. It’s still unclear how beneficial this actually was compared to the baseline, but it’s not a ridiculous idea on its face. With its diffuse geographic nature, the benefits of the World Cup were never going to be easy to parse, but in a soccer-mad country like Brazil, having a handful of new or renovated stadiums around the country didn’t seem like totally ridiculous waste of money, especially since whatever money the Brazilian government spent was supposed to be spent on infrastructure improvements and not on the stadiums themselves. The Rio games, on the other hand, were billed as a catalyst for a massive improvement opportunity for the city.

Juliana Barbassa’s fantastic new book, Dancing with the Devil in the City of God: Rio de Janeiro on the Brink casts into relief Rio’s failure, and Brazil’s failure in general, to achieve even this modicum of success. Written in the first person and full of personal reflections about her relationship with the city of her childhood upon moving back as an adult, Dancing with the Devil’s reporting focuses on the changes occurring in Rio beginning around the time Brazil won both the World Cup and Olympic Games. Throughout the book, Barbassa draws the reader back to the failures in governance that force huge portions of the population to live in the crossfire of gang and police violence, often at risk of losing their homes, while raw sewage runs through the streets of their neighborhoods.

Much of the early part of the book focuses on Rio’s sprawling favelas, within which live SOME percent of the city’s 12 million residents. The most affecting part of the book deals with the invasion of Vila Cruzeiro, a favela in the northern part of the city which served, along with the neighboring Compleixo do Alemão, as a locus for the most violent criminal gangs in Rio. The gangs inside the favela were so well fortified and so well armed, that the Brazilian Navy had to be brought in to provide support to the police. Barbassa details the harrowing military operation that eventually brought both Vila Cruzeiro and the Compleixo do Alemão under police control under the mandate of the Pacifying Police Units (Unidades de Polícia Pacificadora, UPP). This was treated as a major triumph by the police and government in Rio, but, in Barbassa’s words, it was reminiscent of “George W. Bush’s “Mission Accomplished” speech in 2003, when he made an action figure landing aboard an aircraft carrier and declared” victory.

While the reduction in violence, in and of itself, represented a dramatic improvement in the quality of life for the favela dwellers, the improvement of government services was halting and uneven. While the Compleixo do Alemão was supposed to be administered by the specially-trained UPP officers, a lack of trained officers meant that the military remained for several years instead. The same issues of police violence and drug trafficking, with it associated criminal violence remained, although diminished and changed. Recently, it bubbled back to the surface as a national issue when Rio police were caught on video committing what were, in effect, executions. In early October, Mac Margolis wrote about how the extra-official slayings threaten the real gains achieved in the pacified zones. He cited the fact that there are not enough trained UPP officers to work all of the necessary posts, leaving them to other officers more accustomed to the Brazilian police forces’ “shoot first, ask questions later” mentality summed up so well in the common Brazilian phrase bandido bon é bandido morto (a good criminal is a dead criminal). In fact, despite the high expectations generated by the UPPs, the murder rate in Brazil has actually risen in recent years, focused heavily on the country’s poorest urban residents.

Later on, Barbassa travels to find the source of the Rio Carioca, whose name gives the residents of Rio their demonym. Until the 20th Century, the river was the main water source for the city, but as Barbassa describes, is now more easily identified with one’s nose than one’s eyes. The section running through the heart of the city is mostly paved over, and where it’s exposed, has concrete banks. As such, Cariocas “could be forgiven for assuming that his gray, dead discharge is part of the wastewater treatment system, and not the stream born less than three miles away at the feet of Cristo, among granite boulders and lush forests.” Of course, upon arriving at its source, where there “was something that looked and smelled like a mountain creek,” Barbassa hardly has to look more than a few hundred feet to see “PVC tubing snaked down the hillsides, each contributing one home’s worth of waste to the stream.”

