Macri's default | Stop paying the debt issued …

The default value of Macri is unpublished when the file is examined. cessation of payments d & # 39; Argentina. This is the eighth in national history (the one invented by the Judge Griesa it is not accounted for as it was not a sovereign decision not to pay) with the peculiarity that it is a debt issued by the same government. The above was due to debts inherited from previous administrations. It is a strong indicator of the speed and scale of the disaster caused by the macro economy. In less than four years, after receiving an indebted economy, Macri will deliver it by default. That is, he borrowed and collapsed. This is a remarkable brand for such a short economic cycle. Not paying the debt issued by your own management is not the only factor that makes this defect exceptional. It must be added that the break will be with debt denominated in pesos, that is, in the currency issued by the country.

The government could have respected these commitments because it has no restrictions on the issue of pesos; The difference is with the debt in dollars, currencies that are obviously not issued and do not have in quantity. It is not common for countries to inform investors that they can not pay the public debt in their own currency. These are cases of dramatic sovereign bankruptcies.

The default debt statement in short-term pesos reflects the burden on which it is poured the Macri government, despair that drives him to react without evaluating the consequences. It was a decision motivated solely by the fear that, as long as the deadlines of these public commitments in pesos are specified, these resources be intended for the purchase of dollars. And as the free availability bookings they are winding up at a fast speed, the Treasury's response has been improvised, which has accelerated the race.

The trend towards the loss of reserves acquires a projected dynamic that results in central bank They will be empty before the government's delivery on December 10th.

caught

he "Corralito" of public debt in pesos, with a disbursement schedule for legal entities, has generated a disproportion of proportions in Mutual Funds of Investment. Economist Christian Buteler has published a scathing tweet: "The losses that Lacunza caused to the FCI because of its measures are impressive." Fund holdings rose from nearly 250 billion to 155 billion pesos from 27th to 30th August.. He added that "38% reduced badets under management in 3 days as a result of bailout plans". He stressed that some funds dropped to 62 percent During this period, he said that the banks most affected by the fall of their funds are BBVA, HSBC, ICBC and Banco Nación. The suspension of operations the day after the announcement of the default and the subsequent collapse of shareholder value led to the nervousness that attracted savers to the fate of their deposits.

The finances of the provinces and of businesses Industry, services and trade also suffered a devastating shock with the "corralito de las Letes". They placed some of the working capital to avoid its devaluation in very short-term debt securities of the National Treasury, at rates higher than fixed term loans, they now have the money trapped.

The purchase of Goods of treasure This was the private sector's financial strategy in a context of collapsing consumption and the internal market. Companies have sought an emergency exit before the sinking of the macrista use the state (which needs pesos to cover the fiscal deficit) as a drowned financier. He was paying very high interests, funds that make it easier for companies to cope with the depressed wages of their workers and commitments made with their suppliers. The financial revenues obtained with the Letters contributed to the day-to-day administration of an economy in crisis.

These letters were also used as collateral in the circuit of stock market loans ("surety bonds"), which also remained in limbo.

Many the provinces they mimicked the behavior of private companies, by allocating an excess budget to the purchase of letters in pesos and dollars, in order to collect an income allowing them to cope with the payment of wages, bonuses and d & rsquo; commitments with suppliers. According to an official report, Ten provinces have a total of about $ 1250 million of these short-term debt securities. The province of Buenos Aires Maria Eugenia Vidal it's made to take "Corralito de Letes" with about 500 million dollars.

Another example of neoliberal dogmatism and political conservatism is the failure to pay the debt in pesos, in addition to the commercial plan for friends, family and foremen, which is overwhelming. impericia in the administration of the crisis. This announcement triggered an increase in the intensity of the exchange rate and the startup of the bank.

