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In defense of Javier Milei

In defense of Javier Milei

We would like to hear the remorse, boarding the ship to take Victor’s body…: Don’t be afraid, I won’t commit any more crimes. My task is finished. Neither his life nor that of any other human being is necessary for the fulfillment of what must be fulfilled..

Like Victor Frankenstein, the macroecolobists locked themselves in the “laboratory” for years, finally manufacturing an unthinkable “active entity.” On real television, a madness came to life that is being condemned to loneliness, without solid relationships with its creators. The monster is capable of living in the abstraction inhabited by those who taught him not to take people into account. In just four months, he perpetrated all the cruelties there were, brilliantly. His Frankenstein doctors flee the laboratory in terror, they let go of his hand. Not even they can accept the product of transgression of the limits of life. As in the novel, from the moment the monster demonstrates the victory of the ideas that sheltered him, the Frankensteins already anticipate the social defeat of their entelechies..

The thousand yard gaze

Like its creator -Frankenstein-, in the Liberty Foundation, the leviathan expressed frenetic symptoms, melancholic disturbances, disconsolation, crises of despair and anxiety attacks. It was shell shock, we now call it “post-traumatic stress disorder.”

Just as Frankenstein could not bear to hear the words “natural philosophy” without feeling nauseated, Milei’s sponsors cannot recover from the April 23 march. They are panicked. The thing is that the Frankensteins will no longer be able to set foot in their media laboratories or Congress and Mortadelistic Colloquiums. At this moment they see nothing and feel nothing, theirs is the thousand-yard gaze of soldiers traumatized by wars. The problem with her predecessors is that Milei succeeded in applying the cruelties that Doctors Frankenstein taught her. All the Frankensteins that Milei made fun of continue to live to see how all the businessmen they courted die because of her. They succumb, victims of a monster that did not produce the politics they hate so much, but ideological supremacy and the macroeconomists who tried to dominate politics. They spent 30 years looking for a monstrosity that would show the face to do everything they sold to society.

WHAT THEY ASKED HIM TO DO, HE DID. THE LAW AND THE DNU

Religious dogmatists called for fiscal discipline to skyrocket, primary surplus now. Milei tries to please everyone; pension and tax reform, tax reduction, and incentive for private investment. Obviously a labor reform for Rocca and his team at the Secretary of Labor, deregulation and economic opening for all and, an exchange rate policy consistent with the rest of the macroeconomic policy.

They crammed Milei with all the reforms that focus on improving productivity and efficiency—the hypnotic litany of Martínez de Hoz and his team—and, “no help from the State.”

Before Milei, the Frankensteins criticized the value of the “Creole barrel” at $56, at the official exchange rate. And, they added that the fuel tax – whose revenue partly finances transportation subsidies – was frozen. In that context, they asked Milei to “honest” the price of fuel that implied: brutal devaluation, international price and tax normalization. They ordered him to end with subsidies of 2% of GDP by 2023.

WHAT WAS THE PLAN THEY GAVE TO MILEI?

Several CAMBIEMOS officials, but especially two, the partners in the private sector close to Macri (Caputo and Bausili), constituted Milei’s economic team that works especially in the tax area. The resistance is done by Macri’s other official and former president of the PRO, the ineffable Patricia Bullrich, with sticks. They asked him to postpone dollarization until 2025, while they do “the bicycle.”

That promotes a strong fiscal adjustment, strong on the spending side, little less on the income side. Let it move forward with deregulation. That they ask the IMF for net funding in dollars, which they were going to give it, that they make an agreement with the cereal companies to enter dollars. That initially they did not unify the exchange rate – while they did their thing -, that they fearlessly introduced significant increases in the rates of public services for their friends. That they sought to pass the Omnibus Law through Congress, that the PRO and UCR legislators were going to approve “common sense laws” by Dr. Frankenstein and his assistant Sturzenegger.

The stabilization program would begin with an inflationary flash. “You put it in Milei.” They decreed that there was no alternative to the fiscal adjustment, they told him that he must find a solution to the problem of the BCRA’s remunerated liabilities. They encouraged him to rely on them, and talk about Alberto’s mismanagement, without mentioning the pandemic, the war and the drought and, in particular, to talk about the deterioration of public accounts during the second half of 2023 and kill Massa .

WHAT DID THEY SAY ABOUT MILEI’S OPENING SPEECH?