However, it is not not just the poor, lacking any other option, who end up just dumping their waste into whatever waterway will take it away from their homes. In the rapidly developing western part of the city, where much of the Olympic infrastructure is under construction, newly built apartment complexes catering to upper middle and upper class Cariocas, often dispatch their wastewater directly into the marshes nearby. Unlike favela dwellers, these apartments don’t dispatch their wastewater wherever they can because they lack other options. Rather, it is easier and cheaper for developers to build pipes that dump into nearby waterways than to get them linked into the sewage system. And since no one stops them or punishes them if they don’t, there is little downside relative to the cost savings. In a telling anecdote, while accompanying researchers studying the caimans that inhabit that region, Barbassa learns from one of the researchers that they face more danger from sewage-borne diseases in the water than from the caimans themselves.

When Rio won the games in 2010, two important tenets of the preparations were going to be integrating the favelas into the urban fabric of the city, and cleaning up the polluted waterways in and around the city. Integration included linking the favelas to public services like the power grid, water and sewage systems, but also helping link favela dwellers to jobs through improvements to the public transportation system. Virtually none of this has happened. The choice to put the main venues where they did, away from the city center in the suburban frontier, meant that the infrastructure improvements were geared toward the residents middle and upper class residents of that part of the city, meaning highways. Transportation within the city center has barely improved–the World Cup was supposed to contribute to this as well–and new highways do little to link the urban poor to the new growth center miles away. There were some plans drafted to integrate the favelas into Rio’s public service network, many of which were praised by urban design experts for their forward thinking. However, Barbassa details how most of these were quietly tabled, and in a disturbing number of cases, residents were instead informed that their communities would be destroyed.

In the end, little was done to integrate the favelas into the rest of the urban fabric. The omnipresent smell of human feces Barbassa describes in her visits to those communities remains. So does the threat that in bad weather, whatever makeshift sewage system does exist will be overwhelmed and people will find their homes flooded with sewage. The upshot of this is that the water pollution in Rio remains as bad as ever. A report by the AP in July, based on a study they commissioned, showed that the water in the areas of the city designated for various outdoor water events, such as long distance swimming and sailing, was so polluted with fecal coliforms and other bacteria that it poses a serious health risk to the athletes, including in the water just off Rio’s famous Copacabana Beach. Despite this, just a couple of weeks ago, the organizers of Rio 2016 announced that there will not be any testing of the waters at the Games. A breathtaking decision to simply ignore the problem.

The Olympics, even with the extra attention from the World Cup, was never going to be enough impetus to fix all the problems affecting urban Brazil. However, from the beginning, Brazilian politicians talked about the positive legacy the events would have for the country. The World Cup came off despite the concerns in no small part because of Brazilians’ ability to improvise and make due with adverse situations (a skill called jetiinho in Brazil), and it’s not ridiculous to imagine a similar thing occurring next summer with the Olympics. However, simply pulling off the events without embarrassing the country cannot be the point. When Brazil won both events in quick succession at the end of the last decade, President Lula declared that, “All those people who thought we had no ability to govern this country will now learn that we can host the Olympics.”

The World Cup and Olympics were supposed to leave a legacy long after the athletes went home and the cameras were turned off. And yet, sixteen months after the end of the World Cup, and ten months out from the opening ceremonies of the Olympics, and it’s difficult to see how that legacy will be a positive one. Crime may have been contained such that tourists in the country for a few weeks wouldn’t perceive it as an issue. Yet, just miles away, police and drug traffickers wage open war in the favelas, with police summarily killing “criminals” and the traffickers committing heinous acts of retribution. Brazil’s government may be capable of ensuring that all the venues are completed on time, but at the cost of spending money meant for public works projects like infrastructure improvements, such cleaning up the filthy waters around Rio de Janeiro. Brazil will remain a country without adequate infrastructure, with one of the highest murder rates in the world, where a significant portion of the residents of its richest cities have raw sewage running through their neighborhoods and whose children are constantly at risk of being struck by a stray bullet.

