It all started, months before the elections: “In the Idea Colloquium In 1988, it was agreed that Peronism would ask the country’s largest economic holding company for help. “A decision that shaped the 90s.” (Clarín, July 30, 2022). Remember, at the beginning (1989), waiting for his turn, strategically Domingo Cavallo was the Chancellor of the first cabinet of the Executive Branch.
(PHASE 1) B&B Plan -Bunge & Born
magnitude devaluation, bank runs and hyperinflationary peak, with looting in the interior of the country. Those responsible for the Economy were: Néstor Rapanelli (minister) and Orlando Ferreres (vice), respectively. The Rapanelli-Ferreres tandem: liberalized prices, interest rates, dollar and, carried out fierce adjustments to achieve the well-known “economic sincerity”.
Let us also remember that BCRA of hyperinflations, chaired by the famous Javier González Fraga (JGF), whom the economist Jorge Born blamed for the second hyperinflation, which occurred between January and March 1990, in his role as president of the BCRA and advisor to the minister of economy. González Fraga, successor of Carlos Melconian as president of the Banco de la Nación Argentina, has recently been very discredited for granting bad loans during the period of suspicion (prior to the Bankruptcy of Creditors) to the Vicentin group, being president of Mauricio Macri’s BNA.
Going back to 1989, Economy Minister Néstor Rapanelli was the executive of Bunge & Born, who replaced his company colleague Miguel Roig, who died 5 days after taking office (Prime Minister of Economy). But the expert ideologue of the plan was the economist Orlando Ferreres, founder and member of CEMA, and “intermediary before B&B of a little model that supposedly predicted the behavior of all the variables”. If that had been true, a purpose would preexist. But the model surely failed.
Orlando Ferreres said: “Patricia Bullrich asked me to design a bimonetary model, like that of Uruguay or Peru.” The economist offered the pre-presidential candidate Patricia Bullrich the model that was already used to organize the economy after Alfonsín’s hyperinflation, at the end of the ’80s. “We must announce a package of measures all together, a shock policy,” she said. (www.noticiasargentinas.com, May 7, 2023)
Take note of the similarity with an eventual 2024 time. Since 1989, Menem included Orlando Ferreres as vice minister of Economy and Roque Fernández, as vice president of the BCRA, both members of the CEMAa think tank that later phagocytized Menem, Domingo Cavallo and the Mediterránea Foundation, in 2001. Currently, the former CEMA has already phagocytized Milei.
A decade later, the members of CEMA were accused by Domingo Cavallo of “treason to the country.”
“When CEMA was Argentina’s economic team, national spending grew by $7 billion, while in 1995 and 1996 it had declined by almost $2 billion. When I left Economics, a “Long live Pepa!” Scandalous,” said Domingo Cavallo in response to the criticism that Roque Fernández launched at him the previous week”… (Cavallo, La Nación, July 2, 2001)
“…Roque Fernández began with his irresponsible attitude of lying and said that the deficit was 7,000 million. The responsibility of Roque Fernández, Corach and Menem in the mismanagement of 1998 onwards is very, very great and I hope that they will soon have to be held accountable, I am not saying before Justice, but before the Argentines. (Ibid)…When Roque Fernández, Pedro Pou, the people of CEMA and their friends criticize what Machinea did and what I am doing, they are intellectually dishonest, politically demagogues and, in general, professionally irresponsible. They are without a doubt the ones who led the country to the depression that we are experiencing… typical CEMA preacher, who are Roque Fernández, Pou, Jorge Ávila, Carlos Rodríguez, (Pablo) Guidotti and all these characters who, in addition to having caused so much damage to the country…I think they are traitors to the country.. (ibid)
(Phase 2) Bonex Plan.
“We had presented the Bonex Plan to Erman with Mingo Cavallo (Mediterranean Foundation) and Guido Di Tella,” recalls Roque Fernández (CEMA). “Erman understood it, he had been vice president of the Central Bank and understood what was coming.” (Clarín, 04/09/2022 12:00 / Updated 04/16/2022 12:56)
After 6 months of extravagant experiments, a new hyperinflationary outbreak and, facing the end of the B&B Plan, o end of “Stage 1” of a synchronous 3-stage plan-(as we could sense now), with a phenomenal accumulation of internal debt (analogous to the current Leliq and other liabilities of the BCRA and the Treasury), plus the disorderly placement of public securities with extravagant interests, above 400%, the arrival of Stage 2 was being prepared.
The Government carried out the compulsory exchange of all fixed terms worth one million australes, in exchange for bonds (called Bonex 89) that expired in 1999 through the decree 36/90. It is considered that the confiscation reached 60% of the monetary basewhich caused a sharp recessionas a result of the significant drop in liquidity. The implementation of the Bonex Plan caused an extraordinary loss for fixed-term savers.
(PHASE 3) Convertibility Plan
One year after the second explosionthe bullfights returned at the beginning of 1991, predicting or provoking the last leg, if it had potentially been planned, the arrival of the third hyperinflationary outbreak. As we would say in soccer, now, “I had it in me,” she entered the Cavallo field, with the Convertibility Plan ($1 = u$s1). Everything that followed is not the subject of this article, but can be found in any search engine, with countless different versions.
By 1989 we had reached hyperinflation, after 16 years of rampant 3-digit inflation (1975-1991). There was a time of phenomenal uncertainty in Argentina (July 1989-April 1991), which lasted for a longer time (1992), even the $1 per US$1 reached $1.20 per US$1, until the 1 to 1.
If today they devalue from $350 to $730 as Milei proposed, 50% of purchasing power in dollars is lost immediately and the transfer to prices may be greater (as with the period prior to Convertibility).
It would seem obvious that the next step would be a 10 or 20-year bond in dollars for fixed-term savers (who, in addition to the 100% temporary unavailability, would lose 60/70% of the dollar value of the bond ipso facto). Finally, in the not too distant future (2/3 years) a currency basket system could be tried in a reissue of the latest Cavallo 2001 Convertibility. Another day we will tell you who lost and who won. In economics nothing is neutral.
It is not difficult to find casual coincidences between actors and events (1989-1991) and 2023. It could be deduced that the described articulation of the 3 stages could coincide with the Milei and Bullrich announcements..
Either of the two proposals: Milei and Melconián, would be preceded by a fiscal adjustment of magnitude, unification or at most two exchange rates and liberation with a strong devaluation jump, in the style of Orlando Ferreres-Rapanelli. What we should be understanding is that to make this possible, we would have to go through a social outbreak. Furthermore, it is necessary to ask if the “I want it now” generationis prepared to endure another period 1989-1991.
Director of Esperanza Foundation. https://fundacionesperanza.com.ar/ UBA Postgraduate Professor and Master’s Degrees at private universities. Master in International Economic Policy, Doctor in Political Science, author of 6 books
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
