Almost 12 Months In, What Is The Score?

[camberiu]

December 10 will mark the first anniversary of the end of Cristina's reign and the first full year of Macri as president. So, what is the score so far? How much better or worse has Argentina gotten since then? Although no one has asked for it, here is my take:

1 - Macri so far has demonstrated to be a much more predictable, sane and rational leader than Cristina, both domestically and at the international stage. No surprises there and hardly a worthy praise, since even a shit throwing baboon at the BA zoo could accomplish that with ease.

2 - His primary focus so far has been on tactical issues, like ending subsidies, lifting (some) import restrictions, renegotiating the holdouts bonds issue that has dogged Argentina for over a decade, and attempting to attract foreign investment. Although I think these measures are overall positive, I seem them as to putting a band aid over an exposed bone fracture. He seems to be betting that those tactical reforms will bring a wave of foreign investments that will lift Argentina out of its current economic quagmire. I equate this strategy as putting a lipstick on a pig and hoping that the new "princess" will somehow be able to attract a beautiful prince that is willing to kiss the pig on the lips.
The hard reality is that most of the world today is dealing with excess productive capacity and investors are adopting a more risk averse/defensive posture. So without deep and meaning full structural reforms, such as the complete revamping of the current labor and tax laws, the creation of a truly independent central bank and the establishment of a hiring process that ends political patronage inside the government and the judiciary, I don't see significant foreign investment coming to Argentina anytime soon. Worse, without such reforms, I don't see how Argentina can ever escape that boom&burst cycle it has trapped itself into over the last 100 years or so.

3 - So far, I have seen no evidence of Macri even attempting to begin the most preliminary discussion with the broad Argentine society about those needed reforms. Instead, all I see are hopes of some foreign investors coming down from the clouds to rescue Argentina.

 

[Noesdeayer]

Camberiu:
Right.It is difficult to tame one's temper and ego.I have trouble with mine as well.So here is my take on your take.Besides,I comment on Brazil a lot and I don't live and work there either
1) Macri does,indeed,deserve praise for his predicability,sanity and rationality because it is a complete and total change of leadership from over 70 years of Peronist statist orientated policies.
2) Beginning with the words "the hard reality" down to the end,I would agree 100%.International investors will not continue to finance Argentina based on wishful thinking and "pie in the sky" promises.Structural reforms are animperative must and must come ASAP.It is absolutely crucial that these structural reforms experience a solid beginning in 2017.
3) True. Argentina must take full advantageof this historical moment and not waste it as they did with Peron in 1945.Stop expanding the public debt and increasing the deficit.Improvement of their productivity is another imperative.
The main obsticule in all this are the Argentine people themselves who basically wait for these things to be done for them with little actual colaboration,We see this not only in the unions but also in the empresarial sector.They must begin to cooperate.It's now or,indeed,never.

 

[camberiu]

Another point that I forgot to mention is Macri's foolish approach to the drug issue in Argentina, opting to escalate the "war on drugs" instead of treating it as a public health issue.
When the only thing you know how to use is a hammer, every problem turns into a nail.
I think that this idea of going "Rodrigo Duterte" on drug dealers is folly. It failed in Brazil, Mexico and it will fail in Argentina too.

'Better to be belligerent than innovative': Argentina's new approach to fighting drugs is stoking concern

 

[UK Man]

Positive - Having someone 'normal' representing the country and making friends with the rest of the world will eventually pay dividends....she just got on everyone's goat.

Negative - Nearly a month later and I'm still waiting for my small tea order from the UK. Which is farcical in this day and age.

 

[sesamosinsal]

The hard reality is that most of the world today is dealing with excess productive capacity and investors are adopting a more risk averse/defensive posture. So without deep and meaning full structural reforms, such as the complete revamping of the current labor and tax laws, the creation of a truly independent central bank and the establishment of a hiring process that ends political patronage inside the government and the judiciary, I don't see significant foreign investment coming to Argentina anytime soon. Worse, without such reforms, I don't see how Argentina can ever escape that boom&burst cycle it has trapped itself into over the last 100 years or so.

Even if they made all the necessary reforms and they were perfect, they'd still run into the issue of a dysfunctional global economy, as you suggested. Global economic growth is largely dependent upon U.S. imports, which have risen year-after-year since the 70s... until 2008.

