FINANCIAL MACROTIMOTIMBA
The bicycle generated daily profits of US$70 million, until last week when rates fell. But even with lower rates in pesos, the dollar is worth $860. The debt of the Treasury continues to increase, which is burdened by the founding disaster of Prat Gay, Sturzenegger and Caputo with LEBAC since 2016.
Bausili, Caputo’s partner in the private sector – gross conflict of interest -, both BlackRock collaborators, manipulated monetary control with the reduction of base and aggregate growth, disguising with the reduction of the negative rate in pesos, the highly remunerative real positive rate in dollars. Net reserves have increased by US$8 billion, as a result of stepping on imports and preventing the transfer of profits from international companies. Public debt increased US$33 billion since December 2023 (Secretary of Finance).
Exchange gaps were reduced by postponing $43 billion in loan maturities
debt, kicking off the pressure on the Treasury. The shock to aggregate supply due to the correction of the exchange rate, prices and tariffs, combined with the shock to aggregate demand due to the enormous fiscal and monetary adjustment, introduced the economy into an absolutely unnecessary recession. The virulence of fiscal and monetary policies destroyed aggregate demand.
First they triggered inflation to double, and then they sold a slowdown to the “ordinary people” which only responds to the recessionary tragedy resulting from the sum of macroeconomic rudenesses. But the worst thing is that a “V reversal” is not seen in the entire year 2024. The IMF’s estimate of the fall in GDP and inflation: a fall of (-2.8) and 150%, respectively, has very good will, but It will be double. Having paralyzed public works and also private construction, laying off thousands of construction workers, there will be no rebound. Simply put, the cost of building in dollars grew well above the final price of the property stock. The same thing happens in leather goods, since the cost of producing a bag in the factory is higher than the selling price on the merchant’s shelf, sales and therefore the production of bags came to a halt. Nobody invests to produce at a loss. Textile sales fall 50%.
Private consumption is discouraged by the fall in real wages and the real wage bill. The average macroecologist sells the idea that net exports can drive activity as in the second quarter of 2002, but there is a big difference. The thing is that the exchange rate for the second quarter of 2002 was much higher than what the government offers with the crawling peg of 2% per month. The amount of dollars that enter will depend on the next devaluation. Illustratively, the metaverse spreads that the liquidation of agriculture will increase around 80%, compared to Alberto Fernández’s drought, but that is not going to happen.
Only romantic hearts are happy, there will be less liquidation of agricultural currencies than expected, the deterioration of the exchange rate will not help because Caputo and Bausili will concentrate on pedaling the devaluation to 2%. With a 70% monetary policy rate, the velodrome is celebrating, while the purchase of silo bags to save on grains grows.
Rates are increasing uncontrollably, there is a danger of an inflationary rebound. The final increase in service rates is coming: electricity 185%, gas 300% and up to 600%, 209% in AySA. The bus ticket accumulates 410%.
A CALCADO classic: The little tablet by Martínez de Hoz
It acts as an anti-inflationary anchor (2% monthly) and is also functional to the velocipede. The “Macri and Lacunza trap” is not lifted because “the trade job” would be wasted.
Colleagues say that currency competition is better than dollarization for “the timberos.” It gives them the future possibility of eternalizing the “curro trade” every time a government arrives that guarantees “the trilemma.” Remember, “the impossible trinity” teaches that it is inadmissible for a country to simultaneously support a fixed exchange rate, free movement of capital, and an independent monetary policy. They are looting us, “the same, but faster”.
However, if they wanted to dollarize, a change in the monetary regime would require the approval of Congress. It cannot be done through a DNU. Returning to currency competition, this should include the lifting of the stocks, after a significant recomposition of the BCRA’s reserves. A floating but invariable exchange rate would be required and, for this, the BCRA would have to have enough dollars to be able to intervene and avoid impetuous devaluations. Hence the desperation to obtain a new agreement with the IMF, the aspiration to reinstate the rating given to Macri. With those US$ 12,000 million they could be encouraged, without the fall in reserves triggering a forced departure of the government and a loss for the “laggard cyclists.” The accumulation of reserves is due to non-payment of imports. The gap with the “blue” has the limit of the savings of the middle class that is melting. Now the country risk and the other gaps have the pressure of the Iran and Israel conflict.
IT IS NOT TECHNICAL. “IT’S GREED, IDIOT”
The new debt of importers, the profits not transferred abroad and the current controls demonstrate the little commitment assumed with the environment that invented them. To say that if the US$12 billion were there, the stocks would be lifted and the exchange market would be unified is a chimera. Pedaling one more day at this time implies a thinner slice, but brings in around US$65 million a day, US$1,950 a month.
The above needs are very severe. Even if the coin competition with US$12 billion were possible, without giving them to friends as in 2018, “it would be a test,” say the acolytes who do not take into account the “let’s last plan”. On the other hand, the dollarization quackery would demand between US$30,000 and US$40,000 million.
In any case, currency competition would not be the previous step to dollarization; instead, good balanced macroeconomic fundamentals could be, which would be difficult to achieve with the violent fall in tax revenues and the impossibility of adjusting more on the spending side. . Now not even the alignment with the United States and Israel generates dollars to continue with this absurdity.
The adulation to General Richardson, Milei willing to concede everything: the inspection of the base, the suspension of the nuclear program, the clampdown on China, the waterway, and the purchase of airplanes. Americans ask: – Where is Milei’s trap to grant us everything? – One more day!
The Chancellor does not help, she does not have the slightest idea of any diplomatic issue, nor an effective policy, however, she has a certain disposition. The lies of the Argentine foreign minister who visited Japan, Vietnam and Malaysia, ignoring China, do not help.
Traveling to the United States to receive the “Ambassador of Light” award is extravagant. Milei lives rowing for himself, filling in the gaps that her CV had. Citizens are getting tired of the adjustment and can let them know on April 23, May 1 and 8.
Sturzenegger was insulted in the audience of his own club: Gimnasia y Esgrima de La Plata. With his proverbial cynicism, he says that the reforms are going to be done, no matter what Congress does, and he stated that Fujimori was a model of economic reform…
In four months they did not manage to pass a single law, which constitutes a historical record. For the first time, a Chamber of the Legislative Power has rejected a DNU. Nor has there been any progress in the construction of a political coalition, nor has an interbloc been created; parliamentary passivity is unprecedented. Milei rambles or pretends to believe that he can obtain absolute ratification of the omnibus law and the DNU.
It seems that Milei and Caputo are looking for an excuse to be caught on tiptoe. – Are all prices free, but is there control of amounts in the joint ventures? – It is not clear what the outcome of the social crisis in which we have been immersed is, there are no guarantees that can prevent a sudden overflow.
The governors are united in the objective of stopping Milei’s reforms at the provincial level. The most important provinces will confront the government in the conspiracy of the retirement funds, “the southern unions” will not give approval regarding the distribution of funds. Subsoil ownership is crucial.
Layoffs in the public sector generate growing protests. As we know, the CGT mobilizes towards the Monument to Labor on May 1, a general strike on May 9 and, first of all, on April 23, the CGT participates together with students and teachers in the Great University March. However, social movements will be in the streets.
However, despite such calamity; A gradual recovery would be possible if there was intellectual clarity and political will. The reasons that lead to the suffering of the population would be resolved by restoring severed income and rights. This would be achieved by stopping the abuses and recovering the threatened rights. The outcome of the unlearned macro-financial scammers, reckless characters who always end up fleeing, is approaching. As his friends often say: “a historic opportunity was lost.”
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 8 books, @pablotigani
Source: Ambito
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