Brazil may succeed in pulling off the Olympics as well as it did the World Cup; sufficient so that everyone could get to the games on time and without incident. But Brazil’s Olympics will still be a disaster, just like the World Cup was. Because if you can’t point to anything useful the games helped facilitate, it becomes impossible to even justify them as a means to an end; breaking down obstacles impeding necessary improvements. Instead, Brazil is left having spent billions of dollars building stadiums–despite pledges not to spend public money on them–while millions of people living in its biggest, richest cities still live without access to basic services and the rich and poor alike flush their toilets straight into the water they live along. Brazil’s World Cup and Olympics didn’t just cost the money they spent building the venues, it also cost all the money that could have been spent improving the lives of Brazilians instead.

No matter how nice the games look on TV, they have been an unmitigated disaster.

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Losing the war he invented

Last night, I floated on Twitter a question about how many long Nicolás Maduro can blame Venezuela’s troubles on an economic war waged against him before his supporters come to believe that he’s too weak to succeed in winning it. Obviously this question rests heavily on the assumption that there are a good number of Maduro supporters who believe that Venezuela really is the victim of some sort of vast conspiracy, and not just the predicatble consequences of poor policy decisions over the past 15 years. Recent surveys, however, indicate that one in five Venezuelans still supports Maduro and reporters have to problem finding people to interview in the now-ubiquitous grocery store lines who at least claim to believe his claims, so there is at least a bit of a constituency.

The threat in this propaganda line for Maduro isn’t really in the opposition so much as within the chavista coalition. Few people who support the opposition are likely to believe that the problem is anything other than the government anyway. However, things are different among chavistas who continue to believe that chavismo is a path to prosperity. For these people, the country’s continued economic malaise might not demonstrate the failure of the model so much as show that Maduro is too weak to protect the gains brought by Hugo Chávez. This is exacerbated by the fact that the policies Maduro has selected to fight the economic war–currency and price controls, taking over producers and distributors, etc–will mostly only contribute to the problem, whatever positive optics they might give. If anything, those positive optics (fighting contraband on the border, taking over stores, seizing “hoarded” inventories) might simply cast into starker relief how little those efforts are doing to alleviate the shortages and inflation wracking the Venezuelan economy right now.

So what happens if the loyal chavista base decides that Maduro is too weak to win the war he says he’s fighting? The conspiracy-minded might say that this is the machiavellian plan of some high ranking officials who have allowed–or even encouraged–Maduro to founder while enriching themselves off the distortions, only to swoop in and save the day once the situation starts to risk chavismo’s hold on power. Whether that’s someone’s plan or not, any clear-eyed people close to Maduro must be concerned about what happens if the chavista base ends up in the streets protesting. Considering how openly authoritarian the government has become in recent times, it seems difficult to believe that the opposition would be able to end up in power, at least immediately.

Moving forward while falling behind

The 2014 IMD Competitiveness Ranking was released today and for the big economies of Latin America, the news was not good. Of the seven Latin American countries included in the rankings, only Argentina moved up (from 59 to 58) while Venezuela stayed stable as the least competitive country of the 60 in the rankings. Brazil, Mexico, Colombia, Chile and even current economic star Peru all fell.

Rankings like this have to be taken with a grain of salt. Since it is a relative ranking, a rise or fall in the ranking can be as much a factor of other countries’ performances as anything Chile or Mexico might be doing. Moreover, some factors, like currency fluctuations, can significantly affect a country’s competitiveness yet are not something that governments can completely control.

That said, this should be a worrying data point Latin American governments as it represents a continuation of a decades-long trend of Latin America continuing to fall behind, even when it moves forward. Several of the countries included in the ranking have been actively working to improve their international competitiveness, yet are, according to this methodology, doing so more slowly than elsewhere. If Mexico can pass its most aggressive economic reforms in decades and become relatively less competitive, what are the chances it will ever achieve meaningful catchup-up growth with the developed world?

At the end of World War II, Latin America’s per capita GDP was higher than Japan’s and comparable to Eastern Europe and the Soviet Union. In the decades since, country after country has caught and passed Latin America. To reverse this, Latin America is going to need to consistently be moving up, on rankings like this one.

