Don't Cry For Evita

The Daily Reckoning PRESENTS: Eva Peron was a favorite of the poor of Argentina. She had a warm heart, it was said. But like that other great champion of the masses, Che Guevara, Eva realized her greatest glories after she was stone cold dead. Bill Bonner explores…


“One cannot accomplish anything without fanaticism.”

– Eva Peron

One of the strangest of the world improvers to appear in the 20th century was the wife of Argentina’s Juan Peron, Evita, as the “descamisados” – or ‘shirtless ones’ called her.

We went to visit her grave on our recent trip there. It is in the Recoleta cemetery, a short walk from our apartment near the French Embassy. There, you will find a whole city of the dead, laid out in tiny houses of marble or granite, often with statues on the roof, sometimes with glass domes and elaborate carvings. Most of the mausoleums have glass doors. Some of the doors are even open. You can look in at the cobwebs and caskets.

People wander around, down one street, up another – often looking for a family tomb, or if tourists, just looking. It is a huge place, with a thousand stories, some of them chiseled in stone.

“Did your father die?” begins a Marx brothers’ routine.

“We hope so,” Groucho replies. “Because we buried him.”

Here, it is no joke. One of the tombs tells the story of a poor girl who was entombed alive. Cemetery workers found her coffin ajar, and realized the mistake – but too late.

While most inscriptions tell us of the dead, some recount the stories of the living. One father was so grief stricken that he gave away all his fortune and traveled the pampas begging.

“Here it is,” Maria called out to us. After roaming the streets in the ciudad de los muertos (city of the dead) for half an hour, she had finally found the corpse she was looking for, that of Eva Peron.

We had expected more: A fountain maybe, or a giant statue of the woman. Maybe even crowds of poor people, crossing themselves, vowing revenge on the rich and plotting revolution. But the tomb is like any other, only less attractive in many ways…plainer than you’d expect, just gray granite with no particular style or flourish. All that sets it apart from those around it are the flowers – there were several bouquets – along with candles and a few notes. There were a few other people visiting the monument, but they seemed no more interested in it than we were; they were just casually curious.

Eva Peron was a favorite of the poor of Argentina. She had a warm heart, it was said. But like that other great champion of the masses, Che Guevara, Eva realized her greatest glories after she was stone cold dead. That was when the common people really took to her. For that she can thank her embalmer, a man who worked on her corpse like Rembrandt on canvas. You can check for yourself. Eva was pretty enough, but no great beauty, even when she was young, warm flesh.

Still, it seems she had something going for her. She got a tango singer to take her to Buenos Aires when she was only 15, and if she gave herself to him in exchange, as her upper class critics whispered, would that have been so bad? After that, she managed to make something of a career for herself and by 24 was already a popular radio actress. She did most of her real work in the bedroom, went the jealous rumors. All we know is that she must have had talents that don’t show in a public photograph. She managed to get one colonel fall for her and then, at a charity event, she got her hands on another one, Juan Peron, and never let him go.

Juan Peron was then 48 years old. His first wife had died. He has spent his career in the army and greatly admired the way Mussolini had handled Italy, some of which he had seen firsthand during officer training in the 1930s. In 1943, when he met Eva, Peron wanted to do in Argentina what Mussolini had been able to do in Italy – line up the support of the working classes and take control of the government. But, he desperately lacked one thing – the Duce’s charisma and powerful personality. According to most biographers, Peron had no personality at all. On the other hand, he was a calculating, conniving kind of guy.

When he met Eva, he must have realized that she could supply what he lacked. Here was a woman with the gumption to elbow her way through a society crowd so she could sit down to dinner next to him…and then, yes, he hardly had to say a word…she was in his bedroom before his soup got cold. What a woman! And besides, she had the right credentials. She was born poor, and even illegitimate. She had had to make her own way in the world – we won’t dwell on the details – and now could stand before the lumpen as one of their own. Publicly, she could be Evita…the Princess Di of Argentine fascism…the peoples’ princess of the pampas. Privately, she was more than that – she was a tough and determined arriviste.

In 1945, Peron was arrested. While he wobbled and even considered going into exile, Evita kept her nerve. She used the money she had embezzled from an earthquake relief fund and went directly to the unions to rally support, arguing that Peron was the man they needed in the Casa Rosada, Buenos Aires’ equivalent of the White House. By October of that year, she could field 200,000 demonstrators, and forced the authorities to back down. A year later, she helped Peron win a landslide election victory; he was well on his way to realizing his ambition of being an Argentine Mussolini. Later, after Il Duce – and his mistress – were strung up by fickle followers, Peron would amend his ambition, saying that what he really wanted was “a fascism that is careful to avoid all the errors of Mussolini.”

