Prices skyrocket, stun Argentines

[Judi Lynn]

Source: Associated Press

Prices skyrocket, stun Argentines

It’s ‘scary,’ grocery shopper says after currency devaluation

By PETER PRENGAMAN THE ASSOCIATED PRESS
Posted: December 19, 2015 at 2:47 a.m.


[font size=1]
VICTOR R. CAIVANO
Credit: AP

Two men, one holding a sign that reads “devaluation = madness” in Spanish, speak Thursday during a protest
against President Mauricio Macri’s economic measures in front of the Congress in Buenos Aires, Argentina.
[/font]
BUENOS AIRES, Argentina -- Argentines expressed shock at soaring prices on Friday and a major union called for protests to demand salary increases in the initial fallout from a major devaluation of the South American nation's currency.

The price increases came after the new administration of President Mauricio Macri on Thursday lifted restrictions on the buying of U.S. dollars. That led to a 30 percent devaluation of the Argentine peso in comparison with the dollar, which was immediately felt across the country.

Supermarket shoppers said Friday that they will have to buy less of some products such as bread and even cut out some things like beef, practically sacrilegious in a country known for its choice meats.

Gisela Guana, 26, a maid, said that earlier this week she could buy bread for 42 cents a pound but now its 55 cents a pound. "What's happening is scary," said Guana, who earns $535 a month. "Workers are the ones who are going to pay" for the devaluation.


Read more: http://www.nwaonline.com/news/2015/dec/19/prices-skyrocket-stun-argentines-201512/

[Judi Lynn]

1. Argentines receive ‘Macri-economic’ shock treatment

Argentines receive ‘Macri-economic’ shock treatment
Sun, Dec 20, 2015 - Page 13　
AFP, BUENOS AIRES


[font size=1]
A chalk outline with the words “your salary” in Spanish is drawn in front
of the Argentine Congress during a protest against Argentine President
Mauricio Macri’s economic measures in Buenos Aires on Thursday.

Photo: AP
[/font]
After only one week in the top job, Argentine President Mauricio Macri has passed drastic economic reforms, drawing praise from foreign investors but angry protests from citizens afraid for their salaries.

The so-called “Macri-economic” shock treatment in Latin America’s third-biggest economy saw the Argentine peso plunge by a third after he scrapped his leftist predecessor’s dollar exchange controls.

That was an even sharper fall than during Argentina’s financial crisis in 2002, when it had to be bailed out by the IMF.

A sharp adjustment is needed to make the country competitive, Macri said, but economists and his political opponents argue that it will hurt Argentines’ purchasing power in the medium term.

More:
http://www.taipeitimes.com/News/biz/archives/2015/12/20/2003635189

[cantbeserious]

2. The Oligarchs, Corporations And Banks Keeping The 99% Suppressed

eom

[Proserpina]

7. Dare one ask: What did they THINK was going to happen?

The Argentines are less educated than Americans.

[forest444]

3. Great post, as always. Here's more on Argentina's Macrinflation:

http://www.democraticunderground.com/110845684

http://www.democraticunderground.com/1016139753

The right-wing attitude in Argentina regarding these sudden price hikes caused by Macri's own decisions (devaluation and the export tax cuts, which encourage wholesalers to further limit domestic supply) can only be described as cavalier - if not Marie Antoinette-esque.

Luis Etchevehere, the head of the Argentine Rural Society (the principal pressure group representing large landowners), dismissed the price hikes, saying that "Filet Mignon isn't for most people." The Rural Society (which has a history of backing Argentina's right-wing dictatorships) were among Macri's top campaign contributors and cheerleaders, and were some of the most vocal advocates for Macri's twin, inflation-boosting policies of devaluation and export tax cuts.

And one PRO congressman (Macri's party) had this advice: "if you can't afford the bread, look for another bakery."

[Astraea]

4. wow. the Argentine version of 'let them eat cake'

eh?

[forest444]

9. That's exactly what it is.

There's a lot of of country club Republican-style self-righteousness among the Argentine upper and upper-middle classes, unfortunately.

There are a lot exceptions among them, to be fair. But the majority sound just like Mitt Romney during his 47% remark - and President Macri was definitely their man.



