Caputo says dollar doesn’t float due to fear of "communism"

[MilHojas]

Caputo says dollar doesn’t float due to fear of ‘communism’ - Buenos Aires Herald

The economy minister pointed to Peronism in a response to critics who posit that the peso is artificially overappreciated

buenosairesherald.com

Argentina to lift all currency exchange restrictions “soon”

While Argentina's Central Bank (BCRA) announced the “imminent” removal of all remaining controls on foreign exchange transactions, the South American country's National Institute of Statistics and Census (Indec) is about to report October's inflation on Wednesday. Most experts predict it will be...

en.mercopress.com

Milei keeps the peso from driving huge price hikes

Shoppers increasingly stick to essentials and foot traffic is thinning, limiting the ability of businesses to raise prices.

www.batimes.com.ar

 

[sergio]

Caputo says dollar doesn’t float due to fear of ‘communism’ - Buenos Aires Herald

The economy minister pointed to Peronism in a response to critics who posit that the peso is artificially overappreciated

buenosairesherald.com

Argentina to lift all currency exchange restrictions “soon”

While Argentina's Central Bank (BCRA) announced the “imminent” removal of all remaining controls on foreign exchange transactions, the South American country's National Institute of Statistics and Census (Indec) is about to report October's inflation on Wednesday. Most experts predict it will be...

en.mercopress.com

Milei keeps the peso from driving huge price hikes

Shoppers increasingly stick to essentials and foot traffic is thinning, limiting the ability of businesses to raise prices.

www.batimes.com.ar

I thought Communist governments were the ones that controlled the currency!

 

[LuckyLuke]

Translation....we implemented austerity to reduce one type of inflation (fiscal deficit/emission).

Inflation here is also partly driven by the perception of the dollar value, regardless of fiscal prudence.

If we allow "speculators" to arbitrarily drive the price of the dollar up, inflation could return in some form.

If inflation returns, Peronists will claim the austerity was in vain.

We can't afford to give them any material evidence that our policies don't work.

 

[FrankPintor]

Translation....we implemented austerity to reduce one type of inflation (fiscal deficit/emission).

Inflation here is also partly driven by the perception of the dollar value, regardless of fiscal prudence.

If we allow "speculators" to arbitrarily drive the price of the dollar up, inflation could return in some form.

If inflation returns, Peronists will claim the austerity was in vain.

We can't afford to give them any material evidence that our policies don't work.

Indicating, perhaps, what a colossal mistake it is to focus exclusively on the fiscal deficit?

A real economy needs competitive production and exports. Which, with an open market, need a favourable exchange rate. While, no doubt, many Argentinian companies are uncompetitive at any exchange rate, I can only compare the small and medium companies here to the Mittelstand in Germany, or the specialist manufacturers in Lombardy. If Milei is in power for too long he will destroy all of this (he's already trying to destroy Argentina's nuclear reactor research and development).

Furthermore, stopping all infrastructure investment, even funded projects, must the the single most brutally boneheadedly stupid action taken by Milei (there's lots of competition, I know). Would any sensible foreign investor bring his money here when the government refuses to spend its own? Foreign investors have fled Vaca Muerta, despite all the RIGI guff.

One of the worst things you can do to a private company is give the bean counters (and that's all Milei is) free rein. I'm thinking the same is true of a country's economy.

If Vaca Muerta showers Argentina with Dollars in 2-3 years time, it will be despite Milei, not because of him.

 

[LuckyLuke]

Indicating, perhaps, what a colossal mistake it is to focus exclusively on the fiscal deficit?

A real economy needs competitive production and exports. Which, with an open market, need a favourable exchange rate. While, no doubt, many Argentinian companies are uncompetitive at any exchange rate, I can only compare the small and medium companies here to the Mittelstand in Germany, or the specialist manufacturers in Lombardy. If Milei is in power for too long he will destroy all of this (he's already trying to destroy Argentina's nuclear reactor research and development).

Furthermore, stopping all infrastructure investment, even funded projects, must the the single most brutally boneheadedly stupid action taken by Milei (there's lots of competition, I know). Would any sensible foreign investor bring his money here when the government refuses to spend its own? Foreign investors have fled Vaca Muerta, despite all the RIGI guff.

One of the worst things you can do to a private company is give the bean counters (and that's all Milei is) free rein. I'm thinking the same is true of a country's economy.

If Vaca Muerta showers Argentina with Dollars in 2-3 years time, it will be despite Milei, not because of him.

You forget the tight rope that the market has Milei walking. He cannot emit for public projects, pay down debt, accumulate reserves and reduce taxes all at the same time, never mind in the face of a recessionary drop in tax revenues. Just where is he supposed to get all this money while placating a fragile market that is ready to jump ship to dollars en masse while Peronist pirañas circle him ready to roll out the "I told you so" with promises of bread and circus for all.

 

[FrankPintor]

You forget the tight rope that the market has Milei walking. He cannot emit for public projects, pay down debt, accumulate reserves and reduce taxes all at the same time, never mind in the face of a recessionary drop in tax revenues. Just where is he supposed to get all this money while placating a fragile market that is ready to jump ship to dollars en masse while Peronist pirañas circle him ready to roll out the "I told you so" with promises of bread and circus for all.

The chainsaw was applied to every public project, including those with funding, partial funding, and almost complete projects. I'm not saying it would have been easy to identify "deserving" candidate projects, but applying some intelligence to the task would have been better, I think. Also, remember that unilaterally stopping all infrastructure projects makes the government vulnerable to damage claims from all of the contractors affected..

Just a random quote I saw on Reddit: "The compressor plants [for the Nestor Kirchner Gas Pipeline reversal project] were 80% complete at the end of Sergio Massa's administration, a project that would allow doubling the gas pipeline's transport capacity. These works cost the State about 50 million dollars, and by not completing them, the government will have to disburse more than 500 million dollars to import liquefied gas.

As no private company is willing to take on the project with its own financing, the Javier Milei government paralyzed a key project to accelerate the Vaca Muerta business, the production and transport of natural gas to be able to export to Brazil".

Does that make sense to you? It doesn't have to be all or nothing. And again, investing nothing send a signal to potential foreign investors.

Would this "recessionary drop in tax revenues" have anything to do with an over-valued currency?

 

[FrankPintor]

I just had to check this: it seems that on the order of USD 250 - 300 billion could be owed to contractors for chainsawed infrastructure projects in Argentina. It's difficult to estimate, since it depends on the contract details of each individual project, but it's still nice to have a ballpark figure.

Rather amusingly, this puts the YPF expropriation claim of USD 16 billion or so very much in the shade. You know, the one Milei always uses to beat up Kicillof.