Evita burned hot, but she burned fast. By 1952 she was burned out and burned up. She appeared at Juan Peron’s side for his second inauguration in an open car, held up, like El Cid, by a plaster support under a long fur coat. She was not yet dead then, but almost. Cancer had eaten away at her and the radiation with which doctors had burned her to try to kill the cancer. Between the doctors and the cancer, she was left with not much time. She died seven weeks later, weighing only 80 pounds and only 33 years old, younger than Elvis, the two Kennedys, or Che…but older than Joan of Arc.

She may have died young, but she did not leave a good-looking corpse. The burnished beauty that hundreds of thousands of mourners admired, sobbing into white handkerchiefs…touching her coffin…even kissing it, were not those given to her by God. No they were the handiwork of the mysterious Spaniard who embalmed her.

Doctor Ara was a bit of a miracle worker. Jesus Christ himself only managed to change water into wine, but Dr. Ara all but resurrected Eva’s worn-out corpse. He laid on the waxes, the paint, and the rouge with a touch nearly divine, and somehow transformed the gutter girl into a veritable saint.

If Evita was a humbug and a scalawag, it no longer showed. Bargain basement when she started out, her price had skyrocketed with her ascent to power. By the time she flamed out, she was pure Tiffany’s. Yet, this was a woman who looted the “charitable” foundations that were meant to serve the poor and who helped hundreds of Nazi war criminals escape to the pampas. Peron himself made 1,000 blank passports available to the defeated Germans after the war – again, it was for a price. You see, Eva and Peron were classic world improvers of the better sort – they could be bought.

On June 6, 1947, Evita began a triumphal tour of Europe. It was even called a “Rainbow Tour,” anticipating the great celebrity promenades later in the century. She visited heads of state. She visited Pope Pius XII. She visited her Swiss bank. She even made the cover of Time magazine. It was about that time that Argentina became a refuge for war criminals on the lam. Thus, it was that Juan Peron won reelection in 1951 with money the provenance of which no one was quite sure, but many thought came from the grateful Nazis.

The truth is, Argentina may be a hard place to govern, but for such as they, it has always been a good place to disappear. Debtors, criminals, and political refugees have always run off to the pampas; a few Nazis could hardly make much difference one way or another. And the krauts turned out to have their uses. Later, when the Argentine generals needed to “disappear” others, it is said they turned to squads of professionals, trained and originally organized by those who had disappeared themselves after World War II.

The Perons learned quickly that the masses could be manipulated with vulgar demagoguery. Evita even gave away Christmas presents to the poor, and brought in poor orphans so they could be photographed with her, before they were tossed back onto the streets. But the masses needed to be controlled, too, and that was the hard part. The collapse of commodity prices in the ’30s had made them restless and had initially led them to support Peron. But Mussolini’s economic meddling worked no better on the banks of the Rio Plata than it had on the banks of the Tiber. In 1949, the stock market collapsed and made the mobs restless again. The incomes of the working class fell 30%. And this time, Juan Peron could not pose as an outsider. This time, he was in power; the plebs held him responsible. At first, Evita tried grander gestures to appease them, but then the lace gloves came off. Troublemakers were arrested, and drawing on the talents and training of Argentina’s new immigrants from the Third Reich, many were tortured.

And then, when Evita’s corpse had finally cooled and Juan was thrown out of the Casa Rosada, it was Evita herself who disappeared. The generals were afraid her dust might provide a rallying point for the mobs, so they shipped her casket to Germany, then to Italy, and didn’t return it to Juan until 16 years later. By then, he was living in Madrid and had remarried. His new wife, Isabel, was ambitious, too. When Evita’s coffin was put in the living room, Isabel lay on top of it (some say she lay down inside of it) to draw power from the dried-up corpse.

And what happened to Evita’s Swiss bank account? That disappeared, too. After her death, Juan Duarte, her brother, who had rushed to Switzerland, died suddenly and mysteriously on his return in his apartment in Buenos Aires. Authorities were never able to figure out whether it was murder or suicide, but either way, the money never turned up.

Epilogue: Juan Peron and his new wife returned to Argentina and retook power in 1973. But the poor man died the following year, leaving Isabel, his vice president, to run the country. Naturally, she ran it into the ground and was overthrown by the army in 1976.

Bill Bonner
The Daily Reckoning
May 12, 2006

Editor’s Note: Bill Bonner is the founder and editor of The Daily Reckoning. He is also the author, with Addison Wiggin, of The Wall Street Journal best seller Financial Reckoning Day: Surviving the Soft Depression of the 21st Century (John Wiley & Sons).

