By Alejandro A. Tagliavini *
The results of the primary elections in Argentina surprised us strongly. Alberto Fernández’s “Frente de Todos”, accompanied by Cristina Kirchner for vice president, won 47.7% of the votes, against 32.1% of Macri’s ruling. Only a miracle could reverse this result in the October elections when a candidate, with only 45% of the votes, will be proclaimed the president who would assume on December 10.
Known the result there was a historic black Monday. The Buenos Aires Stock Exchange fell 32% in a single day, measured in dollars the fall was 48% the second world record of the last 70 years. The country’s debt bonds fell 60% the same as the Argentine shares listed in New York.
The CDS (credit default swap) skyrocketed 100% and already show a 75% chance of bankruptcy in Argentina in five years. The country risk measured by JP Morgan rose 80%, the peso devalued 35%, and the government very counterproductively, with the intention of curbing the devaluation, rose the astronomical reference rate to 74%.
Thus, in general, Argentines impoverished 30%, on average, in a single day. And, although markets later calmed down, the underlying problem continues. Now, who is to blame? Is it the scare for the return of Kirchnerist populism or Macri that leaves the economy in bad conditions?
Another of Argentina’s serious problems is that stock and financial operators and media economists are highly mediocre and made the public believe that the economy was basically good with Macri since, among other things, he had IMF support. And so they helped inflate a bubble that now burst, because the truth is that the economy is going badly.
As he did for years in governing Buenos Aires, Macri, despite his deceptive discourse and the support of falsely “pro-market” economists – strictly conservative, neo-Keynesians who call themselves “liberals” – systematically increased the weight of the state by suffocating to the productive sector, to the private sector to unprecedented limits: annual inflation of 50%, interest rates of 70% and an unsustainable tax burden, among other things. And the Keynesian IMF helped, with a whopping more than US $ 50,000 million, to finance this debacle.
That is, it is true that because of his discourse and history contrary to the market – which are nothing but free people, the people working without suffocating taxes or coercive regulations – the Kirchnerism scares, but the bubble that burst – armed by irresponsible advisors – left evidence the seriousness of the economic situation.
Macri will go down in history not only as having impoverished the country for its anti-capitalist policies – beyond its deceptive discourse – but for having lost the historical opportunity to get the country out of populism. And this with the help of neo-conservatives – so-called “liberals” – who, initially out of ignorance or opportunism, supported him, although some later escaped shipwreck, causing another serious problem to the country: public opinion wrongly blames the market economy. Argentina, then, objectively, has no future, we can pray that the new government respects the market a little more than Macri did and, by the way, thank that the meaning of life – and happiness – does not go through the material.
* Member of the Advisory Board of the Center on Global Prosperity, of Oakland, California