Aspiring toward an Average Revolution

A Google alert popped up a few minutes ago in my work email with an article from Truth-Out entitled, “FiveThirtyEight Gets it Wrong on Venezuela.” It’s a bit of a slow day at the office, and my curiosity was piqued. “Oh yea?” I thought, “I was actually quite impressed with that FiveThirtyEight piece. Let’s see what this has to say.” As it turned out, it was a piece written by Mark Weisbrot of the CEPR, who has devoted significant ink to defending the Bolivarian Revolution’s increasingly indefensible economic policies over the years.

The main thrust of Weisbrot’s argument is that Dorothy Kronick’s comparisons are unfair (plus some indirect, guilt by association attacks on it by criticizing FiveThirtyEight’s quality). For instance, he argues that it is misleading to judge chavismo‘s economic performance with 1998 as a base year because Chavez did not control PdVSA for the first four years of his presidency and because, until 2004, the opposition was actively trying to destabilize the country and topple the government. The first point is highly dubious; he’s implicitly arguing that without the full control of the state oil company’s finances, chavismo was incapable of growing the economy. The second point is more plausible, but really is only salient in 2003 during the oil workers strike, which had a severely negative impact on the economy that year. In any case, Weisbrot compares Venezuela’s per capita growth from 2004 to 2013 to the rest of the region and finds that Venezuela is actually the 12th best performing economy out of the 20 in the region. He adds that “if we were to place a dollar value on the increases in access to health care, education, and housing, Venezuela’s rank would go up significantly.” He also criticizes Kronick’s comparisons of Venezuela and Bolivia, arguing that much of its better performance is because Bolivia’s exchange rate has been more stable and that it was able to engage in counter-cyclical spending during the Financial Crisis while Venezuela could not as though those were not themselves indicators of poor economic management.

What really stands out in the whole piece are the gymnastics necessary to just make Venezuela’s economic–and to a lesser extent–social achievements under chavismo look even average compared to other Latin American countries. The chavista project purports to be a world-changing ideology that will replace the current capitalist dogma so one would expect its results to be self-evident. Instead, its defenders are left to argue that everyone is wrong, things are great in Venezuela because it achieved the 12th best per capita GDP growth in the region since 2004. ¡Viva la revolución bolivariana!

This is not a small thing either, considering the concurrent decline in freedom and spike in violence in Venezuela during chavismo. People in much of Latin America saw their lives improve materially by the same amount or more during the first decade of the 21st Century and didn’t have to fundamentally reshape the relationship between the citizenry, the state and the governing political party in the process. Chavismo only makes sense as an alternative to the existing paradigms if it is demonstrably better–especially since most other countries don’t have the world’s largest oil reserves to help fund it–and right now, as the IMF projects Venezuela to be the only Latin American country not to grow this year, it requires a herculean task to even argue that it does as well as the average non-revolutionary country.

Too poor to dissent, but not poor enough to revolt

A shocking, but not really all that shocking revelation yesterday from Venezuelan education minister Hector Rodríguez that chavismo does not want its supporters to become too wealthy because then they might turn into escuálidos—a common pejorative term used by chavistas to describe its middle- and upper-class opponents. Over at Caracas Chronicles Gustavo Hernández Acevedo has a good post exploring it from the perspective of the fundamental dissonance between preaching socialism while giving away free washing machines and how the movement now lacks the same charisma as Chávez to rhetorically paper over that problem. Hernández Acevedo is certainly correct but I think he gives chavismo too much credit for its actual devotion to socialism and misses how important the power dynamic Rodríguez is describing is, and the challenge that dynamic poses to chavismo going forward.

However devoted to the socialist cause Hugo Chávez may have been at some point in his life, he and his movement long abandoned any real pretense of building socialism in Venezuela in favor of more traditional Latin American-style corporatist populism. This populism is built on the premise of power and whatever rhetorical justifications it gives itself are little more than window dressings. Populism’s power is built and maintained through cooptation of certain groups—typically large but economically and politically marginalized groups—through policies designed essentially to buy that group’s loyalty. In Venezuela it started in a defensible fashion, with the early misiones at least ostensibly providing services that would improve the long-term productivity of the country, like improving healthcare access and eliminating illiteracy. Over time these morphed into crude giveaways like the washing machines Hernández Acevdo alludes to, but the basic principle behind them was always the same; buy loyalty through small, material improvements to people’s lives, all draped in the rhetoric of socialism.

