Mr. Mander’s short essay arrived in my e mail this morning.: July 14, 2018. It does not appear, as such, in the pages of the Financial Time. Its melodramatic title is ‘Argentina on a knife edge’! Impending ‘crises’ , manufactured or real sells newspapers and or creates traffic on websites.
But what is of interest, to those readers of this newspaper’s advocacy/apologetics, for Macri’s failed attempt to bring Argentina back into the line with the utterly bankrupt Neo-Liberal coterie of nations. That have tried to extricate themselves from this trans-generational political/economic nihilism,that has missed the attention of Macri. Macron, and late arrival to the Neo-Liberal fold, Moreno. That Macri appealed to the IMF, not even a year and a half into his presidency demonstrates with utter clarity that his ‘Austerity Lite’ is a failure!
Never fear, Political Economy, tinctured in statistical modeling, and other forms of Economic Theology, used by the Technocrats/Priests of Economic Science appear in Mr. Mander’s essay, to demonstrate that he is a titular member of that coven.
But look to Mr. Mander’s informative essay published by the Financial Times July 13, 2018 for a more nuanced, but by no means lacking in ideological propinquity/conformity to Macri’s Neo-Liberalism Lite.
In this essay Mr. Mander quotes from a frustrated man buying half a tank of gas, a sociologist Marcos Novaro, a housewife Gloria Carrasco, an executive , Macri himself and Eugenia Campos a shop assistant. In sum, he has exercised his due diligence as a reporter. Or can the reader assume that a ‘stringer’ handled the ‘man in the street interviews’?
Headline: Argentina learns to live with its inflation dragon
Sub-headline: Mauricio Macri is all but ignoring stubbornly rising prices as he searches for growth
A copy on the Financial Times e mail:
Few would dare to assert openly that the recent turbulence in the Argentine peso is over. Nevertheless, the currency has appreciated over the last two weeks. Having reached almost 29 pesos to the dollar, it is now closer to 27. But even if stability has returned to the foreign exchange markets, albeit temporarily, that would be just one battle won in a war whose outcome remains far from certain.
The next step is to start lowering sky-high interest rates, which in turn will allow the government to start reviving economic activity. With a technical recession expected in the second and third quarters of this year, overall growth in 2018 could be close to zero. Only then can authorities effectively tackle alarmingly high levels of inflation, which have taken everyone by surprise, and could reach 30 per cent this year. That is “the logical order” in which to rebalance Argentina’s economy, according to a senior local banker.
In the best of all possible worlds, this plan could work. But President Mauricio Macri is walking a terrifyingly fine line; plenty could go wrong. For one, who knows whether the international context – which played a key role in the rout on the peso – will be kind to Argentina?
Regardless of dangers that Macri cannot control, his next great hurdle is to push a credible 2019 budget bill through congress. That must be done with the support of the unruly Peronist opposition, to enable the government to meet its ambitious targets agreed with the IMF for reducing the primary fiscal deficit to 1.3 per cent of GDP in 2019. While there does appear to be an emerging consensus in Argentina that it needs to balance its budget – and keep it balanced – it remains unclear how this will be achieved.
Wherever you look, someone will always argue why cuts should be made elsewhere. No one wants to be the one to take the hit. Any whiff of a failure to meet the targets will not go down well with the markets, potentially triggering a new round of exchange rate volatility.
Like never before, Macri is hostage to the demands of a population which is showing signs of fatigue with austerity, and the demands of the markets which have effectively obliged him to speed up his drive to reach fiscal equilibrium. Success in appeasing these opposing forces will have a critical bearing on Macri’s re-election chances next year. At least he can take heart from the fact that, for now at least, Peronism has not been capable of presenting a viable alternative.