Milei’s speech, “it couldn’t be better.” Excellent diagnosis of the “heavy inheritance”. They spoke supporting him and spreading twin deficits of 17% of GDP, with a fiscal deficit of around 5% of GDP and a quasi-fiscal deficit of 10% of GDP.

Caputo does not know macroeconomics but he is a financial protégé, it was due to that adjustment of 5.2 points of GDP to eliminate the fiscal deficit where 58% of the adjustment will come from a reduction in expenses and the remaining 42% from an increase in income. The minister intended to lower spending by 3% of GDP by reducing subsidies for energy and transportation from February 2024, (0.7% of GDP); a sharp reduction in spending on public works (0.7% of GDP); minimizing discretionary transfers to the provinces (0.5% of GDP), eliminating social programs with intermediaries (0.4% of GDP) and reducing operating expenses (0.5% of GDP). That would contemplate a buffer of 2 centimeters: an increase in social assistance in the AUH and Alimentar Card.

The Milei-Caputo program, with a brutal fiscal adjustment and an extravagant devaluation, plus the gradual lifting of capital controls, tariff adjustments to “correct” part of the distortion of relative prices, implied a doubling of the inflation rate during the first half of 2024, with inflation potentially climbing to 25% monthly in December.

With respect to net reserves, which were effectively at a negative level – and remain negative – they desperately needed dollars. There was a current account deficit and heavy debt maturities in dollars. They estimated a trade surplus of 17,000 million for 2024, against an estimated deficit of US$ 7,000 million in 2023, as a consequence of the increase in agricultural exports, more than 11,000 million, and the reversal of the energy trade deficit that would turn into a surplus of about US$2.2 billion in 2024 – thanks to Massa – which would be omitted. It was far from being able to finance the needs in dollars with a trade surplus and the maturities of the public debt in currency, the debt in futures, Ledivs yu$s 10,000 million of arrears of dividends whose transfer abroad was practically prohibited (and is still pending). , the commercial debt of importers that was converted into debt securities and the new one continued to be stepped on.

The Frankensteins quietly celebrated the 118% devaluation and, that a fiscal shock was undertaken, the monetization of the deficit was eliminated, that there was monetary control, price liberalization and “correction of relative prices”, to their liking and piaccere.

They were radiant because the primary surplus for the first two months of 2024 – omitting to say how – was $3,243 and the financial surplus was $857 million. They didn’t pay anyone.

They paid tribute to Milei because spending collapsed 38% in real terms, year-on-year, gave a standing ovation to the YELMO product line: “chainsaw, blender and polisher-vacuum cleaner”.

Milei’s first two-month spending was: (-32%) lower than that of Alberto Fernández (October 2020-March 2021), (-26%) lower than at the end of Macri (March 2019-December 2019), (-21%) lower than Macri’s final month in December 2019), (-40%) lower than Guzmán’s (June 2021-July 2022), (-35%) lower than Massa’s (August 2022-October 2023). With this deficit and a probable increase in the demandable debt of $500 billion, according to the accrued execution, the “cash” accounts of the National Public Sector (SPN) recorded a primary surplus of the order of $400 billion.

For the Frankenstein doctors, prioritizing reducing the deficit was more important than providing oncological drugs, to give a strong signal of adjustment. There were fiscal surpluses after interest payments, both in January 2024 and February 2024, as during Néstor and part of Cristina. In March 2024 there was a slight fiscal surplus. The quasi-fiscal deficit collapsed from 10% of GDP to 5.2% and may continue to decline with the reduction of the repo rate. Public debt grew by 33 billion dollars.

There was control with a reduction in the growth of the base and monetary aggregates, net reserves increased US$ 8,000 million with creative accounting, stopping paying for imports, exchange gaps collapsed 20% and, the government managed to kick forward $ 43 billion debt maturities in pesos, putting pressure on the Treasury. There was a notable improvement in Argentine financial assets and the country risk, which exhibited a declining trend, reached 1,200 basis points, when before the runoff it was 2,400 basis points. The AL30 bond, which was worth $26.6 before Milei’s success in the runoff, touched $58.50. Of course, according to the Frankenstein doctors, the recession was inevitable due to inheritance. Fake.

“Noodles with tuco”

Milei is right, they are ungrateful and envious: “Perhaps out of ignorance or resentment they say that there is no stabilization plan, he mocked Carlos Melconian: “There was one that said ‘fideos con tuco’… Life is like that.” Milei did what they said needed to be done for 40 years. As In Susy Shock’s poem, Milei symbolically said: “I claim my right to be a monster.” ““To cry in the countryside”.

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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