Cristina warns Milei era will end in major crisis

[Lanick]

It's fair and rightful to condemn the previous Alberto Fernandez presidency for all of it's wrongdoings, however, defunding and attacking universities and research institutes and organizations is a direct threat to the entire future of the country. Every country needs doctors, lawyers, engineers, scientists, researchers, and of course, artists and intellectuals as well - no matter how much rightists such as Milei hate these people. What is a country without these groups of people? Milei wants to close the CONICET. He has repeatedly attacked cultural institutions and intellectuals who disagree with him, and on top of that, over 40,000 people lost over ~$250 million collectively as a result of Milei's promotion of the $LIBRA cryptocurrency scam. Prior to becoming President, he also promoted crypto trading courses on Instagram - and we all know that crypto trading is essentially gambling. Who really ruined the country? I have no idea why you insist on defending him so vigorously!

You’re right. And I would second everything you say if this was not taking place in Argentina. The universities here are independent and funded by the government through taxpayers. University education is free and it’s a top notch education. Milei had problems with universities accepting and educating foreign students completely free of charge. A nation needs doctors, engineers but why would a nation pay to provide medical school ducation to a foreigner free of charge. Now; the more students you got the more funding you can demand from the government and this is not happening anymore hence some academics (who were not even bothered to show up at the university) are unemployed now and they’re annoyed. There’s demand for them at private universities but they want public ones where nobody bothers them. But I can assure you that the universities are functioning at the moment.

A close friend is a stage actor. He is far left and supports K. He gets paid for doing nothing. Acting nowhere, producing nothing. Just an actor on a payroll. He’s not getting any dough now. And he’s furious. Because he has to work now. Be it commercials or tv. Before he was having a very leisurely life getting paid by the government because he’s an artist even though had nothing to do with art. There were a lot like him in the system. And I’m sure good ones suffering because of the abusers but that’s life.

 

[LuckyLuke]

My prediction is that some serious economic shock will come but not soon― somewhere between year 4 and 8 of Milei presidency. The cause will either be from trying to maintain this overvalued position or through the conventional boom-bust of irresponsible deregulation. Probably the more transformative changes will come in the second term.

Very curious as to your prediction. The BCRA would not have been able to intervene much longer in the FOREX were it not for the IMF loan. Even within the structure of the IMF loan the BCRA is not building reserves as required. With commodities in a bear market, exports suffering, blanqueo's running out of steam, it remains to be seen where the BCRA will get dollars other than high interest REPO loans.

 

[FrankPintor]

Very curious as to your prediction. The BCRA would not have been able to intervene much longer in the FOREX were it not for the IMF loan. Even within the structure of the IMF loan the BCRA is not building reserves as required. With commodities in a bear market, exports suffering, blanqueo's running out of steam, it remains to be seen where the BCRA will get dollars other than high interest REPO loans.

This is something I don't understand... because it wasn't able to get the Dollar down to the lower limit of the exchange rate band (well, duh...), Argentina decides to borrow yet another USD 2 billion (where are we at now? USD 64 beeelion in debt already?).

This USD 2 billion loan is deposited in the BCRA's account, where it magically transforms from being debt to being an asset and can now be used to buy Dollars (which the government hopes, or hoped, will depreciate). Am I right so far?

 

[redlobster]

This USD 2 billion loan ... can now be used to buy Dollars... Am I right so far?

Don't you think it's a bit strange to use dollars to buy dollars?

The government is just selling borrowed dollars for pesos to push the dollar price down.
At some point, they will run out of dollars and need to borrow again.

And everybody knows that uncontrolled borrowing is much healthier than printing money.

 

[FrankPintor]

Don't you think it's a bit strange to use dollars to buy dollars?

You are correct, I was being a bit incoherent. Borrowed Dollars to tick an IMF "central bank reserves" box, even though it's a loan, not an asset. None of this makes sense to me.

 

[LuckyLuke]

You are correct, I was being a bit incoherent. Borrowed Dollars to tick an IMF "central bank reserves" box, even though it's a loan, not an asset. None of this makes sense to me.

Balance sheets are a funny thing. You can have a house reported as an asset and the attached mortgage be a liability at the same time. The equity of the home is what is ultimately added to the net worth.

In this case the BCRA has the asset of increased bank reserves and the liability of the loan principal. It's a wash (zero) on it's net foreign reserves.

These maneuvers aren't all pointless. Deregulating import/exports can cause some temporary strains on required dollars for import purchases while waiting for exports to try to bring in dollars. The problem of course is that exports are already strained from an overvalued peso and a commodity bear market.

Milei is pulling all the strings at the same time. Unfortunately, they were already very tangled to begin with. Much of the fiscal deficits apparently causing inflation were government aid in the form of direct stimulus (social security, scholarships, food banks, etc.) and indirect stimulus (utility subsidies, gas subsidies, public works, etc). By cutting them to reduce inflation, it only further strained employment, consumption, tax receipts and import demand, while simultaneously crushing the export market with peso's bounce back.

 

[Bajo_cero2]

I believe Macri wants so. He is the one behind CFK SC decision.

 

[redlobster]

Borrowed Dollars to tick an IMF "central bank reserves" box, even though it's a loan, not an asset. None of this makes sense to me.

I don’t see why that’s surprising.
In traditional double-entry accounting, receiving a loan increases both cash (assets) and loan payable (liabilities) - reflecting its dual nature.

 

[FrankPintor]

Milei is pulling all the strings at the same time. Unfortunately, they were already very tangled to begin with. Much of the fiscal deficits apparently causing inflation were government aid in the form of direct stimulus (social security, scholarships, food banks, etc.) and indirect stimulus (utility subsidies, gas subsidies, public works, etc). By cutting them to reduce inflation, it only further strained employment, consumption, tax receipts and import demand, while simultaneously crushing the export market with peso's bounce back.

So, win, win, win all round

I hear you and @redlobster about balance sheets and double-entry accounting, but then Mileinomics is reduced to accounting tricks, right?

An actual recovery path for Argentina would have involved an export-led boom (not just agriculture), driven in part by a lower exchange rate, bringing actual unencumbered money into the country and into the BCRA's reserves. Milei's only success so far seems to be reducing inflation (which is valuable, though it's still very high), for the real world there's nothing else there.

 

[jlynch]

This is something I don't understand... because it wasn't able to get the Dollar down to the lower limit of the exchange rate band (well, duh...), Argentina decides to borrow yet another USD 2 billion (where are we at now? USD 64 beeelion in debt already?).

Argentina has more creditors than the IMF. The debt was 400 billion USD as of 2022 and its a lot more now.

https://twitter.com/x/status/1659369728480034816