Government wants to sell colorful mirrors to markets

In fact, all these series of measures widely disseminated by the government are only a great "awakening" of officials to try to show more or less acceptable inflation figures in the three months preceding the elections. It turns out that the previous great propaganda of about two weeks surrounding the measures resulted in a considerable "price cushion" by preventive remarks in the stores, for fear of a controlled advance on the part of officials. This "cushion" should work for a few months as a moderating factor of the inflation rate from June and until the first round of elections. In other words, the "revival" of the government is nothing more than the "overrun" of future inflation to be able to be voted in the elections in a climate of declining inflation, which would give the government a empty excuse to show the public who has come to the economic question a better performance in terms of inflation that can lead to more votes. The "revival" with the issue of prices and inflation has not stopped there, but is accompanied by some sort of "dummy" and cosmetic products of the Bank Central seasoned overactivities: the announcement of the freezing of the flotation bands of the dollar in values ​​close to 40 and 51 dollars, with the announcement that the Central Bank will not intervene in the lower band before June 30. The intention of these measures is that operators anticipate greater rigor with the dollar in order to consolidate anti-inflationary expectations.

What was the result of this "simulation" of action with the dollar? : The increase in country risk and collapse of stocks. Because? For the simple reason that, towards the end of the entry of the IMF's dollars, the ability to end next year without "default" depends mainly on the purchase by the Central Bank of dollars on the market to repay the debt already advanced by 2020 So far, since the inauguration of this unstable scheme of zero issuance of monetary base, the central bank has bought only 1 billion US dollars in almost 8 months. In other words, almost nothing compared to annual maturities of about 30 billion US dollars in 2020, which have no funding at the moment.

The Central Bank has already come without buying dollars for months. And now, he promises to stay for at least two more months and probably much longer. But everything, everything … nothing very different from what is happening today. And if the "simulacrum" reaches the exchange rate policy with the lower band of the dollar, it is immediately transmitted to the financial policy and the upper band: although the upper band remains – hypothetically, we have to wait and see- 51 dollars until the end of the year, the effectiveness of this, today, is only theoretical. Because? Because the dollar is at $ 42, at 25% of that level and that 70% of the fixed terms have an average duration of 30 days, 20% of 60 days and the remaining 10% of 90 days. It is interesting to say that all the fixed conditions of the Argentine private sector were calculated by calculating that the dollar should not exceed 45 to 30 days, 47 to 60 days and 49 to 90 days. As can be seen, 100% of the fixed-term contracts of companies and individuals are forced to "wager" on the fact that the dollar remains far away, far from the upper limit of the flotation.

Therefore, what effect could these measures have on the renewal of deadlines or not? Little and nothing with regard to those who are now placed in pesos. One could think of people who today have dollars and who might fear that the dollar will fall below the lower limit of the float, close to $ 40. But even if it could happen – always on theoretical and hypothetical grounds – how long can it last if the promise reaches only 70 days at most? And at what level could the dollar go down if the central bank had already promised to buy only the best $ 50 million a day bill? As you can see, pure "cosmetics", pure "simulacra". Very perverse measures with the sole purpose of seeing if you can overcome the ground in the polls that give the loser an appreciable distance to the government in the August PASO, the first round of October and the "vote" of November , not against one, but against all potential opposition candidates.

Why are the "resurrected", the "simulacrum" and the "cosmetic" perverse? They have good character, but they are very perverse, because they constitute a "say we do something" for the sole purpose of making the operators stunned and make them believe that what was considered an "economic plan" and then quickly Degraded into "tool" By the own Minister Dujovne in front of the local critics and the bad results obtained in New York, it is likely to return on what, for many, already happens as irremovable. This in the official offices think that with the resumption of inflation, the simulation to make believe that the top dollar for beyond the next 90 days has some relevance, and the cosmetic aspect to announce for the umpteenth time changes in the lower 40 dollars when there is only 50 million dollars a day to buy or not to buy by the Central Bank, this is nothing. other than teasing people. And if there is something that Argentine and foreign operators can not stand is that they cut their hair, especially when the state deficit that adds interest on the Treasury debt and losses Central Bank's Budget Fiscal Exceeds 9 Percent of GDP Reduce It The results of Wall Street's Holy Thursday on Argentine bonds and equities seem to indicate that this policy of selling "colored mirrors" to the markets, which has come to an end totally shameless after years of secret practice, ends. predictable final.