Finally, an economic plan that makes sense!

[sergio]

Nikad: I suspect you have never lent money because the first rule of lending is make sure you’ll get repaid. If you want me to lend you money, sorry, but I dictate terms. Don’t like my terms? Don’t borrow from me. Furthermore, if you had a record of not honoring your debts, of filing for bankruptcy, of continually over spending, of accumulating huge debts that we all suspect you cannot re pay, and still you had the desire to borrow even more from me, what would I demand from you? Your word means nothing, you have a husband that pressures you all the time to not pay, and your kids demand flan.
Your post exemplifies what terrifies lenders of more lending. You should be thanking the imf, praising them, and showing support to Macri, even though you may not like him.
Your post is the tip of the iceberg. It reflects the complete financial ignorance of too many of the inhabitants of this country.
I hope you understand my reply is not an attack on you as a person, but rather a critique of your financial intelligence.

She said that he should have implemented this plan from the beginning and not waited until NOW.

 

[Daniel82]

Honestly I think the extreme of this situation has taken this government by surprise, perhaps showing the naïveté and lack of real world and political experience some of the cabinet has.

It was only this past May that world leaders were still visiting Macri and singing his praises. I met the CEO of a major airline who had come to BA to meet with him about expanding routes and sang his praises.

I used to actually work for someone in a top government role here and lost this person as a client because they stopped receiving the per diems they received allowing them to come to the Capital Federal as often as they used to. And all of these changes happened in about a week or two.

 

[TWB103]

Saying that Macri should have come into power making huge socioeconopolitical changes are ignoring or forgetting that he barely won the election against a very stale, hysterical and increasingly obviously corrupt government and after sucking up to the peronist and unmilitant ks. Also non peronist governments don't have a history of success and longevity because, in large part, while the government might change the significant peronist biased institutions, laws and culture remain.

 

[TWB103]

Half the population would rather this country burn , poverty increase massively etc than see Macri be moderately successful.

 

[Pensador]

Peso 41 now I am enjoying that inflation is not keeping up so prices are low for me. I have zero faith that anything will stop the crisis but for me it is opportunity. I hope I am wrong but I doubt it. The locals are already sold on the fact that they are going down again. Mindset will take them their.

 

[earlyretirement]

Saying that Macri should have come into power making huge socioeconopolitical changes are ignoring or forgetting that he barely won the election against a very stale, hysterical and increasingly obviously corrupt government and after sucking up to the peronist and unmilitant ks. Also non peronist governments don't have a history of success and longevity because, in large part, while the government might change the significant peronist biased institutions, laws and culture remain.

When solving problems, you often pick the solution that offers least resistance. Three years ago it is likely that Macri thought that borrowing money to finance his deficits was an easier approach than the cutting spending, and less traumatic. He may have also believed that doing so would give him the time to come up with other measures that would make the economy grow fast enough, such that tax revenues would increase enough to reduce the deficit significantly. Regardless of what he thought, it did not work, and he's now where he is. I do think that his new plan, and the IMF's approval of it, it the right one.

Keep in mind too that Macri may have looked at the events experienced by De la Rua's government and he may have wanted to avoid their experience. As I recall, initially the cut spending, and the were forced out quickly.

Both TWB103 and rickulivi make EXCELLENT points. Macri made a ton of mistakes and definitely he has to answer for them as the President of Argentina. But some of you are totally unrealistic and don't really understand how screwed up Argentina is if you think that he shoulders all the blame for what is going on. Be realistic on what a train wreck he inherited. I don't think that many people quite understand how bad things were.

It boggles my mind that people are asking for examples how CFK lied or trying to say that inflation wasn't high under her. That's just totally crazy. I already posted in detail in another post about the horrible misfortunes that all coincided at the same time with one of the worst droughts in Argentina in 50 years and the loss of income from corn/soy exports. As well as interest rates going up.

I believe that Macri should have cut spending drastically quickly. But as rickulivi pointed out that's not an easy option when you barely got elected. I already read posters here complaining about their utilities going up and people getting laid off. It seems like all the Monday morning quarter backing here don't live in reality. Running a company in Argentina is really tough, running a huge company is tougher, running a country like Argentina under these circumstances is almost impossible no matter which party is in place.

Some of the posts here are completely unrealistic. I don't think many in Argentina even understand what a horrible situation they are in. The IMF is the lender of last resort. Those that say that IMF loan wasn't needed are totally unrealistic and don't even have a basic fundamental knowledge of finance. I don't mean to be insincere or rude with anyone. But when you have the type of problems Argentina has you have to plan ahead and you can't wait until the last minute to try to come up with financing when you are as big of a deadbeat as Argentina is (sad but true). As another poster mentioned, you should be thanking your lucky stars that the IMF agreed to this EMERGENCY loan. Without it things would be even more dire.

Sure some can argue that this is a temporary band aid. Which may be true. But still it gives Argentina more time. These are very desperate times and desperate times call for desperate measures.

I still think that Macri should have moved quicker but most likely if he did then you'd have another form of chaos. It's one of those damned if you do and damned if you don't situation. Obviously he made many mistakes but many of you are acting like all of these things were automatic and easy decisions which wouldn't have had other consequences. Whether locals want to admit it or not, Argentines are very difficult people. They are complainers and I don't find they have the work ethic of many other countries.

The pain and chaos that Argentina is experiencing now isn't the result of decisions that just happened during Macri's short time in office. It's something that has been brewing for a long time and like I mentioned, most likely you will see these chaotic down falls every few decades no matter who is in office.

