A Sharp Right Turn for Argentina?

[MilHojas]

A Sharp Right Turn for Argentina?

www.wilsoncenter.org

 

[florence]

Thanks for posting this. Very interesting explanation of what is going on in politics here.

 

[aloevera]

A Sharp Right Turn for Argentina?

www.wilsoncenter.org

Milei won't be elected, simple. But if he does somehow happen to be elected, his presidency will fail bigly, and as a result, someone with common sense ideas won't see power for at least the next 10 years. But he won't be elected. I also can't see Bullrich being elected. When is she going to depart the political scene, anyway? She's even more annoying than Milei. All of the politicians here are losers. Objectively, Larreta is most likely to be elected, and of course, he too is a loser.
I guess the Earth will just keep on rotating.

 

[sts7049]

i laughed at the idea of trump being elected in 2016. thought it was impossible!

oops.

i won't view a candidate as impossible anymore...

 

[Alby]

Milei seems like an unlikely winner. But Tennenbaum here

spends half an hour saying the move towards Milei is now so evident (and so worrying) that he is going to campaign against it on the radio (even though he has nothing against Milei personally).

Nobody can say with any confidence what is going to happen. Milei could win.

 

[antipodean]

The reality is that if you ask at random working class people in AMBA who they are going to vote for, the vast majority say Millei followed by Patricia. It is both entertaining and surprising to see the live news reports at Once or Constitution station or out on the streets doing this and listen to peoples point of view - many of who openly say the used to vote K/ P but it never actually worked out for them so they have given up on them.
When you have little left to loose by trying something new, a promise of new hope is better than a promise of a twice tested and failed hope.

And with almost 40%+ of Argentines now having little left to loose in terms of their economic situation, an outsider like Millei will take a big toll on the vote (Just like Bolsonaro, Castillo, Bukele, Trump were also able to do by virtue of being a fresh face whose emotion resonates with the common man).

 

[Quilombo]

i laughed at the idea of trump being elected in 2016. thought it was impossible!

oops.

i won't view a candidate as impossible anymore...

Me too; perhaps I'm once bitten twice shy but I refuse to say never anymore, and given how bad things are for most Argentines I can see people saying "Jesus take the wheel" and giving Milei a shot even though I think he will be a disaster too.

Milei seems like an unlikely winner. But Tennenbaum here

spends half an hour saying the move towards Milei is now so evident (and so worrying) that he is going to campaign against it on the radio (even though he has nothing against Milei personally).

Nobody can say with any confidence what is going to happen. Milei could win.

Now that people are increasingly taking him seriously what do we see on the horizon? This is the part I don't think many people have though out yet that support him that don't have dollars:

I've seen some people hypothesizing that Milei's plan is dollarization si o si, even if he doesn't win by the simple nature of preforming well in the PASO and leading up to and including election day(s). Banks don't have to run out of money for a bankrun to happen, people just have to believe they will run out, and dollarization can happen without the government's blessing in two simple ways: either people refuse to accept payment in pesos for goods/services, or everything is priced in dollars, and then transactions are settled in pesos at an agreed exchange rate (similar to how hotel reservations currently work).

Now, let's say the unimaginable happens, and Milei actually wins. What would dollarization sponsored by the state look like? Infobae asked some economists this on April 4th this month. For one, you have to at the very least dollarize all the physical pesos in circulation, doing so using net reserves of the BCRA would result in an exchange rate of $225:$1. There's the local debt in pesos, that will have to be dollarized too, and that results in an exchange rate of $553:$1 using the reserves. But what about the pesos deposited in bank accounts? If you want to completely eliminate every centavo, whether as physical currency, debt, or deposits, this will require an exchange rate of $840:$1 using the current reserves.

This is what I think people are forgetting, and this is where Milei isn't being clear with people I feel; he's only painting rosy memories of the 90s, 1 to 1, and people being able to get mortgages and take the family to Florida. But the economy doesn't dollarize at the BCRA exchange rate of course, and not even the blue, it dollarizes at something closer to $1,000:$1, which means someone who earns the minimum wage today would go from earning $189.49 USD a month to earning $80 USD/month. Everyone's been calling the IMF's loan restructuring an adjustment, this will be shock treatment, and some people won't make it to the other side. If this is what people want, then so be it, but I feel the Mileis and PRO deputies of the world aren't being honest with people as to the impact that this will have on their everyday life, savings, and future.

 

[ArgentinaVet]

Me too; perhaps I'm once bitten twice shy but I refuse to say never anymore, and given how bad things are for most Argentines I can see people saying "Jesus take the wheel" and giving Milei a shot even though I think he will be a disaster too.