What Rodríguez’s comments show, beyond a clear contempt for both free choice and the people his movement claims to be helping, is that chavismo is running up against the limit of its own sustainability. From a power perspective, Rodríguez is probably right. Corporatist structures tend to break down as societies become more middle class because middle class interests become more diverse and because middle class citizens tend to care more about transparency and accountability of government rather than just results in their own lives alone. At the same time, however, corporatist structures also tend to break down once the populist government loses its ability to continue improving the lives of its support base.

In Argentina, peronismo had the fortune of being removed from power before it fully ran up against that barrier in the 50s and then was out of power during both the hyperinflation crisis of the 80s and the meltdown of the early 2000s, allowing it to cast blame elsewhere. In Venezuela, however, chavismo remains in power and sits stuck between a metaphorical rock and hard place. It doesn’t want to improve people’s lives too much lest it lose their unwavering support as in Rodríguez’s formulation. But it also has to continue improving their lives on the margin to maintain their continued support a difficult. This balancing act has become all the more difficult now that the state is running out of money to shower on its base and the economy grinds to a halt.

Tales of a stagnant middle-income country and a growing poor country

Yesterday, the S&P downgraded the status of Puerto Rican debt to junk status. This further complicates the major fiscal problems the Puerto Rican government has been facing and could well lead to a death spiral resulting in a default. As it happens, I was in Puerto Rico just a few weeks ago, and while the looming debt problems were not obvious to a tourist, it was fairly easy to notice that the economy has been performing poorly in recent years.The signs that the economy was doing poorly, however, were not lots of people on the streets begging or other obvious signs of abject poverty. Instead, walking through popular tourist spots, there were lots of vacant storefronts and properties near the beach that were for sale and clearly had been for a while. I also cannot remember seeing a crane or other piece of equipment indicative of a major construction project. Compared with my visit to Bolivia in March, 2012, the contrast is rather striking. In Bolivia, everywhere one looked there was new construction, both in the posh neighborhoods in La Paz as well as in the much poorer El Alto suburb and the small Amazon city of Cobija in the Pando department.

El Alto: poor but growing.


 El Alto: poor but growing.

While those are obviously anecdotal observations, it is not coincidental that Bolivia’s economy grew by 5.2 percent that year and in 2013 achieved its fastest year of growth in decades at 6.5 percent while Puerto Rico has not had a year of GDP growth above 1 percent since 2004. Growing economies typically will see lots of new construction as growing aggregate demand requires increasing the supply of productive capacity, sometimes in a nice virtuous circle sort of way (and sometimes not, as in the case of Spain) while stagnant or shrinking economies have the opposite issue.

That said, life is still much better for the average Puerto Rican than the average Bolivian. According to the World Bank, Bolivian per capita GDP at purchasing power parity in 2012 was $4,880 while in Puerto Rico it was over $12,222. So while abject poverty was not obvious in Puerto Rico (though it no doubt exists), it was inescapable in Bolivia even despite its torrid economic growth. Life may be getting harder for Puerto Ricans, while it improves rapidly for many Bolivians, but Puerto Ricans are still materially much better off than Bolivians and will remain so for a while.

A devaluation by any other name would smell as… sweet?

Earlier this week, the Argentine Central Bank (BCRA) unexpectedly allowed the official dollar exchange rate of the peso to depreciate dramatically. On Tuesday, the peso depreciated by 3.4 percent and on Wednesday it fell by a further 12 percent, closing the day at 8 pesos/dollar compared to 6.84 on Monday, a 16.96 percent fall in just two days. Yesterday the peso fell to as low as 8.5 pesos/dollar before the BCRA intervened and brought its value back up to 8.2 pesos/dollar. This morning, Cabinet Chief Jorge Capitanich and Minister of the Economy Axel Kicillof announced that the government would lower the tax for obtaining dollars from 35 percent to 20 percent beginning Monday, a significant loosening of the capital controls that have choked off legal access to dollars to many Argentines and fueled a black market whose exchange rate is nearly 60 percent higher than the official rate.

