When Empires Change Hands

09/28/11 Buenos Aires, Argentina – We got back to Buenos Aires last night. When we got into a cab, we found the driver curious and loquacious.

“You have an accent. Are you French?”

“No…but it’s a good guess. I’ve lived in France for the last 15 years.”

“Oh…I studied French for years. I was the best in my class. But I forgot it.

“My mother was an English teacher. But that was in the ’60s. You know, we’ve had two wars with the English. So, I didn’t want to study English. I decided to study French. And then I forgot it.

“I’m glad you’re not English.”

“No, I’m not English. My family is actually Irish. So, the English are our common enemies. Actually, they’re the common enemies of the French too. But at least in my family we’ve decided to let bygones be bygones.”

“You’re very generous. But we Argentines don’t forget. We hate the English. And the Chileans. And the Americans. And the Albanians, of course. Everybody hates the Albanians. Even the Albanians. It’s the only thing they’re right about.”

“Why the Americans?”

“Because they helped the English in the war.”

“You mean, the Falklands war?”

“Wait a minute. Whose side are you on? I mean the war of the Malvinas…

“We hate the Americans also because they are trying to push everyone around. They’re too big for their britches. But that’s how it works, I guess. I read Arnold Toynbee’s history. Every country tries to push its neighbors around when it can. There will always be a dominant country. And that dominant country will always fall. No country remains dominant forever. They get bigger and bigger. They take over more and more. Then, they go too far. And then they fall and another country takes the dominant position.

“It looks to me as though the US is about to fall. It is pushing too hard and in too many directions. Besides Americans are deep in debt. They can’t afford all they are trying to do. They have soldiers in almost every country in the world. Or, that’s what it seems like. It must cost a fortune. And the US doesn’t have any money.

“Down here we don’t have any money either. But we don’t spend any. No one will lend to us. Because if they lend to us they know we won’t pay it back. We made that pretty clear. So they don’t lend. And we don’t spend. It’s a happy balance. We’re poor. But we look poor. And when you live like a poor person you don’t have to worry about losing your money and ending up poor. You’re already poor.

“Of course, Christina [Kirschner, president of Argentina] tells us that we’re all going to be rich. She says the Argentine economy is working so well that it should be a model for the rest of the world. Maybe she’s right. It’s a model of a bad economy. Completely screwed up by the politicians.

“You know I couldn’t even buy a set of tires for my cab. They didn’t have them. Because they couldn’t import them. Christina owns a tire company. So she didn’t want any competition. She blocked the others from importing tires.

“At least we know our economy is screwed up. The Americans don’t know it. They owe everybody else money. We don’t owe much money. We don’t even mortgage our houses. They want 20% on a house mortgage here. It’s crazy. Better to pay in cash.

“But Americans can get a mortgage for what, 5%? So they borrow a lot. And when you borrow a lot you have less than nothing, if you follow me. I mean, if you don’t borrow anything at least you’re at zero. But the Americans are below zero. Am I right?

“China has the money. And China is smart. And there are a lot of Chinese. So I figure it’s just a matter of time before China replaces the US as the dominant power.

“The trouble is, if you read history you see that these transitions aren’t easy. There is usually a war. The dominant power doesn’t give up without a fight.

“By the way, that’s what WWI and WWII were all about. Germany and England fighting for the dominant position. And you know how many people died? Sixty million. Unbelievable.

“Each time there’s a fight for the top position, in history, the death toll goes up. And when war between China and America breaks out…there could be a billion casualties. I’m not kidding. I hope not. But you have to be realistic.”

Tonight, we’re on our way back to France after spending the weekend up in the mountains of Argentina.

What’s new on the high plains and valleys? Not much. The revolution against us seems to have petered out. You may recall that several of the locals — who rent land from us — decided that they didn’t need to pay. They claimed “indigenous rights.” Their families had been there for a long time. So, they figured they should own the land themselves; they shouldn’t have to pay rent — especially to a foreigner.

True, the local Indians once ‘owned’ the land. But then came the Spanish conquistadores. They stole it from them fair and square. Not only that, the Spanish practically exterminated the original owners. So, it is not at all clear that the present families are really descended from the original tribes.

Yes, they have Indian blood. But so does almost everyone in Northwest Argentina. Besides, even the Indians in the valley at the time of the conquest must have stolen it from some other group. There have been people living here for 10,000 years, at least. Some archeologists think they have been there for 30,000 years.

What is clear is that the property changed hands in the 16th century. Ever since, it has been owned by someone of European origin…your editor being the last in a long line. The resident “indigenous” families — about 25 of them — pay a token rent as evidence of the relationship between owner and renter. The ‘rent’ is only a cow or a sheep…usually of so little value we give it back to them. But it affirms that they are not adverse to our title claim. So it must be respected.

That was the situation when a couple families began an insurrection last year. We realized that there was not much we could do about it. Calling in the police would have sent shock waves through the whole area and probably ended badly. So we began a campaign to improve life for all the people on the farm…and waited.

Then, one of the ringleaders wanted to sell some of his cattle. (The local people actually have more cattle on our land than we do.) But he doesn’t have a loading platform. And we do. So we made a deal. He pays the symbolic rent and signs his contract. We let him use the platform.

As for the others, if they pay the rent, we give them a better bull for breeding. And we offered to help them put water and electricity in their houses. We pay for pipe and for a small battery and solar panel. It is a very rudimentary system, but it makes a big change in the locals’ lives — though perhaps not always for the better. Now they can watch TV.

Anyway, that is how the revolution broke down…and your editor retained his title…at least for now.

Jorge, the farm manager, explained more of the background of the story. We were visiting a beautiful little valley about 2 hours on horseback from the main house, where we now grow grapes and nuts. It is a beautiful spot. There are pastures, corals and abandoned fruit orchards. Irrigation ditches connect them all together; nothing will survive without watering…except the cactus. In one place, there is a wall of cactus trees planted to keep animals in or out, we weren’t sure which. There are also several abandoned houses, where people seem to have lived fairly recently, raising corn and keeping goats. The adobe walls of these houses are still intact. The roofs — of straw covered with mud — are mostly still in place. We wondered why there were no families living in them.

“Oh…this is where we had the last revolt,” Jorge began.

“It was about 10 years ago. There used to be five families living here. They had gotten used to having their own way. And so they refused to pay the rent. They took the previous owner to court…they said he had abandoned the property. They asked the court to give them ownership of it. But the owner got some of the other people to testify in his favor. They said he was still an active owner…and that they had paid their rent. The judge ruled in the owner’s favor. The law is pretty clear. If an owner does what he is supposed to do he keeps his property. If he abandons it, the people living on it can claim it.

“That’s what happened up the valley to the north. The owners moved to Buenos Aires. They just forgot about it. Then, when they came back — it must have been about 20 years later — the local people refused to recognize them as the owners. They went to court and the court ruled that he had abandoned the property. The family kept their house and a few hectares around it. But the rest of the farm went to the local people.

“But here in this valley, the story didn’t end with the court ruling. The families here didn’t honor the court decision. They still refused to pay the rent. So about two years later the owner took them to court. This time the local people were in contempt of court. So, the judge got mad and told them to get off the property. That’s why there isn’t anyone living in the valley anymore.

“The previous owner tried to sell the farm before you came along. But no one would buy it because of the land rights issue. But I guess you didn’t know about the problem…”

Regards,

Bill Bonner
for The Daily Reckoning

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill’s daily reckonings from more than a decade: 1999-2010. 

 

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