How is the Argentinian economy not even in worse shape?

Fiscal

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I would have expected more widespread business closures, bankruptcies, and abject poverty after weeks of economic shutdown and skyrocketing inflation. Somehow Argentina is surviving. How?
 

antipodean

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Because... Argentina?

But we will see more small business closures. I understand many local shops and business premises are being abandoned or returned to their owners as some traders simply cannot sustain the electricity and rent costs without much trade. At the moment this government does not like addressing these negative issues and shoots down any questions about them as if the journalist asking them was an enemy of the people. Hence I don't think we are getting the full picture just yet.

There are also too many paradoxes blurring the view of the situation.

For example, Jetsmart was given authorisation from the ministry of labour to pay their grounded employees as little as 50% of their salaries and also invite voluntary redundancies and terminations of contract by mutual accord. LATAM (which just declared bankruptcy!) was denied by the ministry of labour to reduce pay for their grounded staff and must pay 100% and is outright prohibited from firing or suspending employees.

Likewise the government is priding itself on ATP payments to employees of private companies but the reality is that many, many employees have yet to receive these payments for April or May despite businesses applying on time and meeting all requisites. If they don't materialise soon then the company is still liable for these costs and it will sink many businesses.

The other aspect is legally dissolving a business / declaring insolvency is pretty difficult to do. I understand there may be some discussions starting in government to change these laws as they know that soon the problem will be too big to ignore and many business owners will (or are already) just "doing a runner" making the situation worse for everyone.
 
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Fiscal

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Where do you see Argentina headed in a year from now? Economic collapse? Or just continuing to barely get by?
 

Dougie

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I would have expected more widespread business closures, bankruptcies, and abject poverty after weeks of economic shutdown and skyrocketing inflation. Somehow Argentina is surviving. How?
There is a lag between an action and/or event and the eventual economic outcome.

Antipodean sounds better informed than myself, but I'd say a collapse is coming at the end of 2020, early 2021.
 

antipodean

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Like any crisis here it will depend who you ask. For sure the scars will be visible with more shuttered shops, more cartoneros, more homeless, more insecurity, bigger villas, more run down infrastructure etc. But for many life will go on until it doesn't anymore which by that stage someone may have taken their place to weather the next crisis.

My biggest concern is the longer term political landscape and social unrest with all the problems spilling over and the government being unable to remain "popular" for all sectors without resorting to drastic social experiments or measures that would cause a real shit-storm. At this point in time it is up against a lot of serious challenges that it cannot really control: Coronavirus, no dollars, no access to new dollars, low commodity prices, regional instability, global instability, protectionism in key export markets, looming mass unemployment, contraction in consumer confidence and spending, looming inflation higher than we have seen in recent years, a VP and BA governor facing countless corruption charges etc. Venezuela did not happen overnight, it was a gradual decline into oblivion caused by excessive government interference and corruption. I was almost born in Venezuela, my father did business there for many years. The before and after snapshots of that country does not make a current Venezuelan reality for Argentina in 20 years from now unthinkable.
 

Somewhereinba

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There are closed retail shops with for rent signs on them down the main street where I live. Most businesses I know have stopped working unless related to food/hospitals. The middle class is the loser because they actually earn their own money unlike the majority of the poor who live off the Government. The rich don't give a fuck either. All this is doing is pushing the middle class down towards the poor in the hope they become more dependent on the Government - this whole thing has nothing to do with protecting old people - it's a direct strategy to weaken overseas companies and local businesses and turn the country into a Venezuela state where the Government has its hands in every business and everyones bank account. Make the people depend on you for food and they will have no choice who they vote for. It's disgusting but apparently there were enough people who voted for Alberto and his cronies so I don't feel bad for them. I feel bad for the people who are trying to work and look after their families.
 

antipodean

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For those watching the diplomatic news in recent days, Argentina objected to International sanctions against Venezuela and lobbied Mercosur to include the Maduro Regime in the bloc.

You can judge a lot about someone by the friends they keep. Unfortunately there are a few people in the country who agitate social movements and have some influence in the government who see the Venezuelan path as a path to personal riches - narco-money, expropriation/ free capital, easy grafts and bribes, impunity etc.

On the other hand, a lot of middle and working class people who voted for Alberto this time, voted for Macri in the previous elections as felt disillusioned. They felt Alberto was less extreme than Cristina and would offer easy money to solve their problems or out of sheer frustration that no better option existed. Now many of these people are again questioning their vote or getting nervous. Hence Alberto may loose popularity once he lets us all out of quarantine and the economic fallout begins which leads to one of three things:
- He makes a miracle and gets us through it;
- He gets run out of town and things potentially go from bad to worse;
- He goes authoritarian and starts “reforms” to keep his movement in power regardless of the next vote
 

gracielle

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The article was written by Prof. Juan Carlos de Pablo. He is an ARG economist and a highly regarded writer and columnist for the newspaper La Nación. He studied at the Universidad Católica Argentina between 1960 and 1964 and then continued his training at Harvard. He also is an honorary doctor at UCEMA. This university is a non-profit private organization located in CABA, whose beginning dates back to 1978.
28 May 2020
Coronavirus: economic policy for an "eternal" quarantine
What measures should ministers Martín Maximiliano Guzmán and Matías Sebastián Kulfas, as well as the president of the Central Bank, Miguel Ángel Pesce, take if, via extensions announced twice a month, the quarantine lasts until the end of the year? In light of the background and as chilling as it sounds, this task is not a mere hobby.

Important clarification: I am not referring to a "postcoronavirus", but "during coronavirus". Because as it seems we have a blossom of "during coronavirus' ahead", reflections on postcoronavirus are closer to a distraction than a guide to action.

For government action, quarantine to last 8 months instead of 2 is not simply a matter of mere prolongation. Because the extent of the quarantine, by itself, changes the nature of the problem. Not only does the coronavirus mutate, the economic reality also....

For a couple of months, public spending has increased and tax, customs and pension collection has collapsed. Since nobody lends to the State, it issues money. In addition, the authorities when forced to close factories, shops, etc., are paying part of the wages of the private sector. Everything understandable, given the coronavirus...Now, the logic with which decisions are made for a momentary emergency cannot be applied to a quarantine. I do not say "eternal", but it does take a long time. The economic team has to get to work based on this.....

Which implies two things: analyzing with the President of the Nation is not quarantine yes or quarantine no. But the criteria with which it can be relaxed, and the procedures so that not everyone has to depend on some official authorizing to open a trade or let a plant operate. Stiffness is an invitation to do things from the left, and this is worse. The other is that any policy of aid, subsidies, freezes, etc., adds pressure to the pot; therefore, increased flexibility will allow for less fiscal expansion, less monetary issuance, etc.

Last but very important: the President of the Nation has to make a formal, explicit statement, completely rejecting the proposal of the deputy Fernanda Vallejos, which the ministers Claudio Moroni and Nicolás Trotta found "interesting", referring to the companies whose Employees received a part of the wages in April from the State and so should give part of their private property to the same State.
 
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gracielle

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For those watching the diplomatic news in recent days, Argentina objected to International sanctions against Venezuela and lobbied Mercosur to include the Maduro Regime in the bloc.

You can judge a lot about someone by the friends they keep. Unfortunately there are a few people in the country who agitate social movements and have some influence in the government who see the Venezuelan path as a path to personal riches - narco-money, expropriation/ free capital, easy grafts and bribes, impunity etc.
I agree....and to that one can add the pact with Iran during CFK's presidency.
 
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