Global Campaign of Interest Rates

.In the international ranking of nominal interest rates set by the central bank, Argentina is world champion . There is no country that registers a higher rate of 40 percent a year, a level ratified at the last monetary policy council meeting of the entity headed by broker Luis Caputo. The Lebac rate is located at a higher level, at 47 percent per year and may increase a few points in the next call for bids last morning. The rate of advance in the current account without agreement is on average 70 percent and that of some credit cards exceeds one hundred percent. These are rate levels that will not fall in the short term, not only because of Central's fear of a new currency cycle, but because of the agreed restrictions in the Stand-By Arrangement with the Fund. International Monetary Fund.

populismofobia is scared with Venezuela, macrista economy has higher interest rates, since the Central Bank of Maduro administration informs that the weighted average interest rates credits granted by economic destination, excluding credit cards, C & # 39; is 21% per annum. For the tranquility of the beautiful conservative souls, the table of positions is not real rates, that is to say that inflation is subtracted. In the indicator of price increases, Venezuela sits at the top at a sidereal distance from the second, which is Argentina. In the 2018 economic growth forecast, Venezuela is the worst (-16 percent) and Argentina the second worst (0.5 / 1.0 percent in the optimistic projection, which drops to -1.4 percent). percent in the pessimistic).

In the rankings of the interest rate and inflation, the Macri government s placed in the center of the world, taking a first and second place; and in the growth prospects, in the last places of the table.

Tourniquet

The Spectator Index is responsible for the development of these rankings, such as the dissemination of comparative statistical information on various topics, which it distributes through its Twitter account. The figures of inflation, interest rates and GDP in international comparison show that the Macristine administration has launched the economy towards a slope, which now has the hands of the International Monetary Fund as an additional engine.

hands and feet in the stand-by agreement with the IMF, pledging not to lower the interest rate until the stabilization of the money market and currency exchange. As in the current economic-financial scenario that is not a likely scenario, the possibility of a modification of this recessive policy will have to accompany a waiver to the Fund. If granted, further adjustment measures and structural reforms, such as partial privatization of the pension system and the public banking system, will be included.

The fixing of high interest rates was the immediate reaction to curb the dollar. pesos. Despite the main adjustment and monetary garrot, with the increase in bank reserves, the price of the greenback fell very little. All the money exchange scaffolding is very small, played out to him every thirty days to the expiration of the Lebac. Last morning, the Central Bank will try to renew 535 billion pesos of this short-term debt, about $ 19 billion.

On the secondary market, the 30-day Lebac was traded at an implicit rate of 50% per annum, forcing the Central Bank to raise a few more points than the 47 expected in the previous call for tenders. In this way, the vicious circle between the interest rate level and the dollar's contribution is intensely deployed, becoming more acute as the mistrust of the government's economic and political management capacity increases.

Bola
The stock of Lebac rises to one billion pesos, an amount that has fallen very little despite the secondary market purchases by the central bank and the failed attempt to offer the opportunity to buy Letes with Lebac Finance and Finance. Financial entities accumulate a little over 40% of Lebac's total, and the accumulation of interest on this asset allows them to post profits in balance sheets, according to the latest report on the financial system Central Bank. In May, they recorded a combined profit of 14,555 million pesos, 76% more than the same month last year.

Interest rates as high, in addition to guaranteeing increasing profits to the entities, feed the snowball. Lebac, which more than offsets the various initiatives to reduce their stock. This means that the interest accumulated by the high fees dilutes Lebac's bailouts by the Central Bank.

The trap that the previous BC model designed for those who have not been submerged in macrist magic. The absurdity of issuing unrestrained debt in short-term pesos is one of the major factors that disrupt monetary stability and exchange rate stability. There is no way to disarm the Lebac bomb if it is with a massive and compulsive exchange for a medium-term peso bond; but this alternative will generate a sharp increase in the Treasury debt at a high rate and will result in a sudden deterioration of the wealth assets of the entities, accompanied by a stranglehold of bank liquidity that will challenge the daily lives of entities. In other words, continuing to refinance Lebac at the current rate level prevents a currency swap; but ending abruptly with these central responsibilities will lead to a financial collapse.

Red Circle
Leading the global ranking of interest rates in national currency is not the only exceptional place reached by the Macri government. In just a few months, it has almost doubled the dollar rate that it has to offer so that in the local market, investors continue to refinance the maturity of Letes. From October 2017 to July 2018, the one-year rate increased from 3.10 to 5.50% per year.

A symptom of growing mistrust is the weakening of the Treasury's ability to obtain dollars in the local market. Investors' offers to buy Letes are getting weaker, investments are then for decreasing amounts, which translates into a net cancellation, despite the fact that the agreed rate is becoming higher.

