Commodity prices and Kirchner

If Argentina would have employed responsible monetary policy (not spending reserves to service debt, hedging inflationary risk against public spending, and not completely cowtowing to unions with 18% wage increases), today's extremely high farm commodity prices would be something to celebrate in the Cono Sur. However, the fact that grain and soybean oil prices (leading to 9% 2003-esque GDP growth) are going gangbusters is dampened by private inflation estimates of 30%.

Controlling inflation would have been relatively simple over the last couple years, thus preparing Argentines for the cyclical return of commodity revenues. Unfortunately, this type of growth does not create many opportunities for economic development. What is does do is provide capital for public works projects, currency stability (although 4:1 peso:USD is beneficial for exports) and the chance to return to international capital markets for additional sustainable financing.

Things are looking good for the the Argentine economy overall. However, the fact that a classic scenario of export-based inflationary growth is possible at this point shows the ineptitude of the federal government over the past 5 years.