There are a number of reasons why this happened when it did, but it essentially boils down to the fact that the government could no longer afford to maintain its previous policies. Specifically, Argentina’s currency reserves dropped below $30 billion this month for the first time since 2006 while a $15 billion debt payment looms and, because of a convoluted web of subsidies and frozen prices in the energy sector, the energy deficit could be around $10 billion this year. There is little expectation that there will be any influx of new reserves this year, leaving the Central Bank unable to continue depleting the reserves in an attempt to engineer a series of microdevaluations until the gap between the official dollar and the “blue” dollar was closed, or at least tolerably narrow.

The problem for Argentina is that, while a devaluation was necessary and unavoidable, without accompanying measures to address the forces weakening the peso, it will just be the first of many. The fundamental problem is that the Argentine government is monetizing its fiscal deficit, injecting billions of pesos into the economy when there is no demand for them since the government can’t borrow to cover its deficit. This creates enormous downward pressure on the value of the peso which the government has combatted through a combination of capital controls—limiting access to dollars—and aggressive interventions in foreign exchange markets to prop up the value of the peso by selling its international reserves. It is also highly inflationary, which puts further pressure on the peso as Argentines try to protect the value of their money by converting their pesos to dollars as quickly as possible.  Since the currency controls limit the legal options for Argentines to obtain dollars, the blue, or black market, dollar emerged and, in recent months, has been trading at a value between 50 and 75 percent above the official dollar.

Argentine officials are likely hoping that this week’s devaluation and the loosening of the currency controls next week will bring the official dollar more in line with the blue dollar. Moreover, they also are hoping that a series of price control agreements with the major supermarket chains and the early and quick negotiations over salary increases for the major unions will act as a brake on inflation for the rest of the year. However, as Lucas Llach points out, this is very unlikely as the salary negotiations will likely be in the range of 30 percent—exacerbating a wage/price spiral already in effect—and become the monetary emission shows no sign of slowing. So long as monetary policy remains so expansionary the inflation pressures will remain and the pressure on the peso will remain. This is why, despite the devaluation, the gap between the official and blue dollar remains in the same range it has for the last several months; no one sees this as addressing the root problems and therefore expect further devaluations.

What happens going forward is highly speculative. Some of this speculation is that the suddenness of the measures and the dearth of explanation by the government indicates that the government is planning major changes. This is certainly possible, though what those changes would be is difficult to guess as Kicillof and other prominent policy makers continue to essentially deny the facts on the ground in their public statements, meaning any serious changes would be a major about-face. In the more likely event that these were measures taken in desperation and not as part of a broader economic strategy, things look fairly bleak. The inflationary spiral will continue unabated with the ever-lurking possibility that it will spiral completely out of control as further ad hoc heterodox measures to contain it fail.

At the end of November, I was able to attend at the Inter-American Dialogue a meeting of the Latin America Economies Roundtable (LAER). The general consensus at the meeting, by a number of very intelligent and well-informed people was that Cristina Kirchner’s government could probably muddle through the last two years of her term without a crisis so long as inflation stayed below 25 percent, the deficit didn’t exceed 3 percent of GDP and commodity prices didn’t fall dramatically. According to the Billion Prices Project, year-on-year inflation is above 24 percent so far this year and the budget deficit last year was right at 3 percent. Commodity prices—particularly soy—appear unlikely to fall in the coming year, but the potential for further devaluations could encourage farmers to delay selling their product, putting a severe strain on government revenues, widening the fiscal deficit and feeding into the inflationary loop. In other words, while these are relatively arbitrary conditions, they are useful as rough benchmarks for the stability of the Argentine economy and Argentina is already pushing the upper bounds on them with plenty of factors there to push the country well beyond them.

Argentina may not be on the verge of a crisis yet, but low growth and high inflation seems like a relatively optimistic scenario for the rest of the Kirchner presidency.