Public debt debate: chronicle of an announced default (Part LXVIII)

Public debt debate: chronicle of an announced default (Part LXVIII)

Macri I was terrified. The economy was going down the drain, Cristina Kirchner was rising in the polls, while the president’s popularity plummeted. In May 2019, a new “IMF mission” arrived. The second program that came after the first disappointment had also been a failure in terms of inflation and level of activity, which fueled the anxiety of investors and markets that saw the lights go out in the Argentine economy.

Given the drop in collection in March 2019, the IMF had allowed the minister Nicholas Dujovne the reduction of the primary surplus target that was scheduled for the second quarter of 2019, from $40,000 million to $20,000 million. An additional contribution to the campaign?the opposition wondered. Although the arithmetic fiscal deviation would occur right in the last quarter of the year, when the reality of the annualized deficit would be verified, which would prevent further disbursements and thus also limit their chances of success. This being the case, at some point the grenade on which the IMF had thrown itself could explode..

In other words, if it were not so – the most greedy, those who tend to rush out of financial crises -, they would have six more months of time to continue speculating and earning tons of dollars with the phenomenal “carry trade” (financial bicycle) that accompanied, and in part, for which The presidency of engineer Mauricio Macri will be remembered forever: “time of mammon”.

mammon is an Aramaic word that means “god of greed”, its etymology is a demon which they call mammon, representing one of the deadly sins such as greed. The Greek word pleonexia means greed, greed, advantage, covetousness.

In the political aspect, although there was an official laundering of the official electoral polls in April -they could no longer be masked-, these aroused great concern and anticipated the expected flight of investors, cornered by the drop in collection, the destruction of economic activity and a growing social demand, as had not been seen since 2001.

In March 2019, the polls of organized official pollsters already exposed the competitive equality between Cristina Kirchner and Mauricio Macri, which would lead to a possible ballotage. In April, Cristina’s eventual triumph if she appeared, seemed undeniable. Even informal sources gave him much more than the recognized nine points of advantage over the candidate Macri. It was the worst moment of the twisted political and economic process.

At that moment we knew that six months of time was a lifetime in a presidential election, but the truth is that the evidence was growing that, if Cristina Kirchner decided, she had a better chance of returning to the Casa Rosada than Mauricio Macri of staying. The contingent return of the former president had nothing to do with capital flight. The speculators arrived with Macri, they did their business, and when the numbers closed, they had no incentive to stay in the country of their failed experiments, nor to finance a new political adventure..

We could talk a little now, thank you. The president was so restless that he called to a table, all the active forces and even those who until then were the example of everything “what not to do” in a government. Was he concerned about the town or the country?

– Was it about curbing the risk faced by job sources-companies-, or was it seeking to reverse the destruction of 250,000 registered jobs in twelve months? – Would it be to accept the interweaving of Cambiemos with the privileges, inequalities and exclusions that were masked through its marketing formulations? – Would it be a meeting of adherence to the 10 points (see article LXVII), with content neutrality, saturated with denialism?

The scenario was paradoxical and riddled with contradictions: Cristina: “should we put her in jail for stupidity”, or was she an essential leader so that the IMF would not withdraw support for the country?

Since December 2016, the citizens -the people- have not governed through their representatives, they do not know finances, and the congressmen did not even oppose modest restrictions on short-term financial capital. Nor did much of the opposition help to stop laws and regulations that were benefiting a few in an episodical way, despite routine assertions of relief.

The social effort to reduce primary spending was demoralizing for a population that was unaware of the effects of economic policy applications. Social unrest grew and reduced the chances of the ruling party, which pushed up the country risk and the exchange rate, with the risk of another round of monetary adjustment.

Synthesizing, a very vicious ineffective circle. As Foucault suggests, economics is a lateral science with respect to the art of governing, which cannot be the science of government.. Contrary to the IMF’s approach, the economy and the freedom of the markets constitute the limit of politics, and that cannot be touched without consequences.

In December 2015 the IMF was not. Unfortunately, in 2023, the excesses of the true 2016-2017 yellow balloon party continue to be paid, plus the 2018-2019 failures of the IMF, supporting inconsistent economic management.

Let’s Change figured out a way to stop the tsunami through a wicked trade off (achieve one goal now, and postpone another goal for the future). They established for 4 years the: “suffer now and tomorrow will be happy”. Paradoxically, the support of the IMF allowed the empowerment of high inflation rates, avoiding the risks of default, through another “trade off”, “Pay now and go bankrupt in the next period of government”.

To the heavy inheritance of the next Government (Alberto Fernández) would pre-exist a global deficit gap of 10 points of GDPthis was around US$50,000 million, which with Macri was financed by US$25,000 million from the IMF, US$10,000 million of generosity from the private sector that had involuntarily renounced the credit, plus the inflation tax collected by the State and, the deposits in pesos and dollars from the Treasury, which in 2019 would end with a low level, extremely.

In 2020, IMF disbursements would be “zero”, credit to the private sector that it financed with what should be its own credit could no longer continue to be reduced, ceding it to cover the quasi-fiscal deficit. An extraordinary and rarely seen “crowding out” (expulsion of the private sector from the benefit of credit, by the public sector). It would lack the increasing capitalization of interests of the Leliq, therefore, the next government would have to rule out the fiscal and quasi-fiscal deficit, with no options available. Out of imagining yet, that in 2020 the COVID-19 pandemic would appear.

When “the only privileged are the markets”, the entire democracy is threatened. When the capacity to establish limits and enthrone the rationality of the markets disappeared, the result had been extremely ineffective.

Executive Director of Fundación Esperanza. Graduate Professor UBA and Masters in private universities. Master in International Economic Policy, Doctor in Political Science, author of 6 books.

Source: Ambito

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