In short, Argentina is broken. Argentines are a proud people and I think it pisses them off that their country (as beautiful as it is) is so screwed up. They don't like to acknowledge that fundamentally their system is broken (banking, finance, legal system, employment/labor laws, tax system, trust with one another, political system, massive amounts of corruption, work ethic, poverty levels, horrible education system, efficiency, etc, etc etc).

So continually as there is another crises they will blame the President or political party. But in essence they don't acknowledge that the country is broken in almost every way so they get pissed and blame the politicians (who are also typically corrupt and inept). And it REALLY pains me to say this as I truly love Argentina. But I have to call it like I see it. Until you fix the underlying problems, you will never have long-lasting systemic stability.

So no I don't blame Macri for all these woes just as I didn't blame Kirchner's for all the woes. In between calm periods you will always have these chaotic periods because of the way Argentina is broken.

 

[PoorSoul]

There is zero chance this will end well. Macri and ilk will be voted out. Replaced by even more populist popliticians who will not conform to the IMF terms. End result will be more disaster for argentina and it will be blamed on the IMF.

 

[earlyretirement]

There is zero chance this will end well. Macri and ilk will be voted out. Replaced by even more populist popliticians who will not conform to the IMF terms. End result will be more disaster for argentina and it will be blamed on the IMF.

I copied and pasted this from one of the many articles I read. I think it's all that is needed to sum up the situation:

"The unease has even invaded those who voted for Macri in the hopes that the problems inherited from the Kirchner era would be solved. Nacho, 24, who works at a candy store in the evenings, says that he knows “very little” about the IMF, but has few expectations about the help that might arrive. “It’s a disaster,” he says, “everything is going up in price and I can’t make ends meet. I earn 16,000 pesos [$700] and pay 12,000 [$520] in rent. I am anti-Kirchner because they stole everything, but Macri said that he was going to make a change and there hasn’t been one. I voted for Macri but now I regret it, I won’t vote for him again.” "

Macri was a big fool for setting the wrong tone in the beginning for Argentines. “Today is a historic day: it signals a change into a new era that, as I told you and you believed, is going to be wonderful,” proclaimed Macri on the night of November 22, 2015. “This change will have to lead us toward the future, toward the opportunities that we need to grow, to make progress.” He promised a "revolution of Joy". And the Argentines were foolish to believe this was possible. He talked about, “This change needs to channel all its energy and vitality into building the kind of Argentina that we all dream of. We have said that we have to build an Argentina with zero poverty, and we’re going to do it together.” "

I get he wanted to try to be positive but the Argentines were foolish as well. Instead he should have scared them into the nightmare of a situation Argentina was in. Instead of being so positive he should have told them that it's not going to be easy and he won't have time to fix everything in the short-term but he would do his best. This was a really unrealistic message to start out with. He should have told them that the insanely high inflation under the CFK years would most likely continue and it would be really difficult to contain it. He set totally false expectations from the get go.

So yes, absolutely he is a total failure but again, I'm not sure things would be a total mess if anyone else got elected either. Argentina is a very screwed up country.

 

[Bajo_cero2]

Macri's government, along with the IMF, have agreed on an economic program that should succeed in bringing solid economic, and sustainable. growth to the country, far less inflation, and hopefully as a result, more social justice. There are only two impediments that may cause the program to fail. Let's review the main parts of the program, its pain and benefits, and finally then the potential impediments to it.
Basically, the program calls for a dollar at $44 (or less if dollars flow into the country), and to adjust upwardly on a daily basis around 3% per month; no government or central bank selling dollars, which means if you want dollars, you will only be able to buy them from someone willing to sell them, and that does not include the central bank or government. No primary government deficit (that is, a balanced budget not counting interest payments) and lastly, no new printing of money until June of next year. Wow. A plain and simple program that any financially successful family lives by; that is, no more spending of what you don't earn.

What's the pain of this program? In the short run, it could be huge. An initially severe recession, lots of new unemployment, and large drop in the standard of living of the general population, because inflation will have increased far more than salaries, and lots of people will be out of work.

What's the benefit of this tough medicine? In the near term, you will have far less inflation, and strong economic growth that is sustainable. The growth will come thru exports. You will sell in valuable dollars, and pay your costs in shitty pesos! Likely winners are the agricultural sector, the oil and gas industry, minerals, tourism, and all others that can export.

What are the main impediments to this makes sense program? Sticking to it! Will the government really be able to avoid printing new money? Will social unrest topple the government? Liquid medicine usually taste terrible, but the results can be super positive. The key, of course, is to swallow the medicine. Will Argentine's do it? Based on history, the answer seems to be no. This is the society of the "quiero flan!". However, I have hope that Argentines will finally understand that you cannot spend more than you generate over the long run.

Are you retarded or a paid troll? Last time they did exactly the same there was 2000% inflation and it made look like the 2001 crisis like a pijama party.

 

[Bajo_cero2]

Do you really think all the powerful mafias and special interest groups here would have ever allowed Macri to carry out the kind of "ajuste" creating reforms you mentioned, given that there was not a crisis at the time? There would have been chaos in the streets. Until there is a major crisis most of those groups will not budge an inch because they have too big of a piece of the pie to protect. I do wish Macri had at least tried.

Macri IS the mafia. This is like having Pablo Escobar as a President with one difference: Pablo was nationalistic while M is a traitor to his country.