Finally, an economic plan that makes sense!

[perry]

You are totally missing my point. I do not blame the IMF for the crisis or think it is some kind of devil for ensuring that Argentina will pay them back. I am absolutely blaming Macri for going to them, etc.

These posters have been very unfair to Nikad a intelligent poster who understands Argentina more than most . The arguments by these posters are full of holes as the argentinian people are not to blame for the massive borrowing from this current government . And what did they do with the borrowing they used it for financial speculation only . Is this not an economic crime? The IMF rules state clearly ( now they have broken them) that money lent cannot be used to support the currency . Why now they are giving the green light to the Argentinian government to utilize 150 million dollars a day to prop up the peso . This is burning of our central bank reserves and its like putting a bathplug on a sinking ship .

The argentinian people live within their means and compared to USA and Australian people they have much less personal debt . The people of Argentina are absolutely not responsible for the bad economic decisions of the current government .

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.

Regarding the imf loan why now do you think it will work when all the other money generated by the blanqueo , the issue of government bonds , etc etc did not create any difference to the budget of Argentina . The reality is this money was used for pure espectulation on gambling on financial markets . None of this money was used to generate jobs and build business . If Macri just used 5 billion dollars to offer business loans to small business he could have generated close to 100 thousand jobs in this sector . It really is not difficult to generate employment which is the backbone of society . There seems to me a macabre plan to bankrupt the argentinian people and deliver this country to international bankers this is very clear to any intelligent person . Most crisises in world history are generated with the collusion of interested parties , We can not assume that what is happening now is not planned .

Regarding the Imf loan did you know that the first payment made by IMF of over 13 billion dollars in June has been already spent . Talk about efficient money management !!!! The first tangent was spent on defending the peso either though it was against the rules at that time . Now the IMF says that Argentina can access this money utilizing 150 million dollars a day to defend the peso ( Seems very unusual that they would allow this rule that has never been approved for any other country ever. It seems that they are working in collusion to bankrupt Argentina ) . In just 30 weeks all this money could be frittered away and the central bank coffers left with nothing .

Argentinas economic faults are not the peoples faults as they have been manipulated by their government and system for a long long time , Devaluation and inflation combined is a very cruel medicine and is equivalent to the worse of financial terrorism , Imagine if you have a family now on a basic wage your buying power is less than half now than 2017 . This is a fact . Wages in dollars have been decimated but costs in pesos have risen close to 50% . I remember saying just 6 months ago on this forum that inflation this year would be 40% and was attacked by some posters. Looks like inflation will be close to 50% this year. Under the Kirchners it never reached this level and also wages were adjusted to keep pace now not happening .

We are living in historic times in Argentina and I believe this government will go down in history as one of the worst ever if not the worst . In just three years he has destroyed the small business class , send the middle class to poverty , and turned Buenos Aires into a anxious depressed city . The provinces are even worse with mass unemployment and poverty .

Argentina is a country that meant hope for me and in those first years that I was here there was an optimism here that was contagious . From 2004 to 2011 there was a booming economy here that was created by real economic growth , People say it was because of soy etc etc . This booming economy was created by business and confidence in business . When an economy is good and costs are low people expand their businesses and employ people . This was the reason for the economic boom and had nothing to do with soy imports . Nowadays everyone is laying off staff and very few are opening new businesses . This massive unemployment is undereported as is poverty and crime .

Will Argentina benefit from the IMF loan ? As stated above already the first payment in June 2018 has been spent on useless money espectulation . The next payments will not be used in any sense to create employment and improve the lives of the middle and working class population . There will be much more austerity and much more pain . Greece a rich country just 10 years ago is in the grips of a recession for close to 9 years . The IMF loan did not help them as they are a broken people earning the lowest wages of Europe at 600 euros a month for basic wage. The IMF forced the Greek government to raise costs on basic services that many people cannot afford . I read recently that close to 15% of greek households use candles in the night as they cannot afford their electricity bills .

https://www.reuters.com/article/us-...austerity-turned-off-the-lights-idUSKBN1781IQ

 

[nikad]

I apologize if I have missed your point, but I was not sure what it was. Was it that Macri should have cut spending from day one, or that he should have not gone to the IMF? I will address both.

