Argentina's economic reforms hold out hope

I RECENTLY visited Buenos Aires for the first time in five years. I noted that the inflation rate was broadcast on TV news daily, indicating high interest in the topic.

At that time, it was running at about 20 per cent per month but coming down. Of course, Argentina has struggled with inflation for a long time. When I was investing in the country in 1989 and 1990, inflation was running at 2,000 to 3,000 per cent per year.

You can imagine how difficult it was to analyse companies on an earnings basis with inflation at the crazy rate. Price earnings (P/E) ratios did not mean anything since the “E” was meaningless. So, we relied on assessing the assets of the companies on a US dollar basis.

Argentina was once one of the richest countries in the world, and Argentinians thus found it difficult to deal with the realities of a lower-growth economic environment. That, combined with the Peronista populist political orientation, resulted in one government after another printing money to satisfy the people’s aspirations with handout…