Macrista's economy was found without access to the voluntary international credit market, it is at the top of the global interest rate rankings and had to hike the short-term rate very strongly. dollars. There was so much evidence of love for the world of finance to end up in such a vulnerable situation: capitulation against the vulture funds, the absolute liberation of the speculative capital movement, the total deregulation of the foreign exchange market, the Empowering millionaire companies in bank charges. international by the placement of the debt and, in conclusion to this policy of subordination, the desperate embrace at the International Monetary Fund.

To accelerated disorder of finances, burstil and exchange, adds the increase in the probability of default in the payment of debt, according to the credit default swap quotation. In this market, CDS insurance against a suspension of payment of the Argentine debt is higher than that of Greece. The implied risk of a new default (CDS) of Argentine debt has almost doubled from 3.73% at the end of last year to 6.76% currently. The increased risk of insolvency is caused by the Letes bomb, which the Ministry of Finance and Finance continues to feed, and the Lebac bomb, which the central bank does not know how to handle.

Another indicator of financial fragility is the country risk indicator, which stands at between 580 and 600 points, or 64% more than a year ago.

President Macri, before complaining about requests and lack of support for the local Red Circle, you should be concerned about how you are treated by the red circle of international finance. He was flattered to the exaggeration of being scorned in a fulminant way. In the former trading floor of the Stock Exchange, which will receive this Thursday on the occasion of a new anniversary of the institution, it will say buy to the rumor and sell to the news (reality). The most remarkable thing about this process is that Macri has believed the praise that he has seduced in his tours abroad, more from the business world, although his father Franco never reflects the qualities to understand the business activity of his son Mauricio, who found refuge in Boca Juniors and his political trampolón with the successful cycle Bianchi-Riquelme.

On the track
Despite the voluntarist speech of analysts related to financial activity, these tests of love for the world of finance were the original sin of the current debacle. The unrestricted financial opening is the reason why Argentine assets are now the most penalized in emerging markets. The stock has collapsed on average by nearly 50% in dollars, bonds fell by 25 to 30% in dollars, mutual funds have already lost about 160 billion pesos of assets, and the peso is the most common currency. devalued this lot of passes. The same spectacular dizziness of debt now has the flight of speculative capital. What was a sham manna of financial dollars today is a collapse of the market, in a trend that does not give any signals of return according to the forecasts of the big international funds.

The Bloomberg agency has published a survey of 20 leading investors, brokers and general manager of the international financial market on the outlook for emerging markets. The balance for Argentina was the worst: it was at the bottom of the list for all classes of assets (currencies, stocks and bonds). The article explains that as the Federal Reserve continues to stimulate interest rates and President Donald Trump continues to raise tariff threats, the floor for emerging markets is still far away. Stressing that devaluations of currencies and liquidation of developing country shares are expected to continue in the second half of 2018.

Another article published in the Wall Street Journal is pithy with the financial outlook. He claims that Argentina liquidates more than $ 10 billion in reserves in April and May in an attempt, largely unsuccessful, to stop the peso each. It is considered the worst of all emerging markets for the loss of reserves and the depreciation of the national currency against the dollar.

The latest report of the Institute of International Finance, which brings together the world's largest banks, offers fulminant figures on the flight of Argentine capital made by foreign funds. Calculates that between April and May, the speculative capital flight amounts to about 7000 million dollars in net terms. He warned of the risks of refinancing debt in dollars in 2019, placing Argentina, with Colombia, Egypt and Nigeria, in the most complicated lot for the renewal of maturities. To add that given its heavy reliance on foreign currency denominated debt, Argentina, Hungary, Turkey, Poland and Chile appear to be the most vulnerable to large fluctuations in foreign currency flows. capital.

The macrista economy has gone from spoiled to being the worst in the emerging neighborhood.

Recesin
With the current level of interest rates, the economy cracks and there is no change in the scenario with a stand-by agreement with the IMF, which has become the guide of economic policy. The economic team agreed with the fundamento-technical technicians of the need to maintain high interest rates for several months. And even if the Central Bank wants to lower them, it must first get the Fund 's approval.

The government, with its public and private propaganda network, promises that after a second half of stagnation, next year, the recovery will begin. This forecast is against historical evidence of the consequences of a sharp devaluation and agreement with the IMF on the Argentine economy.

A currency adjustment like the one triggered in December of last year and which is still not associated with recessive processes. traumatic, with every consumption and investment. The devaluation that is largely transferred to prices, with wages that do not match in the same proportion, further weakens domestic demand, already sufficiently punished by the recession with each job and high interest rates. .

The impact on the economy of the exchange rate overvaluation (devaluation) accompanied by a monetary asphyxia (high interest rate) is only beginning to sanction the social front and work. This relatively contained crisis scenario is with a dollar moving in the range of 28 to 30 pesos, but a new jump in price, which can not be ruled out, will accelerate the economy of the macrista