In Bonner and Wiggin’s follow-up book, Empire of Debt: The Rise of an Epic Financial Crisis, they wield their sardonic brand of humor to expose the nation for what it really is – an empire built on delusions. Daily Reckoning readers can buy their copy of Empire of Debt at a discount – just click on the link below:

“Now Perhaps Someone Will Listen!”

The price of gold soared last week…and the week before…and the week before. We at The Daily Reckoning saw the bull market coming seven years ago. Readers who bought then are nearing a 200% gain. Those who haven’t bought yet are wondering whether to get in now, or wait for the next correction. We’re wondering, too.

We don’t get many opportunities to gloat, so we have to pretend we deserve them when they come. It is a better species of vanity than pretending that we don’t, and it gives us a suitable soapbox on which to stand while we address the question our dear readers haven’t asked. What do we see ahead for the yellow metal?

How did you guess? Of course, we expect gold to go up. Maybe it will correct in the near-term, but the bull market is far from over, in our opinion. How far will it go? Probably a lot further than anyone thought possible, and with a lot more damage to the world’s financial system than anyone imagines.

Despite the huge increase in the gold price, we see very little in the press or in conversation that makes us think the public is wising up. If asked about it, commentators and analysts say, “all commodities are rising.” That is true, but gold is rising even more, which must mean one thing and one thing only: people are losing faith in paper.

Yet, the world is awash in the stuff: bonds, mortgages, shares, currencies, I.O.Us., derivatives, funds of funds of funds holding piles of paper assets. And of all the forms of paper that swirl around in the world’s financial alleyways, one is ubiquitous – it is the one in which even the price of gold is quoted: the U.S. dollar.

We are as wary of group-think as anyone, but the fact that most people think the sun will shine tomorrow doesn’t make us think it won’t. Nor does the fact that almost everyone believes the dollar will go down convince us that it will go up. We may be contrarians, but we are also unreliable. Sometimes, we figure, the crowd finally gets it right. And what it has right is that the greenback has become a cat stuck in a tree. Somehow it must come down. Otherwise, the U.S. current account will go negative by more than $1 trillion per year.

Of course, there are economists who see no harm even in a deficit of that magnitude. Then again, these were the same sort of people who thought Hurricane Katrina would save them from having to water the lawn.

But gold is telling us a different tale. The yellow metal has run the gauntlet of resistance levels with white-hot speed, slicing through a hundred dollars in a matter of weeks. Forecasters who predicted that this was a “spike” caused by speculation have been scorched. The commercial short-sellers – and there are many of them – have had to eat their losses and their scoffing. What has happened is simple but historic. Gold has changed its nature from a mere metal to a benchmark against which all currencies, not merely the dollar, are being measured. It is trading like a currency itself, a fundamental one, to which not just greedy, but frightened money is pouring. And the money that is running scared right now is the money printed in green ink.

Still, while everyone agrees that the dollar is coming down, few expect that it will cause much trouble. Even Morgan Stanley economist Stephen Roach, who used to be reliably gloomy on the future of the world economy and moaned regularly about the “unbalanced” state of things, now seems to have lost his balance, spouting claptrap about how “coordinated efforts” by central bankers will put things right. And what are the bankers conspiring to do? Bring down the terrified dollar, of course.

And then there’s Harvard economist Martin Feldstein, writing in the Wall Street Journal, reminding us that a currency devaluation can be relatively painless, as it was when the U.S. dollar went down nearly 40% in the early ’80s.

But, of course, that was then. A quarter of a century can make a difference. In the early 1980s, America was still a net creditor to the rest of the world. The price of gold and credit was high, and stocks and bonds were low. Now, it is the other way around.

By the mid-eighties, oil dropped to $25-35 a barrel. There was not a single McDonald’s in all of China, and the sovereign nation of Russia didn’t even exist. Now, Russia and China are among America’s biggest creditors, oil trades over $70, and the United States is running $800 current account deficits.

Among the dizzy optimists is former Assistant Treasury Secretary Brad DeLong, who argues that the deficits are trivial when compared to the size and growth of the U.S. economy. Real GDP of the United States is growing by $400 billion per year, he writes. Even after depreciation, the $130 billion that does not go to labor is capitalized at about $1.5 trillion of wealth. Thus, the current account deficit – even at $1 trillion – is not overwhelmingly large. The country can sell two-thirds of the increase in GDP to finance imports and still be $500 billion better off every year.

