Home / World / The ghost of the crisis returns to Argentina | Argentina

The ghost of the crisis returns to Argentina | Argentina

This was a complicated week not only in Argentina. The rise in interest rates in the US took the money from emerging markets and the currencies of the region quickly depreciated. But not as much as the Argentine peso. And when the dollar goes up, the street worries, a lot. Although "nothing has changed so much in the last month for such a change in expectations", says former Economy Minister José Luis Machinea, the man he tried to contain, until his replacement by Ricardo López Murphy the debacle of 2001. Where is the problem then? For the political scientist Juan Germano, director of the consultancy Isonomía it is a matter of perception. "In Argentina there are three forbidden words: inflation, dollar and unemployment, any Argentine can panic with these issues, unemployment is the most taboo subject, because it is very scary." In two years of [Mauricio] Macri that variable it was not a panic factor and it is not now, but of the three taboo subjects, there are two that this week were in all the newspapers, "he says.

From the door of his candy store, Oscar has the Thermometer of Villa Urquiza, a middle class neighborhood of Buenos Aires. "People do not talk about anything else: 'The dollar goes up, everything increases, gas, light, gasoline.' I sell less and less," he complains. He has the feeling, he says, that the country is close to "something very serious" happening. Miguel is 52 years old and has experienced many crises. He comes out of a grocery store with some fruit in an orange cloth bag and he has comments in his mouth: "Again the same, always the same, the dollar rises and everything rots. For Jorge, the owner of one would release, the problems will begin next week, when he has to replace merchandise. "They used to come up with pennies, but now they're two or three pesos, sales, as always, holding in. People save money when they're scared," he says. Dollar and inflation, the two taboo subjects, the usual ones.

The adjustment leaves Macri without a plane


Mauricio Macri will continue for now without a presidential plane. Hours after the Argentine government announced a cut in public spending to contain the fiscal deficit, the Presidency announced the suspension of the purchase of a new aircraft: "In the current context, it is not a good time to do so." The Argentine president has a suitable airplane domestic and regional flights, the Tango 04, but for longer trips must use commercial services.

The decision is part of a wider savings. The government has been adamant in its decision to cut spending, which included the progressive reduction of subsidies to public services, with the consequent increase in rates. Macri also intends to moderate salary increases and insists with the message of austerity to his collaborators to avoid scandals. The last one had as its protagonist the Minister of Finance, Nicolás Dujovne, when a week ago, the newspaper Perfil reported that he used public funds for private flights, to pay tribute to the head of the IMF, Christine Lagarde, and to have alfajores of the brand Chocoarroz in his office

"Argentines think green," says an old maxim that survived all the models with which governments tried to dominate the Argentine economy. Liberals, neoliberals, Keynesians, populists, nationalists, developmentalists, industrialists: the history of the South American country had room for all possible recipes. But the dollar was always there, flying like a grim over the heads. "Argentines think in dollars because of a history of inflation that began in our country in the 1940s and, over the years, generated at least two hyperinflations and large impacts on the distribution of income. thinking will take years to the extent that we achieve inflation rates lower than one digit, "warns Machinea. In 1981, one of the last ministers of Economy of the Argentine military dictatorship, Lorenzo Sigaut, launched a phrase that made him famous. "He who bets the dollar loses," he said, and days later he devalued the peso by 30%. It is just an example that explains the survival of the ghosts of the past.

"This thing that seems so mysterious, why Argentines look at the dollar, have to do with how many people have lost money. without having a form of legitimate savings, "says Alejando Grimson, Ph.D. in anthropology at the University of Brasilia . To save is, then, the dollar, and when the dollar rises, prices increase, especially in food, commodities tied to international values. "The government lowered export taxes and then tended to re-hook the price of raw materials to the international value, gasoline is also dollarized, the government released the price and has never dropped since," says Grimson. As the problems persist, the tradition of saving in dollars is passed from parents to children. "Argentines know how much a dollar is worth, it's on the radio, in the news every hour, in the newspapers, and everyone knows exactly how much they earn and how much they spend in dollars and then nobody wants to earn less in dollars," he explains.

On Friday, half an hour before the opening of the markets, the government decided to neutralize a new exchange run with an increase of almost 700 points in interest rates and the announcement of a new fiscal deficit target, which went from 3.2% to 2.7% of GDP. Finance Minister Nicolás Dujovne said that the State will save 3,200 million dollars in public finances, with cuts, especially in public works. The reaction of the market was immediate and at the end of the day the dollar had returned to values ​​prior to the bullish climb.

In the short term, the Government faces the challenge of controlling the exchange hysteria, diverting the agenda towards less conflictive issues, take out the dollar conversations and the price rises from the coffee talks and the front pages of the newspapers. "These are issues that trigger automatic paranoia, although the context is that of a small crisis, but you have to control them quickly, because if they extend over time they will be a much more serious problem," says Germano. The challenge is enormous, because once there is discouragement it is difficult to recover optimism, especially for a government that came to power with the promise of a "revolution of joy."

The end of the idyll with the markets [19659005] MC

Mauricio Macri has had his first big run-in with international markets. Since he took office as president of Argentina, in 2015, leaders from around the world have praised the orthodox turn of his economic policy, after the 12 years of Kirchner protectionism. In January, some criticisms were heard when the Central Bank, pressured by the government, timidly lowered the interest rate even though inflation remained uncontrolled, close to 25% year-on-year. But the banking run this week has put the idyll in crisis: Argentina has left more than 7,000 million dollars of its international reserves to try to stop the fall of the peso.

The Government tried to stop the run with a rate hike and a reduction in spending, especially in public works. But the brake on these investments will have political consequences. The Macrismo has relied on some Peronist governors to pass laws in Congress, where it is in the minority. Without the letter of the public work, loses negotiation capacity.

About admin

Check Also

Stormy Daniels: All versions of the president | International

Stormy Daniels: All versions of the president | International

It should not be so difficult. There is a porn actress who is very clear …

Leave a Reply

Your email address will not be published. Required fields are marked *