Adios Populism! Cleaning Up Ruins Left By Maduro And Kirchner

Falling revenues, dire financial conditions and voter exasperation have curbed populist-socialist power in Venezuela and Argentina. The opponents have their work cut out for them.

Maduro and Kirchner at a 2013 summit of South American leaders.
Maduro and Kirchner at a 2013 summit of South American leaders.
Danilo Arbilla


BOGOTÁ â€" The recent triumph of the Venezuelan opposition in parliamentary elections was good news. Better still was the voting public's resounding rebuke of the ruling system and the likes of President Nicolás Maduro, parliamentary Speaker Diosdado Cabello â€" a man of highly dubious reputation â€" and Tibisay Lucena, a loyalist appointed head of the electoral authority.

Other news that has received less attention is the continued drop in the price of Venezuelan crude, which fell last week to just over $34 a barrel. But these two bits of news are related.

You can blame Maduro for many things, but perhaps his worst feat was prompting nostalgia for his predecessor, the late Hugo Chávez, through his own mismanagement skills that have led to the country's deterioration. Not that Chavez was really any better. He wouldn't have gotten much farther than Maduro with current oil prices, and without oil prices having hovered around $120 to $130 a barrel during his time in office.

With that much cash, you can buy almost anything, even charisma. You can buy arms and warships from Spain and the United States, negotiate favorable business terms for companies with the friendly Lula government in Brazil, sign big deals with China, Iran and Russia â€" whose scope and consequences have yet to be fully revealed â€" provide cheap oil to needy Central American states or pick up the tab for dysfunctional companies, from Costa Rica to Uruguay.

At $38 a barrel, Chávez and Maduro would likely be in the same predicament. So the terrible legacy Venezuelans face today is bequeathed by two presidents, not one, and a system they installed. That system remains in power, even after the recent election defeat.

The opposition now has an arduous path ahead and must remain united in order to progress. Chavismo is not overcome, only badly injured. It is ensconced in its power den, sharpening its claws. In this setting, the opposition must maintain the unity that brought it to victory.

Hanging on

Generally, the populist and authoritarian regimes that call themselves progressive are loathe to leave power. That's in keeping with their doctrine, but also because they fear returning to the bottom of the heap or being held to account.

The conduct of outgoing Argentine President Cristina Fernández de Kirchner is a perfect example. To begin with, she has thwarted the transition of the incoming government, denying it critical administrative information. Incoming President Mauricio Macri doesn't know what he'll find once he takes office. And in recent weeks, Kirchner has rushed to appoint some 20 ambassadors and hundreds of civil servants, and run up debts the new government must pay in coming months. She even refused to participate in the traditional handover ceremony in the presidential palace.

It is an almost ridiculous attitude that may corroborate popular hearsay about Kirchner's mental health. Meanwhile, her supporters are urging resistance, seeking a remedy for their falling numbers in zealotry.

Like her ideological peers in the region, Kirchner is finding it hard to step down. This lot won't leave before they have trashed the place! And that, after years of failing to make good use of the enormous revenues from a unique period of high demand for their export commodities. They could have invested the money â€" instead of spending it to win political votes, feed their egos and finance extravagant social programs with eminently electoral motives. Expect also an increasing number of revelations about leaders, senior politicians, their partisans and relatives personally enriching themselves.

The pseudo-progressive ideology is on its way out because the cash ran dry and people are exasperated. But make no mistake, they are not giving up. They will bide their time, hoping people have short memories and will be disoriented by their day-to-day problems. And then, right on time, they will resume their perennial discourse of bombast and bleeding hearts.

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Debt Trap: Why South Korean Economics Explains Squid Game

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.

In the Netflix series, losers of the game face death

Yip Wing Sum


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

Simon Shin/SOPA Images/ZUMA

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.

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