Point 1: Macri should have gotten tough on spending from the first day in office. It's easy now to say what he should have done; it's a whole different ball game when you are faced with tough choices, and you need to make a decision. He may have made the wrong decision, but he is certainly correcting that now. Haven't you ever made a decision based on the information you had on hand, only to realize later that you made the wrong one? Should you get blamed for that?

Point 2: You are blaming Macri for going to the IMF. I don't know how financially astute you are, so excuse me if I assume the worst. Do you understand the difference between income, expenses and cash flow? Your income can be equal to your expenses (no deficit) but you can still go broke because you don't have the cash to pay your maturing debts (liabilities). That's why it's so important to not only watch your income and expenses, but your cash flow too.

Here's an example: Assume Macri balances the primary budget next year, as promised, but he will still run a deficit equal to the interest expense the government needs to pay on its dollar debt. Let's assume that's a few billion dollars. Where does he get the money to pay for that, when no one wants to lend him? We should all thank the lender of last resort: the IMF. There's more. Debt matures; for example, next year the Bonar 24 has to pay the 15% of their maturity value (not interest, just return of principal). That's a few more billion dollars. Where does he get the money to pay for that?

Unless you propose another default, you should be saying "Thank you IMF for bailing us out, again!"

I appreciate your reply. I am a well seasoned investor operating in different stock and real estate markets for over a decade, so I understand a thing or two.

Macri was expected to clean out the economy, and that means zero deficit from day one. The president having the wrong information is unacceptable: if his team and advisers are unable to provide him with accurate information, they should resign.

I am not sure what your grounds are for taking the less traumatic decisions, history has proven that gradualism has systematically failed worldwide. You can only stabilize an economy with shock measures.

A devaluation was needed and it should have happened years ago, to reduce public internal debt.

The IMF, just like any bank or loaner is in its fair right to take all measures it considers appropriate to secure it will get its money back. HOWEVER, Macri should have used private loans under this same old and repeated plan that you praise so much.

The IMF has loaned Argentina money to secure private debt repayment. This money is not for infrastructure, salaries, pensions, hospitals or schools. As a matter of fact the IMF does not care whether people eat or not. It prevents Argentina from defaulting yes, but unless the current administration does its part, it will help nothing.

In the end Macri has proven to be more of the same populism but with a different tone. He is keeping the poor poor, the middle class is paying for all his " mistakes " ( which I don't believe are such ), and the rich stay richer. We pay more taxes than any country in the world to get c**p in return and they keep adding new taxes ( who would come invest here? ) He is trying to turn the country into an exporter of primary agricultural products ( you see a model where big land owners are they only ones making money ). No industry or development.

Macri systematically lied to the middle class that voted for him and will get his payback in 2019. I do not like Trump, I thought he was ridiculous when talking about building a wall, etc. He is about to start building it and the economy in the US is booming.

Macri needs CFK more than he needs the IMF at this point. He needs the big corrupt enemy that makes him look not so bad after all. But they are both the same. Being Macri's father one of the heads of corruption, how deep and hard do you think he will fight it?

People should not be paying for the ongoing party of corruption of the last decades: the economy could be clean and debt would be reduced by renegotiating public services contracts for instance, or by using a system similar to Chile's for public infrastructure... but if they did so, all of this millions of public money would not be going through the dirty hands of corrupt politicians.

Argentina 2018 is just more of the same old. Rickulivi, what is it that makes you SO happy and impressed about it? Unless you are holding Arg bonds... I don't get it?

 

[wrangler]

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.

@rickulivi


As Joe McEnroe would say, 'You can't be serious?' 'Are you for real?'

This administration has been hinting at $30 USD/AR$ since the dollars was below $20. They claimed that it was necessary in order to kickstart exporting. Exports are actually down with a dollar at $40.

With the U.S. set to increase interest rates well into next year, there will not be any dollars entering Argentina, except what is coming in March, and April from 'The Campo'.

You seem to forget that Macri burned tens of thousands of millions of dollars, bankrupted Argentina, and then went to IMF, furthermore, apparently, you seem to forget, that nothing good has ever come out of the IMF, not for Argentina, and not for any other country in the world, but let me guess, you think this time will be different right?

