ALCORTA — Walter Canzani’s farm is in one of the most fertile zones of Argentina’s Pampas region. Still a proud gaucho (cowboy), this son of Italian immigrants knows, however, that the cows that made Argentina’s beef the most famous in the world are no longer the big money-maker.
Although Canzani still keeps some 50 heifers in his pastures, these days he's focused more and more on an enormous field of soy, the crop which the late-president Nestor Kirchner used to lift the country out of crisis in 2001. Now Kirchner's widow and current president Cristina Fernandez de Kirchner has pushed measures to keep farmers cultivating soy as a response to the more recent economic slump and currency shock.
In 1978, when Walter was 10 years old, he inherited 48 hectares of land beside a rare asphalted road that cut through the plains of the Pampas, in central Argentina. “In the middle of the 1980s, people began to see the potential of soy,” he recalls, speaking under the shadow of the porch that surrounds his house. “But the real boom came in 2000.”
In 1992, one ton of this produce — used for food, animal feed, and fuel — was priced on the Chicago stock market at $180 dollars. By 2004, pushed by Asian demand, soy climbed to $407.
So, the farmers began to enclose their fields with electric fences so that the herds of Aberdeen Angus, which had previously been allowed to roam freely, couldn’t graze on this new farming gold. Canzani, who prefers cattle farming to tillage, gave in and did the same, still completely unaware that he already had an invisible partner in this new enterprise.
The Kirchner family came to power in 2003, with a center-left proposition that was quickly revealed as classic Peronism: state intervention on the economy, protective tariffs to strengthen industry and taxes on farmland. Nestor Kirchner imposed export taxes on soy that reached 35%. Given that Argentina had become the third biggest producer in the world after the United States and Brazil, this meant an important flux of capital was secured. With this money, the family financed big social plans for the lower class and incentives for industry, but while employment rose, the cost of living soared.
The farmers in the Pampas were forced to shoulder the new tax burden, a mechanism that had spurred national development from the 19th century onwards, creating a certain proud resignation that they must help fuel the recovery.
Beginning of the end
But by 2006, the inflation — increasing at rate of more than 20% annually — hit the food industry. When it came to the treasured beef output, Nestor Kirchner feared a revolt. He tried to keep the prices down, blocking exports almost completely, justifying the decision by saying Argentina needed to feed its own first.
For the country’s famous gaucho meat, this was the beginning of the decline. In 2005, Argentina was still the third biggest exporter in the world, but by 2012 it had fallen to the 10th place, outstripped by neighboring Uruguay and Paraguay. It’s worth noting here that international demand for Argentine beef never diminished, even if the export levels did.
“There isn’t any hope that the situation will get better any time soon,” says Walter, as he pumps water by hand from his well. “The smaller farmers are unhappy with the fields and they largely remain in the stables.”
After the state bankruptcy in 2001 and an agricultural protest in 2008, which was the most difficult moment since either Kirchner was elected, Argentina in 2014 is once again a country with a fundamentally unstable economy.
Years of official statistics that have been sugar-coated, from deficits in foreign trade to the budgets of state-owned businesses have killed any remaining optimism for GDP growth and tax revenue.
Both the government and the people have been so overwhelmed by the urgency to acquire solid assets that they still anchored everything that had become volatile. With international debt from the markets excluded after the default of a decade ago, Buenos Aires has returned, once again, to the Pampas, accusing the farmers of “exploitation” and ordering them to to open their businesses and increase exports.
“This would never have happened with meat,” says Canzani. "Because when a cow is ready, it has to be killed and butchered, while soy can wait in storage until the storm has passed.”
But Canzani's stainless-steel storage tank currently sits empty, because smaller farmers like him sell their crops as soon as they can. For all their risk and sweat, an Argentine gaucho still earns less than an average office worker.
Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.
SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.
The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.
It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.
Seoul housing prices top London and New York
In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.
According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.
Average home loans are equivalent to 270% of annual income.
One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.
According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.
Playing the stock market
At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.
A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."
In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.
42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s
Game of survival
In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.
But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.
This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.
- Death & Debt: More French Heirs Renounce Succession Of ... ›
- The Ancient Art Of Debt Relief, A Brief History - Worldcrunch ›
- South Korea Owes Iran Billions But Won't Cough Up The Cash ... ›