While not impossible, Macri's promises are going to be much, much harder to keep in these economic conditions. NK and CFK were lucky to come into power toward the end of a global trade boom, and Scioli likely lost to Macri because of it. To think that Macri will be able to somehow revert global trends is wishful thinking at best.

If he's lucky, he'll be able to keep the country steady for the next four years, but the wave of investment in Argentina will not come until 1) the rate of inflation is stabilized, not necessarily lower; 2) the exchange rate is stabilized; and 3) global demand picks up.

Currently, the BCRA has LEBACs (deposits) worth the entire supply of money in public circulation. To grow the domestic economy, they're going to have to cut interest rates, but when they cut interest rates, those pesos are going to flow elsewhere, perhaps the U.S. dollar or even the economy, but either way the lowering of interest rates will further exacerbate the inflation problem.

And if U.S. imports don't pick up, none of this really matters anyway. Argentina's most important economic partner is Brazil, and Brazil's most important economic partner is China, and China's most important economic partner is the U.S. Currently, U.S. imports overall are either flat or on the decline. It's hard to tell which at this point, but they aren't growing. This not only has consequences for Argentina, but really the global economic order overall.

Macri is in a tough spot, and none of the issues he's facing are his administration's fault. He's taking a huge, huge gamble by promising Argentina an economic recovery in these conditions. Internally, they're clearly aware of this gamble because their policy decisions reflect it; this is why they aren't opening up the economy very quickly. Their political discourse, however, is much more optimistic. Given that it's unlikely things won't change much by 2019 (if anything, things will likely be worse), he's going to have a tough time explaining what happened.

I am sure you've all seen the video of CFK walking through the throngs of militantes... https://www.youtube.com/watch?v=H8OCPASoUjo

In 4 years, the effects of all of this could make her return to power viable, if she runs.

 

[camberiu]

Bradly,

I agree with you that international economic conditions are so bad that even all the reforms Macri could possibly implement might not be enough to attract meaningful foreign investment.
However, without those reforms, Argentina is not even dead in the water, but drowning. Without such reforms, there is no way he can stabilize the currency and foment a minimum level of sustainable levels of domestic savings, investment and consumption.
I agree that Macri is on a tough spot and he inherited this mess. But hey, he wanted this job, badly, so I feel no sympathy towards him.
As the world's economy fizzles, having Argentina trapped on a stagflationary swamp sounds very unappealing and it creates a ripe scenario for the return of a Cristina, or worse.

 

[Noesdeayer]

Bradly:
A very concise and true synopsis of Argentina's economic situation.Unfortunately,I don't think he will end his term with inflation lower than 8%.
.Macri is in a very tough spot but he he is able to move ahead on the reforms, and get the Argies to bring back some of their U$D milliones from abroad,I believe that he will get the necessary support and colaboration of the Argentine people as a whole in all its sectors without creating "a ripe scenario for the return of Cristina"
.Interacting with Argentines in the day to day i am convinced that a necessary majority of them would not return to something like her "relato"
And "worse" would be Venezuela.Gotta have that sensationalist gloom in there.

 

[camberiu]

A very concise and true synopsis of Argentina's economic situation.Unfortunately,I don't think he will end his term with inflation lower than 8%.
.Macri is in a very tough spot but he he is able to move ahead on the reforms

I'd love to hear more about these "reforms" that he might be able to "move ahead on" to bring back all those greenbacks. Because so far, I have heard of no proposed reforms at all.

 

[Simonkeating]

Positive - Having someone 'normal' representing the country and making friends with the rest of the world will eventually pay dividends....she just got on everyone's goat.

Negative - Nearly a month later and I'm still waiting for my small tea order from the UK. Which is farcical in this day and age.

Im from Uk too. This issue with the tea concerns me.

 

[D.B. Cooper]

In less that a year he's managed to put in jail Lazaro Baez, Perez Corradi, Ricardo Jaime, Caballo Suarez, Milagro Salas, Jose ( 9 Million Dollar Man) Lopez, and Juan Pablo Schiavi.
We need too see the rest of these thieves in jail. Devido, Melani, Boudo, Cristina and who knows what else is out there that we don't know about yet. Let's not forget that in less than a year he settle with the Vulture Funds & lifted the cepo on the Dollar.
I think the boy is doing just fine, Lets give him some rope he's just getting started.