By Tyler Durden | From ZeroHedge.com | On February 9th, 2013
A week after Argentina resorted to every failing authoritarian government’s last ditch measure to (briefly) control inflation before runaway prices flood the nation and result in political and social upheaval, namely freezing retail prices – a decision which never has a happy ending, the country is pressing on through the rabbit hole and in the latest stunner of a government decree (which like Venezuela yesterday is merely a harbinger of what is coming everywhere else), has banned advertising in the Argentina’s newspapers in an attempt to weaken what’s left of a private, independent media, and to punish those who don’t comply with the government’s propaganda.
Supermarkets and electronics retailers say Argentina’s government has ordered them to stop advertising in the country’s top newspapers, in a bid to weaken independent media companies as President Cristina Kirchner turns to increasingly unorthodox policies to prevent inflation from derailing an ailing economy.
The order, confirmed by retailers and newspapers but denied by government officials, comes after retail executives say price-control czar Guillermo Moreno pressured them earlier this week to agree to freeze prices for two months. Executives say Mr. Moreno then told them to pull all newspaper sales ads in hopes this would somehow curb inflation. “This was an imposition, not a request. He simply decided that nobody should publish any ads. It’s not sustainable and will be hard to comply with,” said one retail-sector executive.
And yes, a light bulb just went on over the president’s head when he read the word “price-control czar.”
Why is Argentina resorting to this dictatorial measure? Simple – to stifle the independent press for one simple reason – “misreporting” inflation, or at least reporting inflation numbers which are orders of magnitude higher than the official government numbers.
Mrs. Kirchner played down inflation for years, refusing even to say the word in public. But with economists estimating annual inflation at around 26%, she has been calling on consumers to prevent companies from raising prices. A sluggish economy and Mrs. Kirchner’s confrontational political style have also taken a toll on her popularity.
The Buenos Aires Newspaper Editors Association said the order was a reprisal against those who publish independent inflation estimates. “This is another display of how far authoritarianism can go in a context that is dominated by discretional policies and bullying,” the group said in a harshly worded newspaper ad Friday.
The controversy comes as Mrs. Kirchner attempts to implement a three-year-old media law that would overhaul Argentina’s media industry and dismantle media giant Grupo Clarín SA, which publishes Argentina’s bestselling newspaper, Clarín, and runs a profitable cable-TV and Internet network.
“This aims to inflict economic damage on all independent media companies,” Clarín spokesman Martin Etchevers said. “On the one hand, it’s another attempt to weaken media that don’t depend on government money. On the other, it’s an attempt to keep people in the dark about inflation.“
Two birds with one dictatorial decree stone. However, while the motive is quite clear it shows the danger of having a truly independent media, and one which is not aligned with the government’s propaganda: report the truth and we will starve you by banning all your advertising. Ad revenues in the US must be soaring…
Mrs. Kirchner accuses Clarín of using its sway to undermine her government. Clarín officials say the government started targeting it in 2007, when it began reporting that the government was underestimating inflation.
Just as notably, with the witch hunt against anyone whose inflation numbers differ from the government’s official lies, it is likely that the organizers of the Argentinian equivalent of the Billion Dollar Price project would get the death penalty.
In 2011, the government started fining economists for publishing their own inflation estimates. To protect them, a group of opposition legislators began publishing the economists’ monthly inflation estimates anonymously.
What is most ironic is that it is the same US-based IMF who recently punished Argentina for its inflationary misreporting.
The International Monetary Fund has weighed in on the matter and recently censured Argentina over questions around its economic data. The IMF warned that it could eventually expel Argentina from the organization if the matter isn’t resolved.
But perhaps Argentina is not massaging its inflation numbers – perhaps it is merely doing what the US and every other IMF member nation does: ignore those prices which are soaring, and hedonically adjust everything else far lower, to give the general public the impression that the horsemeat lasagna which went up in price… it didn’t really go up in price.
At the end of the day, this like every other idiotic measure taken by a government in its last throes is just to preserve power one more month, or week, or day:
Gabriel Gómez, an economist at the research firm Consultora Ledesma, said the government is imposing short-term price controls and advertising limits ahead of a key mid-term election in October.
“The only thing the government wants now is to decelerate inflation before October,” he said. “Everyone knows that price controls are counterproductive in the long-run, so that’s the only way to understand the logic behind this.”
Top government officials have called on Mrs. Kirchner to amend the constitution so she can seek re-election in 2015. To do so, her coalition would need to win more congressional seats in October.
Or, as is the case everywhere: when the government’s self preservation is the bottom line, screw the people. Alas, that is the case now in every “developed world” nation, whose status quo is clinging on to dear life as the legacy socioeconomic and financial system implodes.
Keep an eye on just how far Kirchner will go to keep her place in power – that will be a useful indicator of what is coming to every banana republic next, and quite soon.
This article was originally posted at: http://www.zerohedge.com/news/2013-02-09/after-freezing-prices-argentina-bans-all-advertising