Caputo apparently believes that this new “little tablet of Martínez de Hoz” is here to stay. Of course the objective of making it remain supports and sustains the inveterate “financial bicycle”. According to Caputo, the real exchange rate in authentic trust cycles gives an average exchange rate of $560 per dollar, at today’s prices. The Convertibility exchange rate would be $550 at the present price.
Probably, if the public debt had not increased by 33,000 million dollars in 4 months, if there were the US$ 15,000 million that no one lends them, if we were not in commercial default with foreign suppliers and with Cammesa, we could live together like Uruguay, with an appreciated real exchange rate. But we cannot believe that the real exchange rate of the current situation is better than that of December, because the tendency to decrease the surplus – the deficit returns – is growing.
Furthermore, the monetary expansion to keep the BCRA debt performing, or buy the eventual dollars, cannot stop. Everything changed in 5 months, but we returned to our old ways. It is a forced and misguided comparison that Caputo proposed, because it only seeks to strengthen the ability to endure the “financial bicycle.” The fiscal balance is precarious, the trade surplus will depend on the exchange rate and the current account surplus carries the intertemporal risk of public debt. The appreciation of the dollar with Martínez de Hoz and Cavallo ended in exchange explosions of magnitude. The Minister of Economy and his fellow cyclists and market operators say “he who bets on the dollar loses,” but the ghost of Lorenzo Sigaut carries an inevitable déjà vu.
This happens temporarily today, because apparently there are fiscal and monetary balances, if the monetary and fiscal program becomes unsustainable and, the only source of dollars puts pressure on Milei, the exchange rate depreciates (devaluation). It is undeniable that the current exchange rate (with the environmental series) at $900 is 23% lower than the real average authentic exchange rate of approximately $1,150. To put it another way, according to environmentalist tradition, today we have “the strong weight” and it is valued at 28%. Hyperinflation in dollars consumed the initial competitive advantage.
In the environmentalist version, we saw a series that compares the real exchange rate of the year of the Russian default, but in December 1998 (remember the context: third consecutive quarter of GDP decline, following the 1997 crisis), a few months before the devaluation of Brazil and, a year before the Turkish crisis, then the multilateral real exchange rate would proceed 10% higher, with an open Argentine economy, with more activity than the current one, and after many years of structural reforms and stabilization, with around 100 billion of public debt. Today the public debt is 4.5 times greater. We agree again with Milei, the exchange rate has to do with reserves, balance of payments, but it must also be seen in “time and space” (Kant available to everyone). Although this last analysis would destroy them.
If Caputo defended “the bicycle” with 2% monthly crawling peg, a crisis could be generated due to lack of dollar settlement. The only exception would be to return to Massa’s differential exchange rate for the countryside, but that would detonate the last grenades of the monetarist fundamentalism that supports Milei.
With a crawling peg of 2% monthly, “the sweet silver” and the “give me two” of Arriazu-Adolfo Diz and Martines de Hoz returned, which left a bomb for Lorenzo Sigaut. A sports shoe, a t-shirt, a piece of gym equipment, a blue jean, a cell phone, in Argentina costs double or more than double in reference to the US.
The exchange rate delay causes declines in competitiveness, with enormous industrial damage, and significant amounts (quantitatively and qualitatively) of bankruptcies of Argentine industries. Again, critics of Kicillof’s exchange rate anchor do exactly the same thing, although for other reasons and with different results.
If the reform of the State does not happen: labor, pension, tax and the opening of the economy is not carried out due to lack of dollars, we will not only have a fictitious peso, then, as the neoliberals say, “we will fall out of the world.” ”. If the idea is to continue with 2% monthly, the field will not liquidate. Cheap dollar and withholdings “is a lot.” Today the countryside is the only cylinder of the 4 cylinders of the engine of economic recovery. The other 3 remaining cylinders: consumption, investment and expenditure, melted the pistons.
Milei would say of another: this monstrosity uses the populist exchange rate anchor as an anti-inflationary tool. Sturzenegger questioned me on the program: “A dos voices” (TN), in 2013, “every time we did it it ended badly,” he said.. Although he probably forgot, and with Macri he did the same.
THE LIFT OF THE STOCK WAS A POPULAR OBJECTIVE
Thanks to the “Macri-Lacunza stocks” of August 2019, the BCRA kept a large portion of the net reserves that Milei crowed, and congratulated Caputo and Bausili in Alvear, while another portion would be squandered during 2024 in the liquidation “blend” that the export carries out through the CCL, which will be equivalent to 80% of the balance of the trade balance, around US$ 25,000 million.
To lift the stocks, the interest rate in pesos would have to return to strongly positive territory (all the missing industrialists and SMEs would go bankrupt) and, that is also extremely dangerous, due to the accrual of interest from the BCRA on remunerated liabilities and the depression of economic activity. The BCRA continues to acquire dollars and has achieved a significant increase in the “net reserves” perspective, but the time to lift the “Macri stocks” has not come, because the risk of a surge like the one that former president Mauricio had in 2018 remains and 2019.
Milei assures that he would raise it if they granted him the loans that he whines to the IMF for US$15,000 million or the funds that he showed to Alejandro Fantino on the cell phone, and they never arrived. Caputo failed with the effective achievement promised to Milei that made him Minister of Economy. And, that is why he appears to humiliate himself to obtain fresh funds from an IMF, where his personal background does not favor him, although with the IMF, you never know, remember that Macri was disbursed US$ 44.5 billion, after 13 years of absence in the country.
The IMF still remembers that it had to fire Caputo for the capital flight he financed “with his”in 2018. We will have to wait for a chance if the debt with “Communist China” is restructured, with which Milei will never do business… It is obvious that the IMF will not make new disbursements to be applied to the payment of the debt with China.
A solitary Milei in the profession, took the exchange rate delay into the ring. From now on the price of the dollar is controversial. The environmentalists’ union is going to put lobby pressure on it, even if the opinions do not agree with each other, on the nature of the supposed imbalance, whether it is temporary and easily correctable, or fundamental and unapproachable. Remember, appearances can be deceiving because current market equilibria are related to asset stocks and speculation.
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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