INTERNATIONAL DISLATES AND BAD ECONOMIC NEWS
The Chinese swap remains on hold because Milei “does not do business with communists” and “all Chinese are equal” (Mondino). Muslims are anti-communist, but neither the financier nor the lion knew it. Milei’s failed visit to the mosque was suspended blocks before arriving, thus inflicting another blow on themselves with potential investors who profess that faith. The problem would not be fighting with the Chinese and Islamists, the absurd thing is that sucking the socks off the US, the United Kingdom and Israel did not contribute a single dollar.
Just in June, when a new stage full of insecurities began. Exchange insecurity, the Bases Law that, if it does not come out, or comes out mutilated, also makes the propaganda symbol of “currency competition” difficult. There are also no signs to confirm that you are going in one direction. Economic policy is an ortho-heterodox monstrosity, in that order. The current monetary and exchange scheme is at risk. The distrust responds to the lack of a neoliberal stabilization plan to lower inflation to single digits annually, current inflation triples Cristina Kirchner’s worst inflation. The unsustainability of the extravagant adjustment of the first quarter does not combine with any potential for recovery of the economy, not even a growth memorandum is known.
Regarding the artificial fiscal surplus, the rate of collapse of collection is increasing, while the collapse of spending in the first quarter is ironed out. At the same time, “the elimination of the Macri-Lacunza trap” does not come.
Is the elimination of the Country tax that Caputo promised to businessman Luis Majul viable? (the latter, today a LN star, did not appear in the LN rankings, the most respected journalists).
The government keeps selling itself as successful in bringing inflation to an annualized rate of 70%, 16 percentage points above Macri’s worst inflation rate and around 3 times Cristina Kirchner’s worst inflation rate.
“DOWN SIZING” BUSINESS LOGIC
Without a stabilization plan, insecurity grows. The lightness of the social slaughter should ensure at least nominal inflation of one digit annually.
“The business logic of reengineering or down sizing” is decipherable. The president did not read Krugman: “A country is not a company,” and the economy minister did not even read a Lerú summary. In a reengineering, these results must be dizzying so that satisfied shareholders give more time. The “logic of a company” is to earn or stop losing money. Accepting that “the logic of a company” can be transpolated to a country, a significant part of the presumed fiscal progress has been found with temporary rudiments for a corporation with financial problems of the first generation of reengineering, then, cash flows must be generated increasing amounts to ensure payment of the restructuring.
LOGIC OF GRINGOS AND ORTHODOX
It is not seen how devaluation expectations could be forced downwards. Remember that “the gringos” are liquidating only what is necessary to pay debts and buy silo bags (as we said months ago, record purchases of silo bags), waiting for a floor dollar of $1,400, up to $2,000.
Breaking the inflationary expectation within the chosen theoretical framework implies offering a consistent and appropriately notified economic program to move towards the coordination of expectations. By procrastinating increases it is difficult to break inflation expectations. The agreed and postponed price reinforcements force the inflation rate to rise. Social pressure is not going to help. Salaries and pensions need to be adjusted, Wednesday’s protest led by the CGT will extend to the different middle and popular sectors, in an organized and/or self-convened manner.
The consensus of experts, from those who think the same as Milei, does not believe that there will be a “V” rebound. The government has no way to drive a recovery.
Consumption falls and the evolution of private consumption represents 74% of GDP.
Remember: DA = (C + I + G + Expo-Impo). Consumption, Investment, Expenditure and Imports fall. Family spending is in the hands of the wage bill, public consumption will not push up the recovery, investment in construction will not cause growth, due to the immobilization of public investment and private construction, which has costs in dollars that grow above the price of finished properties. Investment in equipment is impossible, companies are at historic minimum levels of utilization of installed capacity.
TIGHTENING FROM ABOVE
We feel ashamed of others. It’s not that there was never any tightening, the problem is that it was very noticeable. We could mention members of the “synchronized swimming” brotherhood. Last week they disciplined the union, arguing that this could be the last chance. Finding a successor to Cavallo took a long time, since all the “environmental businessmen” were millionaires. At this moment, when the voices have silenced the call for help Milei, the versatile league, says that an incipient recovery is beginning (what they previously called “dead cat rebound, when Néstor Kirchner was growing at 8/9% for 4 years).
THE ENDOGENOUS EXPERIENCE
After 16 consecutive quarters of decline, from the second quarter of 1998 to the second quarter of 2002, the economy began to grow, in the third quarter of the recovery. This improvement occurred first with the quadrupling of the peso, an extravagant devaluation, a product of “free floating.” Net exports with an impressive increase in withholdings, salaries pulverized in dollars, collapsed imports. The economy began to grow at Chinese rates for 107 consecutive months, until the Lehman Brothers crisis.
EXOGENOUS SHOCKS
After the “tragic semester” -2008/2009-, the recovery occurred with a real salary 35% higher than the current one, with an exchange rate in present pesos, 60% higher. Given the global recession, it took 3 quarters for net exports to effectively help the variation in GDP.
The pandemic and the permanent adversity of Alberto Fernández meant that, after being 9% up in June 2022 when “friendly fire” ejected Martin Guzmán, it held up to 7.5% up in August 2023 (STEP); The elections and Milei talking about dollarization caused, until March 2024, a return to the GDP of January 2021. The accumulated fall is distributed as follows: (6.6% = 2.3% AF+ 4.3% M).
THE GHOST OF THE NEGATIVE SLOPE The 2018-2019 experience was not an alphabetical exit for obvious reasons, engineers study mathematics, so in the plane of Cartesian coordinates and due to professional concerns, it ended on a negative slope and the recovery never came . The negative slope is the straight line that goes downwards, from left to right, the one that Macri agreed upon when entering “De la Rúa mode.”
So, although the language of the macroecolobists “synchronized swimming” is necessary, it is not serious to say that the economy takes longer to recover its pre-crisis level than the duration of the decline process, and at the same time handle the representation in jargon. “V bounce” graph. We believe that the order frightened many and they did not have time to think of something more elaborate. After the order, everyone went out to try to comply.
Milei rules
The first quarter of 2024 ended with a GDP drop of 3% quarter-on-quarter and 5.2% year-on-year, including December 2023 with a 118% devaluation, higher than the 5% drop in the second quarter of 2023 due to the drought. Without the trade surplus, GDP would have fallen 13% instead of 5.2%, year-over-year.
But the worst thing is, there were 5 million kilos of food that were hidden for 6 months in State warehouses, which are now rotting, they still do not comply with the court order to distribute them all. The 50 cancer patients who died waiting for oncological remedies, the worst, is explained very well by Serrat:
“They play with things that they don’t have spare parts, and it’s the other’s fault if something goes wrong, there is something personal between those guys and me… they experiment with new methods of massacring that are sophisticated and at the same time convincing, they don’t even know their father when they lose the control, they don’t even remember that there are children in the world, they deny us all bread and salt, there is something personal between those guys and me.”
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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