During these nearly four years, they have succeeded each other as leaders of the economic zone of the establishment, Alfonso Prat Gay, Federico Sturzenegger, Luis Caputo, Nicolás Dujovne, Guido Sandleris in Hernán Lacunza, and one worse than another in public management, to end up generating another of the great Argentine crises, such as the Rodrigazo, Martínez de Hoz Exchange Office, hyperinflation and the brilliance of convertibility. Each of them, as their closest collaborators, will quickly settle into urban consultants, local or foreign private companies, universities or international organizations. Before and now, these economists enjoy the impunity conferred by economic power. The crises are repeated.

March 2018

The cessation of macroeconomic payments was in March of last year
. It was not officially declared at that time. But in this month change the government It no longer has access to voluntary funding from the international market. It was when the Finance Minister of the day, Luis Caputo, in charge of managing this wild debt cycle, surrendered Wall Street ask for more dollars and the door was closed.

To continue with the financial bike and debt payment, there were not enough dollars. To avoid falling into the abyss, President Mauricio Macri desperately ran into the arms of International Monetary Fund. He received a huge credit of $ 50 billion, then reached $ 57 billion of this body dominated by the United States. This is the engine that has kept the party in power hoping to win the October elections.

With the result of not, the IMF has shown once again that not only have the economic proposals to stimulate growth failed (it could not be otherwise because it has postulated the recession measures forever), but that it has also failed in its electoral political commitment . By Pressure from the United StatesWith the geopolitical objective of supporting a right-wing government in the region, as a brake on what they call, in a discouraging manner, "populism", it has made the largest loan in its history to fund the Macri election campaign.

His candidate received a memorable beating, which still presents disturbing symptoms of denial of the result. The IMF has also decided to turn off the tap. $ 5400 million disbursement scheduled for September 15 has been postponed and there is no date to finalize the tour.

17 months have pbaded since last March for the new Minister of Finance, Hernán Lacunza, officially recognized that macroeconomics can not pay $ 101 billion of capital and interest on debt under the agreed terms.

On September 28, when the government concluded the second agreement with the IMF, Macri told the Bloomberg funding chain that "there is no chance that Argentina will fall into default". Another broken promise.

Fans of the sinking of the macrista call it "reperfilation"Lacunza insists that the public debate talks about"restructuring", a term that is more favorable to the market.Investors who do not bill to maturity know that Macri bid farewell by declaring the default of payment of a large part of the debt. of the ruling party's useless party strategy, international financial media and risk rating agencies felt that it was all fault

Dynamite

On January 4, 2018, it was the last public bond issue on the international market for $ 9,000 million. It was the last contribution of Wall Street. The main investment funds and banks have been inundated with Argentine debt. When in March of this year, Caputo failed to convince his friends to continue giving money to macroeconomics, the first who started retirement was JP Morgan. The US financial giant has disarmed its position in Lebac (the speculative bomb created by the president of the central bank, Federico Sturzenegger) and bought dollars in quantity. This was the trigger for the launch of the leak of significant investment funds. There were two who continued to believe in Caputo and regretted it today, since this bet had brought him huge bankruptcies: Templeton and BlackRock.
.

These two companies constitute the selected lot of the largest investment funds in global finance. They are the ones who accumulated the most Argentinean debt because they were the main buyers of the debt. Boat and peDo links (double bonus, pesos / dollar), in May of last year.

Registers of large international investment funds of declared badets of Argentine public securities, in pesos and dollarsin the middle of last year, they scored a total of $ 28 billion. From this total, Templeton concentrate 6 200 million and BlackRock, 3700 million. At the top of the podium this ranking was located Allianz SE (Pimco), with 6400 million dollars.

These funds were downloading some of these portfolios bonuses since the beginning of the race, but they still retain a large part, which means that they count losses for these investments.

The relevance of this situation is not that, on this occasion, these giants of finance have lost their bet on the Argentine bonds, but that the macro-economy has annihilated the possibility of obtaining immediate financing in the international capital market. And it does so with a financial world with very low rates, which would facilitate renewal operations.