Now that people are increasingly taking him seriously what do we see on the horizon? This is the part I don't think many people have though out yet that support him that don't have dollars:

I've seen some people hypothesizing that Milei's plan is dollarization si o si, even if he doesn't win by the simple nature of preforming well in the PASO and leading up to and including election day(s). Banks don't have to run out of money for a bankrun to happen, people just have to believe they will run out, and dollarization can happen without the government's blessing in two simple ways: either people refuse to accept payment in pesos for goods/services, or everything is priced in dollars, and then transactions are settled in pesos at an agreed exchange rate (similar to how hotel reservations currently work).

Now, let's say the unimaginable happens, and Milei actually wins. What would dollarization sponsored by the state look like? Infobae asked some economists this on April 4th this month. For one, you have to at the very least dollarize all the physical pesos in circulation, doing so using net reserves of the BCRA would result in an exchange rate of $225:$1. There's the local debt in pesos, that will have to be dollarized too, and that results in an exchange rate of $553:$1 using the reserves. But what about the pesos deposited in bank accounts? If you want to completely eliminate every centavo, whether as physical currency, debt, or deposits, this will require an exchange rate of $840:$1 using the current reserves.

This is what I think people are forgetting, and this is where Milei isn't being clear with people I feel; he's only painting rosy memories of the 90s, 1 to 1, and people being able to get mortgages and take the family to Florida. But the economy doesn't dollarize at the BCRA exchange rate of course, and not even the blue, it dollarizes at something closer to $1,000:$1, which means someone who earns the minimum wage today would go from earning $189.49 USD a month to earning $80 USD/month. Everyone's been calling the IMF's loan restructuring an adjustment, this will be shock treatment, and some people won't make it to the other side. If this is what people want, then so be it, but I feel the Mileis and PRO deputies of the world aren't being honest with people as to the impact that this will have on their everyday life, savings, and future.

I've read much, much worse figures of what the FX rate would be to turn all peso denominated deposits, debt, cuasi debt etc into dollars. The rates I have seen were between 2000-10,000 pesos per USD. Dollarization in the short term would bring catastrophic pain and collapse in living standards for millions of argentines. In the mid and long term it could work especially since Argentina has the second largest quantity of physical USD cash in the hands of the private sector outside the borders of the United States (only Russia has more physical USD cash). Something to keep in mind: the Argentine GOVERMENT and CENTRAL BANK are broke/insolvent/bankrupt; however, the private sector is not and there are an estimated more than $100 Billion USD (billion with a B) in USD cash in safe deposit boxes etc not deposited in the banking system. The physical dollars don't leave Argentina's borders, they just change hands between private sector market participants. If enough confidence was established in a new regime and the right incentives provided those dollars could enter the system and spur massive growth in a dollarized Argentina.

 

[aloevera]

i laughed at the idea of trump being elected in 2016. thought it was impossible!

oops.

i won't view a candidate as impossible anymore...

And just like Trump, a Milei presidency will end in massive failure and his party will never win again (just like Trump). Should Milei happen to be elected, we will return to peronismo after one term. Take it to the bank.

 

[Irelander]

I lived in Argentina from 2005 until last year. During that period I witnessed the euphoria of 8% year-on-year growth rates during Nestor Kirchner's presidency; Cristina's (in my view) reasonably competent steering of the country through the 2008 financial crisis before running out of steam; the hapless Mauricio Macri's fairy tales of "a rainfall of investment" and "inflation gradually falling to a single digit" which came to nothing except the reckless creation of a mountain of foreign debt; and Alberto Fernandez's uninspired, but also unlucky presidency, what with Covid, external inflationary pressure, drought, etc.
I've just come back from six weeks in the country and I have to say things look a bit scary to me. The failure of 16 years of Kirchnerism to make any inroads on poverty levels, coupled with the absolute inability of the right to reflect on Macri's failure and come up with a viable proposal capable of gaining broad support, seem to be paving the way for Milei to storm in, peddling his demagogic "solutions" to an electorate desperate for answers. Obviously he has the hard-right "cull the poor" vote in the bag, but he's also peeling off disillusioned 'Juntos por el Cambio' voters and, most ominously, he's gaining in the Peronist heartlands.
In the pages of 'La Nación' you can sense the nervousness of even the conservative establishment: Milei's 'dolarisation' plan is clearly unconstitutional. Now I see he's talking about bypassing the legislature, Fujimori-style, by means of 'consulta popular'. It's easy to see how this could end up in a situation that makes the January 6th Washington DC riot look like a teddy bears' tea party, especially in a country that historically has shown the depths of depravity it is capable of in terms of human rights violations.