The disconnection between inflation and dollar reaches 150%. While inflation increased 72% in less than 3 months, the free dollar fell 20%. Even paying negative interest rates to banks and – destroying the capital of savers in pesos – the disarmament of the Leliqs made financial entities earn more than 40% in dollars.
So far in 2024, the stock of an Argentine bank, “El Macro”, has risen 64.72% in pesos. With a 20% drop in the dollar, its capitalization is 106% poorly high in dollars. Banco Macro is worth (in dollars) more than double in 80 days.
At the same time, the “main street” economy enters the intensive care area “in a coma”, and with alarming prognoses that place it in a situation of agony. At this rate of decline in sales, 70% of SMEs will not be able to pay salaries and wages on May 5 – in 2 months-.
The persistent fall of GDP, industrial GDP and its consequencehave caused such a collapse in collection that distances the possibility of meeting the zero deficit, against which Caputo has no alternative. The worsening of the fiscal situation will complicate the possibility of meeting public debt commitments.
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The measures outlined on March 1, in the midst of strong social and political pressures, they found the President keeping the Titanic on course. TO Milei They have convinced him that he will regain the credibility of the markets. Nobody warns him that, with the same course, he will not be able to evade the economic and social chaos, which is precipitating day by day.
In fact, some collaborators such as the SMEs secretary, and the tourism secretary – a failure of the season – got off one or two stops early.
A leap into the void
We had anticipated it in 2023 in this column. We explained it extensively in the middle of the campaign and in several articles, what follows is a leap into the void. When revenue collapses, no spending cuts are enough.
And that is happening, as we emphasized a few weeks ago, now there are more extended defaults, but if, in addition, the big winners, “one-day pass” issuers, hesitate, the counterpart is the deposits. There could be a huge devaluation and an attempt to force dollarization, which is unknown where it would lead us.
In the dynamics of the collapse of other Argentine governments there is a dimension that must be reviewed more thoroughly, the role of finance specialists. The financiers are the true architects and carriers of the model: “let’s play”. In this true caste of cunning traders there is an articulated consent that works in tandem with the caste of macroecolobists.
Provinces and traced chainsaw: Domingo Cavallo and Federico Sturzenegger
Despite an agreement with the governorswhich in Cavallo’s scheme was essential to maintain the zero deficit In the last quarter of 2001, it became practically impossible due to the persistent collapse of collection.
Example: $1.2 billion less came in than the minister expected. The very serious problem manifested itself in October 2001 when, for the first time since it had been announced, the zero deficit could not be met and the National Treasury recorded an imbalance of $680 million, 60 million higher than that observed in the same month of 2000. .
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Having crossed the deficit and seeing the collapse of collection, Horse resolved to adopt Administrative Decision 228/01, which sought to obtain additional gross savings of $1.7 billion in the different budget items for the last quarter of 2001, extending the cuts to all items that were not salaries, retirements and pensions.
The measure covered the two branches: Legislative, which would have to spend $56 million less than a budget of $70 million, and the Judicial Branch: $19 million below its budget of $90 million for the last quarter.
Despite the harsh adjustment measures applied (hard and necessary according to Patricia Bullrich)the imbalance of the $1,350 million that was expected above the deficit agreed with the IMF for 2001, opened up enigmas about the possibility of maintaining the zero deficit in 2002, even with the resource savings obtained through the agreement with the provincesa debt swap, and the push for drastic decisions such as the elimination of the Teacher Incentive Fund.
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Cavallo-Patricia Bullrich were convinced that, if they solved the arithmetic questions, even if the quality of life was terrible and everything was destroyed, things would go well.. Let’s change to Cavallo by Milei.
For those who do not know “Mingo”, he would be a kind of ancestor of Milei. If we followed the experience with her four mastiffs, we could speculate some type of cloning.
An unviable system
Financial dominance over politics and the real economy returns, even with repeat individuals. Caputo It continues to privilege the banks, who have been making fortunes at the expense of primary spending. He State saves US$5 million by closing 59 Reference Centerslaying off more than 600 public employees, which represents 8% of the dollar interest of one day of banks’ carry trade.
Banks earn US$63 million per day. To pay the interest on the bicycle, 6,250 public employees would have to be laid off per day. Until reaching the entire year in a static way, without projecting dynamic growth, 2,281,250 public employees would need to be laid off, just to pay the interest on the banks’ bicycle (about US$ 23,000 million).
The tirade reappears, characterized by the Washington Consensus and neoliberal economic reforms. The key Argentine technopols were Domingo Cavallo and Federico Sturzenegger. These economists with PhDs at Harvard University and MIT respectively, are behind everything. One more exposed for reasons of age, he is already part of a summer hit on the Gimnasia y Esgrima de La Plata court.
Javier Milei President of the Argentine Nation Ordinary Sessions
Mariano Fuchila
Sturzenegger is characterized by expressing his intolerant dogmatism through passive and excessive violence, like many technocrats who never watch over “main street.” They also did not work or study production.
They believe that “the paper” of such an author should replace the politics of negotiations, support and concessions. Although Milei He is not academically in that league (Doctors), he also disbelieves in the negotiation. Intransigence is not intended to generate benefits for the other party, it is not a “win win” negotiation.
Now they come to the reissue of the governors’ meeting, believing that their economic project must be free of political commitments, they insist on fighting “the political caste” through depoliticization, and they distrust the values, their ideologies and the logic of party policies. , even from the PRO, who has been following Milei like their four-legged children.
The State, in the mentality of Milei and Sturzeneggeris an implementer of public policies that must be placed above social interests.
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The salary became ointment, the employment rate accentuates its fall after the suspension of public works, and will be followed by small and medium-sized companies, and the construction, commerce and industry sector, which falls like a piano. Additionally, employers’ expectations regarding increasing personnel are discouraging, which, added to the deterioration of real indicators, suggests new declines in employment in the coming months.
The acceleration of the negative trend is very foreseeable in the months of March and April in the three most important conglomerates in the country: GBA; Greater Córdoba and Greater Rosario. In addition to all this, the financial crisis facing the economy will keep access to credit paralyzed, even more harshly for SMEs. But neoliberal technocracy and cyclists do not register these issues.
There are risks
The absence of a political basis for economic decisions will further weaken a government that was born weak, and could lead the president to collapse. The solution to the crisis, subsequently, will not come from the hand of Sturzenegger and Caputobut of the reconstitution of politics and its institutions, so mistreated today.
The president and the technocrats are convinced that they face an issue that requires a technical-depoliticized response, and by taking that path only deepens the political fragility of a government that will end up losing its capacity to implement public policies.
It is a lot of risk without a social containment mesh. That is why it is important to analyze the dynamics of decisions. This dynamic will have a strong impact on the final result, which could be the breakdown of the exchange and monetary stability of these days, the collapse of a democratically elected government, and another default on the public debt.
The dominance of neoliberal financiers and technocrats has been experienced many times, but it has always been attempted in contexts with strong political governance bases or authoritarian regimes.
Today the exact opposite is happening, there is no strong government and there is no social sustainability because the bridges with social movements were detonated. This point alone can contribute to a crisis of governance that, as Caputo told the middle class: “… in three, two, one, we are another country.”
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, @pablotigani
Source: Ambito
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