What about welfare reform? Macri has decided to cut in all of the wrong places. Take from the jubilados who paid into the system, instead of cutting from the lazy who don't deserve it. The reasons are obvious, they won't riot.

Macri has no idea what he is doing. He is absolutely clueless, and so are the flunkies he is surrounded by. The IMF just wants to guarantee that they will get paid back, and truthfully, they don't care too much about Macri's political fortunes.

The 'New Economy' as some are calling it, is just the latest marketing plan of this government in an effort to try to fool the Argentine people into re-electing this clown, well 'not this time louche'. Macri's numbers are abysmal, at 25% and in short order, he will probably reach 'De La Rua's' approval of 7% before he has to be flown out in a helicopter.

 

[Carlos Danger]

Who are the lazy that don't deserve it? Government employees?

 

[Pensador]

Doc Bajo i respect your work believe me! But sometimes you sound the Alex Jones of Argentina.

 

[London2Baires]

Doc Bajo i respect your work believe me! But sometimes you sound the Alex Jones of Argentina.

Don't mock the venerable doctor,he is fighting shape shifting Illuminati lizard Nazi's hiding in Argentine fema camps!

It's only a matter of time before he identifies a nazi pizza pedo ring operating out of a Kentucky's pizza in recoletta...

 

[rickulivi]

I appreciate your reply. I am a well seasoned investor operating in different stock and real estate markets for over a decade, so I understand a thing or two.

Macri was expected to clean out the economy, and that means zero deficit from day one. The president having the wrong information is unacceptable: if his team and advisers are unable to provide him with accurate information, they should resign.

I am not sure what your grounds are for taking the less traumatic decisions, history has proven that gradualism has systematically failed worldwide. You can only stabilize an economy with shock measures.

A devaluation was needed and it should have happened years ago, to reduce public internal debt.

The IMF, just like any bank or loaner is in its fair right to take all measures it considers appropriate to secure it will get its money back. HOWEVER, Macri should have used private loans under this same old and repeated plan that you praise so much.

The IMF has loaned Argentina money to secure private debt repayment. This money is not for infrastructure, salaries, pensions, hospitals or schools. As a matter of fact the IMF does not care whether people eat or not. It prevents Argentina from defaulting yes, but unless the current administration does its part, it will help nothing.

In the end Macri has proven to be more of the same populism but with a different tone. He is keeping the poor poor, the middle class is paying for all his " mistakes " ( which I don't believe are such ), and the rich stay richer. We pay more taxes than any country in the world to get c**p in return and they keep adding new taxes ( who would come invest here? ) He is trying to turn the country into an exporter of primary agricultural products ( you see a model where big land owners are they only ones making money ). No industry or development.

Macri systematically lied to the middle class that voted for him and will get his payback in 2019. I do not like Trump, I thought he was ridiculous when talking about building a wall, etc. He is about to start building it and the economy in the US is booming.

Macri needs CFK more than he needs the IMF at this point. He needs the big corrupt enemy that makes him look not so bad after all. But they are both the same. Being Macri's father one of the heads of corruption, how deep and hard do you think he will fight it?

People should not be paying for the ongoing party of corruption of the last decades: the economy could be clean and debt would be reduced by renegotiating public services contracts for instance, or by using a system similar to Chile's for public infrastructure... but if they did so, all of this millions of public money would not be going through the dirty hands of corrupt politicians.

Argentina 2018 is just more of the same old. Rickulivi, what is it that makes you SO happy and impressed about it? Unless you are holding Arg bonds... I don't get it?

Who said I am happy? I am just confident that the new economic program makes sense, and it should lead--after the recession is over--to sustain economic growth. On the other hand, I am usually a happy guy, so thanks for pointing that out!

Another of your comments was: " if his team and advisers are unable to provide him with accurate information, they should resign." Nikad: you are right! A whole bunch of them have resigned, so what else do you want? I can't remember all the names and I may misspell a few, but here is a partial list: the guy with the German or Austrian name in the central bank, Melconian in Banco Nacion, Quintana (oidos and ojos de Macri), the guy running for governor in Tucuman, the woman foreign minister, Caputo from the Central Bank, the guy that returned to the university in the US East coast, and so on.

Anyhow, I have enjoyed your post, and your comments.