Macri administration Economy Minister Alfonso Prat-Gay, the author of these inflation-boosting policies. He also keeps his own trust fund, and that of the late Amalia Fortabat's estate. in a Swiss fund that's shorting the peso (which means they just made a bundle on this devaluation). He also helped Amalia Fortabat evade millions in income taxes as her former accountant.

[closeupready]

20. "Filet Mignon isn't for most people" > "They'll eat hamburger instead of steak"

[Proserpina]

8. Corruption

We got it, too, but a much larger, wealthier nation can conceal it better.

[forest444]

10. The power of Big Media.

Seven years of a relentless smear campaign by the three largest media groups in Argentina (which are all right-wing, two of which had close ties to the fascist 1976 dictatorship) took its toll. Racist dog-whistle politics helped Macri win as well (Argentines are mostly white; but live uneasily with their sizable dark-skinned minority - many of whom are very poor and thus easy targets for scapegoating).

Even so, Cristina Kirchner retired with nearly 50% approval ratings, and her party's candidate (Daniel Scioli) came within 2.7% of Macri. This was in fact the closest presidential election in Argentine history.

[Spitfire of ATJ]

6. The Wall Street Journal calls it "a promising start".

[forest444]

11. Funny how history repeats itself, isn't it.

The WSJ said the same thing in the late '70s about the Videla dictatorship and his anti-labor, pro-bank deregulation Economy Minister José Martínez de Hoz.



And it ended up like this (depositors lining up at one of the many banks to go under in 1980/81 after their owners stripped them clean):



They said the same thing about Menem, the populist-turned-privatizer, and Economy Minister Domingo Cavallo who raffled away 300 Argentine state-owned firms for nearly worthless Brady Bonds in the early '90s, promising a cascade of foreign investment (which of course turned out to be just a trickle).



And we all remember how that turned out in 2001.

[Spitfire of ATJ]

18. And of course the most famous Argentine revolutionary....

[elias49]

12. So damned infuriating

frigging Banks!
Crooks.
Bastards.

[pampango]

13. The Greeks couldn't devaluate their currency because they are on the euro. The Argentines

can devalue theirs because it is a national currency. Neither is a painless solution as the Greeks and Argentines can attest to.

[Dont call me Shirley]

14. Surprise, Surprise! That's what happens when you elect fascists.

[brooklynite]

15. Maybe the Government should just DECIDE what the prices should be...

...it worked so well in Venezuela.

[MyNameGoesHere]

16. Let me show you where you are wrong

Please note that these are two different countries, two very different cultures and two very different political histories. Comparing the two is kind of American.

[brooklynite]

17. IOW Argentina could have a civilized and thoughtful Socialist utopia?

[Hortensis]

21. One of Argentina's problems is its history of authoritarian

government and its control over the economy. Falling oil prices, though, are an immediate problem leading to the current collapse.

I've read that Argentina was once thought to be as promising as North America, a future counterpart to the U.S. It is a beautiful land of many assets, but sadly conservative philosophy controlled its development so that the land and asset ownership was concentrated in the hands of a wealthy ruling class who felt no need for an educated populace -- critically unlike the U.S., where a democratic culture of widespread land ownership and public education developed early on. And so it went.

I believe strong conservatives are fundamentally unsuited by nature to lead a democratic republic, direct national economic policy, and have charge of foreign policy. Their best talents come out at home in caring for those they care for and tending to their own possessions.

[whatthehey]

19. The inevitable result of stiffing global creditors

All of a sudden when you can't borrow any more money (because even the IMF and WB aren't THAT stupid) and you've stuffed your own pension fund with worthless IOUs, you have to pay either Peter or Paul somehow, and the only ways to do that are to either find something that the rest of the world with actually worthwhile currencies want, or to do a 3rd Century CE Roman Emperor bit and water down the currency so your fixed currency-denominated costs go further. But as then, the trouble is your citizens' costs are not generally fixed in currency units but based on the cost of food and shelter, and anybody with food and shelter to sell and an IQ in two digits now knows your currency isn't worth a bucket of warm spit, so they jack prices up enough to peg to the real value of currency from nations who aren't beggar states.

This is hardly a new issue, and the cause is always the same; an inability to pay state debts (before the inevitable Iceland "rebuttal" is raised it should be noted that there issue was not sovereign debt they did not pay like Argentina, but private bank debts they refused to assume unlike the US. Creditors have no reason to cut off the state of Iceland, only their defunct private banks).