Recession Continues Under Macri

Bradly, how do you see the next 2 years playing out economically and what economic policies do you think Macri should implement? Is he handcuffed due to political constraints or just making the wrong decisions? It seems like CFK's policy of stimulating the domestic market contributed to inflation.

Also why has the merval gone up almost 20% in the last 6 months?

You seem to have a good handle on what's going on and am interested in your opinion. Thanks

Of course open to others opinions as well.
 
Strong over valued peso + high inflation == higher real estate values in dollars, time to sell your real estate if you have one
 
I am firmly convinced that the majority of Argentines want their country to move forward on the road to success.

Doesn't seem to be the opinion of those who supported the Kirchner governments and there's quite a lot of them still about sadly.
 
As a final note.You might google
Four Essential Elements of Economic Progress by Dr. Anne Bradley
The point about types of investment is clarifying.
 
Bradly, how do you see the next 2 years playing out economically and what economic policies do you think Macri should implement? Is he handcuffed due to political constraints or just making the wrong decisions? It seems like CFK's policy of stimulating the domestic market contributed to inflation.

Also why has the merval gone up almost 20% in the last 6 months?

You seem to have a good handle on what's going on and am interested in your opinion. Thanks

Of course open to others opinions as well.

CFK's policies certainly led to high inflation, but the high inflation was mainly due to excessive demand, which her government created through wealth transfers (high taxes and BCRA loans when tax revenues weren't enough). Her government's belief was that you created growth by ensuring that there was demand. There are certainly good arguments as to why this was irresponsible/unethical, but economically-speaking, it kept the wheels turning. If you were to start a business, you'd logically want to start it in an economy where people are spending money; CFK's economy had that.

As far as Macri, I think there is a lot of disagreement about the way forward economically. This was pretty much confirmed by Prat Gay's exit as finance minister. Prat Gay wanted to reactivate the economy (decrease interest rates), which runs contrary to Sturzenegger's goals. Sturzenegger's mandate to lower inflation is much different than Prat Gay's, which is essentially to increase inflation. Sturzenegger, being a long-time PRO adherent (unlike Prat Gay), won that fight.

Macri's strength, in my opinion, is listening to a plurality of voices. The whole reason he's president in the first place is because he was able to forge an unlikely coalition with two other political parties. At the same time, I think his style to listen and not micromanage/oversee has led to a lot of mistakes that could have been avoided, e.g. no public hearings on the increases of utility rates. At times, his administration's policies seem disjointed.

As far as what needs to be done economically now, I think they should target inflation less aggressively and increase domestic demand. Specifically, I would (continue to) decrease government spending (it's too high), lower interest rates, and push for legislation that makes starting a business as easy as opening a Gmail account.

I would not be counting on significant export-led growth or foreign investment.
 
I would be astonished if some, or any, of the persons that have such negative views of the economic and financial measures taken by Macri have ever built any wealth, legally!
 
Macri's strength, in my opinion, is listening to a plurality of voices. The whole reason he's president in the first place is because he was able to forge an unlikely coalition with two other political parties. At the same time, I think his style to listen and not micromanage/oversee has led to a lot of mistakes that could have been avoided, e.g. no public hearings on the increases of utility rates. At times, his administration's policies seem disjointed.

I think the biggest plus Macri has is his ability to converse in a reasonable and educated manner with leaders/politicians from those countries that carry the most clout in the world.
After the news of Macri's win hit the media back home in the UK I remember talking to my sister and she said to me ''at least he looks and acts normal''.Says it all really.
 
I would be astonished if some, or any, of the persons that have such negative views of the economic and financial measures taken by Macri have ever built any wealth, legally!

It depends on how you amass your wealth.

If you make your money selling services/goods to the Argentine economy, legally or illegally, you probably aren't too happy with his policies. Go talk with any PYME out there and see how they feel right now.

However, if you make your money by investing into non-productive assets, you're probably quite happy with Macri's economic policies (re: the dollar, high interest rates, etc.).
 
Also why has the merval gone up almost 20% in the last 6 months?

Forgot to answer this one. The stock markets have become a really poor indicator of economic performance these days, whether you're talking about Argentina, the U.S. or even Venezuela. Basically, all the money that is being injected into the financial system is searching for yield. With interest rates at zero or below zero (whether nominally or effectively after you subtract the interest rate from the rate of inflation) in most countries, the stock market, which is typically much riskier than a government bond, becomes an attractive place to put excess cash. This causes asset prices to inflate and to decouple from the real economy.
 
CFK's policies certainly led to high inflation, but the high inflation was mainly due to excessive demand, which her government created through wealth transfers (high taxes and BCRA loans when tax revenues weren't enough). Her government's belief was that you created growth by ensuring that there was demand. There are certainly good arguments as to why this was irresponsible/unethical, but economically-speaking, it kept the wheels turning. If you were to start a business, you'd logically want to start it in an economy where people are spending money; CFK's economy had that.

As far as Macri, I think there is a lot of disagreement about the way forward economically. This was pretty much confirmed by Prat Gay's exit as finance minister. Prat Gay wanted to reactivate the economy (decrease interest rates), which runs contrary to Sturzenegger's goals. Sturzenegger's mandate to lower inflation is much different than Prat Gay's, which is essentially to increase inflation. Sturzenegger, being a long-time PRO adherent (unlike Prat Gay), won that fight.

Macri's strength, in my opinion, is listening to a plurality of voices. The whole reason he's president in the first place is because he was able to forge an unlikely coalition with two other political parties. At the same time, I think his style to listen and not micromanage/oversee has led to a lot of mistakes that could have been avoided, e.g. no public hearings on the increases of utility rates. At times, his administration's policies seem disjointed.

As far as what needs to be done economically now, I think they should target inflation less aggressively and increase domestic demand. Specifically, I would (continue to) decrease government spending (it's too high), lower interest rates, and push for legislation that makes starting a business as easy as opening a Gmail account.

I would not be counting on significant export-led growth or foreign investment.

Thoughtful posts one and all. No time to quibble with everything, but this line caught my eye: push for legislation that makes starting a business as easy as opening a Gmail account.

I don't think the problem here is starting a business. The problem is running a business.

There are a ton of stuff that make running a small business next to impossible. Just crazy stuff that's not normal.

Exhibit A, though there are many: A 1.2% tax on any movement of capital is not normal. It impedes business in a manner that is obvious to a cat and encourages the use of cash, which is both less safe (more on that later) and in turn encourages further evasion. (if it's already all in cash...??) As a barometer of the state's seriousness towards business-friendly policies, this is simply insane.

In general the taxation system here - at every level - basically is built on the assumption that we in the govt. know you're evading your taxes wherever possible, so we'll nail you wherever we can. This is nuts.

A simplified labor scheme where businesses with up to X number of employees can be more risky with their hiring practices, would be a sign of serious commitment to moving things. A stop to police shakedowns of street businesses would be a sign of serious commitment to moving things. A focused effort to make money being on the books be as unregrettable as possible. Etc.

It's the same approach Apple brought to illegal file-sharing. Rather than (continue to) try to technologies and strategies that would make copying impossible, which were both hostile to the legal user and futile in combating the illegal activity (remember the CD's which were supposed to be impossible to copy, and that ended up not working in a great many CD players?), they tried a different tack: Make legal downloading so appealing - both cost-wise and simple - that for the average dude, it's just not worth it to go there. In short order, piracy had not been eradicated but a huge market for legal downloads had generated untold new income for everyone involved.

Nothing - or very little - in the new administration's behavior indicates they get this notion.
 
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