 

[rickulivi]

@rickulivi


As Joe McEnroe would say, 'You can't be serious?' 'Are you for real?'

This administration has been hinting at $30 USD/AR$ since the dollars was below $20. They claimed that it was necessary in order to kickstart exporting. Exports are actually down with a dollar at $40.

With the U.S. set to increase interest rates well into next year, there will not be any dollars entering Argentina, except what is coming in March, and April from 'The Campo'.

You seem to forget that Macri burned tens of thousands of millions of dollars, bankrupted Argentina, and then went to IMF, furthermore, apparently, you seem to forget, that nothing good has ever come out of the IMF, not for Argentina, and not for any other country in the world, but let me guess, you think this time will be different right?

What about welfare reform? Macri has decided to cut in all of the wrong places. Take from the jubilados who paid into the system, instead of cutting from the lazy who don't deserve it. The reasons are obvious, they won't riot.

Macri has no idea what he is doing. He is absolutely clueless, and so are the flunkies he is surrounded by. The IMF just wants to guarantee that they will get paid back, and truthfully, they don't care too much about Macri's political fortunes.

The 'New Economy' as some are calling it, is just the latest marketing plan of this government in an effort to try to fool the Argentine people into re-electing this clown, well 'not this time louche'. Macri's numbers are abysmal, at 25% and in short order, he will probably reach 'De La Rua's' approval of 7% before he has to be flown out in a helicopter.

For your comment that I can't be real, I think you are wrong. I am actually responding to you, so I must be real. I am really alive! Your other comment is that I "can't be serious". Well, in this case, I must be joking. I am not sure how you got to this conclusion, but perhaps you can explain why you think I can't be serious?

Another of your comments states that "the IMF just wants to guarantee that they will get paid back . . ." Please explain what's wrong with that! And if you think that lenders should not expect to get paid back, how much will you lend me? I will take all you have to lend me, especially with you no pay back policy. I love it! We certainly need more people with your way of thinking running banks, but don't count me as one of your depositors.

Finally, another of your statements is that Macri is a clown. I don't know if you know anything about the training that people go thru to become clowns; it's actually serious stuff. These are performers that usually entertain children. Do you really think Macri has the performing gift that will entertain kids? I think you must have meant to use a different word to describe Macri.

Time for my nap.

 

[wrangler]

For your comment that I can't be real, I think you are wrong. I am actually responding to you, so I must be real. I am really alive! Your other comment is that I "can't be serious". Well, in this case, I must be joking. I am not sure how you got to this conclusion, but perhaps you can explain why you think I can't be serious?

Another of your comments states that "the IMF just wants to guarantee that they will get paid back . . ." Please explain what's wrong with that! And if you think that lenders should not expect to get paid back, how much will you lend me? I will take all you have to lend me, especially with you no pay back policy. I love it! We certainly need more people with your way of thinking running banks, but don't count me as one of your depositors.

Finally, another of your statements is that Macri is a clown. I don't know if you know anything about the training that people go thru to become clowns; it's actually serious stuff. These are performers that usually entertain children. Do you really think Macri has the performing gift that will entertain kids? I think you must have meant to use a different word to describe Macri.

Time for my nap.

I am confident that I made myself clear in my replies to you. I am certain that you understood clearly as well.

in regards to the IMF, to be clear, I don't know if they should be paid back. This was an agreement that Macri made all on his own after depleting what was left of the reserves. The point I was trying to make is that they don't care about Macri's political future.

 

[nikad]

Who said I am happy? I am just confident that the new economic program makes sense, and it should lead--after the recession is over--to sustain economic growth.

Any decent economist knows that Macri should have reduced deficit, stop monetary emission and reduce inflation in order to sustain economic growth. This " amazing " plan that the IMF is now imposing in exchange of its loans, should have been implemented from day zero. Three years after, Argentina would still be sovereign and the economy should be growing. This is what people voted him for. He did not honor his word, lied miserably, and now took big loans that future administrations will have to deal with. I still don't understand what is the " magic " recipe that you seem to think the IMF has give Argentina as if it was a gift from the gods (???). The thread's title implies that you seem to be relieved...well, being it that Macri got all this money without any consent, it really does not make any sense to me, as this money is meant to be repaid by future administrations...