The default macro still closed the door, which was already closed, but with a small chance to reopen it. now it will be very difficult, which adds one more element to the heavy legacy that the government will receive 2020-2023.

Macri ultimately energized the possibility of obtaining immediate resources in the foreign financial market for a potential Alberto Fernández government..

The default system presented by Lacunza unblocks funds for non-payment of debts of 10 to 12 billion dollars. Resources that the central bank would have available to attend Request for the exchange market. But this amount of deadlines has been transferred to the 2020 financial program, which is missing about $ 18 billion. In other words, the Macri government wants to burden Fernández's debt further. Not only that. It is expected that the most voted political force in the STEP will approve a law Project which postpones the bond payments without presenting what they would Restructuring conditions. The reasonable order would be first to know what will be the bargaining plan with the creditors, then to ask for the political support of the Congress. The Macri government is doing the opposite to jeopardize Fernández on his own.

Plethora of capital

The macro crisis teaches that it takes break the spell He has been using financial engineering for the administration of the economy, which in recent years has had its biggest representative, Luis Caputo, responsible for the most dizzying cycle of indebtedness in Argentine history. During this neoliberal political period, it was common to hear that the "geniuses" of finance, redefined as the messi of the market, are smart enough to generate structures insensitive to economic storms. It was not like that. Being one of the architects of this financial disaster, Caputo He was at the Ministry of Finance the day Minister Lacunza presented the characteristics of Macri's default.

This magic is naked before the setbacks, when excuses and regrets appear. The regime of financial speculation and the ensuing crisis has already been studied as "the plethora of capital
"A process that occurs when there is an excessive expansion of the currency that is multiplying in the sphere of finances (for the interest rate or valuation of real estate badets or stock market) without being accompanied by a similar expansion of investment and productive activity. Seizures with the consequent financial badet crac they come to destroy that "fictive"No consideration in the value of tangible property.

Ejaculation

As you know this type of crisis has three phases (economic, socio-socio-trade union and political) which are fed at a maximum peak, that is to say when a burst dramatic consequences.

In previous traumatic contexts, these peaks were July 1989, when the hyperinflation it was devastating, and December 2001when the race against weight has resulted corralitolater fault and finally, mégaévaluation. It's a question of knowing what this last crisis of the macro crisis will look like, going through critical weeks.

The financial phase of this crisis, which was triggered by the sharp devaluation that began at the end of April of last year, has no more epicenter the quote in dollars. This is a variable that is already out of control and attempts to tame it, under current conditions, are unsuccessful. Ni is the amount of reserves. There are fewer and fewer dollars at the Central Bank that pull them every day. This is also not a nodal aspect the collapse of stocks and bonds, collapse of contributions that caused a shocking financial poverty effect.

The critical front is currently in thedeposits in pesos and dollars. The other variables have already exploded. The peso with a giant devaluation; reservations with an indentation that stops only when there is nothing left in the Central Bank; stocks and bonds with record falls of 60 to 70%; and the statement of default of part of the debt for a total of $ 101,000 million.

The Central Bank and the Ministry of Finance must stop run behind the eventsbecause they allow the panic the bulk of the market, the worst of the financial phase of the crisis may rush. The main goal should be prevent the exchange rate and equity holdings from being extended to a bank.

The latest report from the consulting firm PxQ of Emmanuel Alvarez Agis explains that a rise in the exchange rate and / or a decrease in reserves will trigger a larger outflow of dollar deposits, which can be extended to deposits in pesos. Note that "This dynamic could compromise the balance of the financial system as a whole."

In a crisis of this magnitude, when political power is diluted and the real economy is paralyzed, the approach to the financial issue must be comprehensive, leaving aside the liberal ideological dogmatism. Economists from various academic backgrounds then agree on the need to impose the control of speculative capital and a system of restrictions on access to the purchase of dollars. Macri would end up restoring a regime of administration and control of access to foreign currencies.

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