Yes, say the optimists, the United States could run $1 trillion deficits soon – but so what? That’s still only 8% of GDP. The interest on this extra borrowing is only about 12% of last year’s economic growth. And when the dollar does come down, as it inevitably must, U.S. firms should be able to export more and will become even more profitable.

Readers might recognize this argument as the same one used to comfort America’s households. They need not worry about soaring debt levels – not when their houses are going up in value! But like a headstrong mistress, debt has a mind of her own. You may have sidled up to her; you may have encouraged her or even egged her on. But after a time, you no longer control her. Compound interest takes over. She controls you.

Compound interest has been described as one of the wonders of the world. Your money grows, and then feeds on itself and grows – as if by magic. But compound interest works in the other direction, too. When you owe money and don’t keep up with the interest payments, the unpaid interest keeps getting added to the principle. And now it’s the amount you owe that grows – as if by black magic. In no time at all, you’re bankrupt.

Already, Americans cannot keep up with their bills. The interest on $1 trillion may be “only” $50 billion, but the U.S. debt is not growing by $50 billion per year; it’s growing by $1 trillion! That’s the measure by which expenses exceed income. In the absence of savings, much of that amount must be taken up as debt.

And who’s going to lend? Who’s going to want to take dollars?

So you see, dear reader, that cat is coming down one way or another, even if we have to cut the tree down. Most economists believe it will be painless…almost effortless. But what’s that noise? It sounds like chainsaws revving up. We’re moving our car out of the way, just in case.

More news from our team at The Rude Awakening…


Eric Fry, reporting from Manhattan:

“On Tuesday, the Ben Bernanke hiked short-term interest rates to 5%…Over the ensuing three days, global stock markets have stumbled, the dollar has dropped 2% and the gold price has skyrocketed more than $50.”

For the rest of this story, and for more market insights, see today’s issue of The Rude Awakening


More views from Bill Bonner…

*** Ameriquest, one of the nation’s leading mortgage lenders closed 229 branches and laid off 3800 employees. Households are paying more in mortgage interest than they have for the last quarter century – 15.8%. It appears that they have reached a limit. Mortgage applications are declining. Unsold inventories of houses are increasing. The bubble in America’s property market is over. At last, it looks as if prices are becoming a barrier to buyers.

But what will those who need a roof over their heads do now?

Where they will go?

*** Colleague Lila Rajiva, down south, offers a possibility:

“Buenos Aires is bustling. Not just with tourists or casual visitors either. It seems a lot of foreigners are here to take advantage of the relatively cheap price of real estate. The real bargains, of course, were snapped up during the slump a few years ago, but there are still good deals to be had – especially for refugees from the inflated prices of the American and British housing market.

“It seems that housing is only one reason people are coming down here. On the subte (underground rail) downtown, I ran into two visitors who must be a sign of things to come. The weather is summery right now, though it’s the beginning of fall in the Southern hemisphere, and both of them were in the usual get-up of the European at large – khakhi shorts, tennis shoes, and baggy tee-shirts. So, at first I thought they were students backpacking for a semester, but Ross, the younger one, was an English teacher who had taken off a year or two to “lie low” until things settled down in the United States.

“‘What things?’ I asked.

“‘The economy, politics…everything,’ he shrugged.

“‘Things’ were too turbulent in the United States just now for his taste. When they settled down, he’d have a better idea whether he even wanted to return or not, he claimed. Meanwhile, South America was inexpensive and warm. He’d spent a week lying on the sand in Uruguay and was now on his way north to the Iguazu falls. When he got back, he’d look for a job. He’d heard that a lot of businesses were looking for native speakers to teach English as a foreign language in Buenos Aires.

“‘Just like all those Dell call-centers in Bangalore,’ he pointed out.

“Neil, the older man, was English and a trifle paunchy. He had been in and out of Argentina for six months. As he chatted, he balanced a laptop on his knees into which he was busy punching figures.

“‘Checking my portfolio,’ he explained.

“It was a healthy one, from the looks of it.

“‘Telecoms are good investments still,’ he confided. ‘I bought some shares in a company at home a while back and doubled my money in just two months. You should try them. Of course, I was working for a telecom at the time and got them pretty cheap.’

“I wanted to know how he got to take off six months from his job.

“‘Actually, I don’t have one,’ he admitted. Though he was not yet forty, he was retired. How come?

“‘Sold my house in Nottingham, that’s how,’ he chuckled. ‘The price had gone through the roof and I knew it was time to get out. I invested the money and now I travel. I still do a bit of software consulting, but only over the net. The main thing is to go where it’s warm and cheap to live.’ He looked over at me hopefully.

“‘I was actually thinking of India…’

The Daily Reckoning