How and when did we return to this nightmare?

The IMF has restored to us the concept of "best student" that Menem had, several years before registering in 2001 the greatest sovereign defect in the history of the world.

25% depreciation before the disaster of Monday, August 12 – indicators of industry and construction posted an unfavorable performance as early as June. The economy was not recovering even with a record crop. Between May 2018 and May 2019, 217,100 registered jobs were lost. Corresponding to 67,000 industries, trade 50,000 and 14,000 others from the construction industry-mother industry. With all, The year 2019 should end with an inflation rate of 50%.

In this context, investors took defensive positions by trying to reduce their exposure to Argentine risk, putting pressure on the dollar and government securities. BCRA was active on the futures market. Curiously, the country risk of Monday after OSPP is less than more than 1,000 basis points that existed before the FF's victory.

Despite the unconditional support – until today – of local and international media, the IMF, the US and Europe, the situation is worrisome and The year 2019 could end with a GDP decline of the order of 2.5%.

The foaming reaction of the markets shows an earlier turbulent scenario. With a dollar higher and more volatile, this was already possible. The nominal exchange rate of 2020 will be very high. We had a dollar of 43/47 dollars and the reversal of the trade balance was almost exclusively due to the collapse of imports due to the recession. Exports have never taken off.

After four years of government, Mauricio Macri is about to leave hands on his head. The next administration will face an irritable budget situation, despite the brutal adjustment of the current government at the end of its term. Since no one is lending us a dollar, the challenge is how to meet the financial needs of 2020. The sustainability of the debt is questionable.

The fantasized "manageable" LELIQ stock and the growing quasi-fiscal deficit have only been observed in the weeks leading up to the great hyperinflationary and / or monetary explosions. Finally, it will be necessary to see how the agreement with the IMF continues, given the need to finance an alarming budget deficit, a quasi-budgetary extravagant deficit and, in this context, to keep the debt maturities concentrated.

Regarding the budget results of the four years of the Macri government, the first two presidential terms of the FPV are the envy. Remember that the budget deficit of 4.2% of GDP in 2019 would have been well calculated by 6%, if Dujovne was in opposition.

In this context, and despite the efforts of the citizens, the next administration will not be able to continue "fiscal consolidation", without risking a social epidemic.

The need for fiscal and quasi-fiscal financing goes beyond the real possibilities of making the same adjustment. The quasi-fiscal deficit alone is in the order of 3/4% of GDP. A compromise is required. And the consequences of systemic costs are also inevitable and unpredictable.

A historic opportunity has been lost. Argentina has fallen from the world.

We have not placed sovereign debt since the beginning of 2018, in a context where capital remains global, including loans placed at negative interest rates. This favorable scenario for Panama, which installs 40-year bonds at a rate of 3.86%, was wasted by the government. Favorable external financial conditions and closed international market for Argentina.

In 2018 and 2019, the government had benefited from increased financial support from the IMF. But in 2020, disbursements will be only $ 3.9 billion. We reiterate that it will be difficult to fulfill the obligations. Gross financial needs would rise to about $ 52.6 billion by 2020. Some may be covered by disbursements from the IMF and other agencies, but about $ 44 billion is missing. Even by renewing the total maturities of LETES, LECAP and LECER – approximately US $ 17,500 million – US $ 25,000 million is to be placed in the local market. It seems impossible to increase the stock of treasury bills, which is already between 20,000 and 45,000 million dollars.

Could the LELIQ stock fly to infinity?

Of course not. In July, LELIQ's stock rose to an average of $ 1.2 billion and its interest rate rose to 61% of the annual nominal value. Today 72%. To estimate a possible outcome, it is necessary to badess how far the monetary base could grow and guess what will be the interest rate in this worst case scenario, when "LELIQ shares" will increase. If the monetary base decreases in real terms and as a percentage of GDP, the required LELIQ stock and rates will become unfeasible.

In order for the LELIQ stock to have a stable trajectory, it is essential that a dedollarization process allows for an increase in the monetary base and avoids a spiral of LELIQ stock and monstrous rates.

In the region, inflation rates are around 3% and interest rates 4%. In Argentina, 55% and 72%, respectively.

A first hypothesis of the crisis rests on the badumption that the transfer of politico-economic power to technopoles, CEOs and Messi of finance has had a decisive impact on the future. The IMF's recommendations following a financial crisis tend to constitute a stock of economic activities leading to subsequent political crises. That happened in 2001. The same cycle takes place.

The secondary hypothesis is an epiphenomenon based on the idea that not all officials of the Ministry of Economy and the BCRA have done enough to preserve the interests of Argentina. Rather, economic policy decisions may have coincided with content that favored the ideological biosphere of financial firms and harmed the country. All this would explain the manifestation of the ballot boxes.

A conscious and tired citizen of this experience has just expressed himself.

* Master in International Economic Policy, Doctor of Political Science, MBA Professor. CEO of www.hacer.com.ar, www.pablo.tigani.com. He is the author of 6 books, 900 articles and articles.