We’ve got the blues again
For most governments in the world terrorism today would be defined as the shock massacres being inflicted on Israel but here the outgoing Alberto Fernández administration would seem more inclined to give it the name and surname of Javier Milei. Which would be overrating the libertarian maverick – we have seen this movie of pre-electoral panics comparable to this week’s four-digit ‘blue dollar’ more than once before in these 40 years of democracy. Milei was only saying out loud with his usual gratuitously coarse language what almost everybody was thinking – could it honestly be said that amid such extreme volatility nobody had any doubts about renewing their fixed-term deposits in pesos before the presidential frontrunner erupted?
Talk is cheap, as they say, while Milei is not the man printing three trillion pesos so far this year, making him more effect than cause – surely the root cause of inflation although it tends to be velocity of circulation rather than volume which turns the corner into hyperinflation. Deposit drainage is inevitable with no escape in the form of the classic antidote to inflation of hiking interest rates because this would swell the stratospheric costs of redeeming Leliqs and other bonds, turning an already terrifying quasi-fiscal deficit into an even more impossible multi-trillion snowball (curiously viewed as a potential asset within Milei’s dollarisation schemes via a burst of confidence transforming its nominal into real value). Yet it is at this point that Milei starts to become a terrorist at his own expense, shooting himself in the foot by fuelling the flames with his toxic venom and thus making any La Libertad Avanza presidency (which continues to be the expectation of most) even more complex than it already is. Talk might not be so cheap after all.
But regardless of whether Milei is an economic terrorist or whether the government is the architect of its own destruction, the problems caused by the extreme volatility of this week’s fourdigit dollar are all too real with panic price increases across the board. Problems which are more likely to be laid at the government’s door than blamed on Milei. October might be considered the supreme Peronist month as containing both next Tuesday’s Peronist Loyalty Day and Juan Domingo Perón’s birthday (last Sunday and thus coinciding with the second presidential debate, a detail which seems to have gone unnoticed) but it has been a nightmare so far for the government with this black and blue week coming on top of the continuing fallout from the monstrous scandal stemming from Martín Insaurralde’s Marbella yachting jaunt.
This might already look like game over but is it? There is still a week to go and in that week President Fernández will be travelling to China where his top priority will be releasing a currency swap of some US$5 billion for money market intervention. The impact of these ‘blue dollar’ surges is so huge that it can easily be forgotten that it is a tiny market against which just a few billion dollars provide more than sufficient firepower – an injection which could also solve all import problems during the short space of a week. That money is not yet in the bag (and cannot be taken for granted with China’s increasing economic constraints) but neither is the election.
This brings us back to the continuing isolationism of a political class which could find no time for international relations in two presidential debates and which is capable of defining terrorism as Milei rather than Hamas. Israel is undoubtedly the global urgency of the moment but China might well be the main question in a longer term. Beyond all the alarmism coming from Washington, two extreme dangers are concrete possibilities. The first is for the outgoing administration to sell the country down the river in order to bail itself out of its acute economic, fiscal and monetary problems. And the second is Milei’s pledge to sever all political and commercial ties with “Communist” China (if only at public-sector level) – if Beijing shares the widespread expectation of a libertarian victory, this will also make the presidential mission of seeking more slack for the currency swap all the more uphill.
The economic and electoral uncertainty at the end of this week could not be more extreme but whatever the upshot, it cannot be anything which Argentina has never experienced before in its volatile history, not even hyperinflation. A new chapter is around the corner but the book remains open.
MANIC MONEY MARKETS
The dollar had its wildest week of 2023 which was not over at press time but an important psychological barrier was crossed on Tuesday when the “blue” version surged beyond 1,000 pesos. Raids on bureaux de change throughout the week included the detention of three Chinese citizens in Belgrano’s Chinatown on Wednesday after a total of US$700,000 was detected in money-belts on their persons. Meanwhile travel agencies started to suspend any payment of services abroad in pesos in anticipation of more devaluation before this month is out, insisting on dollars, although the sale of air tickets is not affected for now.
DIRTY DOZEN
Last month’s inflation was even higher than August’s 12.4 percent, weighing in at 12.7 percent or an annual rate of 138.3 percent or 103.2 percent so far this year, INDEC national statistics bureau announced on Thursday afternoon. The main culprits were garments and footwear (15.7 percent) and recreation and culture (15.1 percent) but the key item of food and beverages was also above the monthly average at 14.3 percent. Core inflation (excluding seasonal and regulated prices) also topped the general figure at 13.4 percent. The news left the Central Bank pondering whether or not to raise interest rates now standing at an annual 118 percent with the Central Bank’s REM survey of economic consultants forecasting an annual inflation of 169 percent by the end of this year. Most of these consultants had been forecasting a lower inflation for last month than the 12.7 percent finally announced by INDEC.
SECOND PARTS AND DEBATES
The final presidential debate in the University of Buenos Aires Law Faculty stepped up the voltage from its Santiago del Estero predecessor with most of the protagonism passing to the Juntos por el Cambio candidate Patricia Bullrich. Economy Minister Sergio Massa was placed more on the defensive by the continuing fall-out from the scandal of the disgraced Buenos Aires provincial politician Martín Insaurralde adding to growing economic problems. Libertarian Javier Milei was more uncomfortable with a trio of segments (Security, production and labour, human development, housing and the environment) not including his pet area of economics. The other two candidates, Juan Schiaretti and Myriam Bregman, stuck to their respective federalist and leftist guns.
ARGENTINES IN ISRAEL
At least seven Argentines were among the hundreds of Israelis massacred by the massive and murderous Hamas incursion into Israel last weekend, shocking the rest of the world. Some 600 Argentines resident in Israel immediately sought repatriation with the number doubling the next day and continuing to grow to 1,400 as of press time. Thousands of people including Buenos Aires City Mayor Horacio Rodríguez Larreta and Juntos por el Cambio presidential candidate Patricia Bullrich responded to the call of AMIA and DAIA Jewish organisations last Monday to march down Estado de Israel avenue in support of the invaded Zionist state.
INSAURRALDE CASE SIMMERS ON
Lomas de Zamora Federal Judge Ernesto Kreplak on Tuesday slapped court secrecy on the case investigating former Buenos Aires Province Cabinet chief Martín Insaurralde, his ex-wife Jesica Cirio and model Sofía Clerici for money-laundering and embezzlement. At the same time prosecutor Sergio Mola requested raids on the properties of the defendants to secure more evidence, such as the presents made by Insaurralde to Clerici and posted on social networks, a request granted by Kreplak. The investigated trio is also forbidden to leave the country. During the weekend Cirio, 38, gave a television interview in which she denied having received US$20 million from Insaurralde as a divorce settlement. She also said that she had no idea that her ex-husband and Clerici were living it up in the Spanish resort of Marbella when the news broke. Finally, she said that she had formed no new attachment since her separation last November. In related news, research into airport records showed that Insaurralde has made 200 trips abroad in the course of this century.
YPF RULING APPEALED
Argentina on Wednesday appealed last month’s New York verdict sentencing the country to pay US$16 billion to the investment fund Burford Capital over the 2012 expropriation of YPF oil company. The appeal against Manhattan Loretta Preska’s September 15 ruling had already been anticipated at that time by Presidential Spokesperson Gabriela Cerruti, who added: “We will continue defending energy sovereignty and our YPF state company from the vulture funds.” The appeal warned that making the multi-billion payment imposed by the ruling would inflict “irreparable damage on a population suffering from high inflation caused by an unprecedented drought,” adding: “The country does not have access to capital markets to issue a bond and deposit a guarantee.”
WHEN TWO POWERS MEET
Mirtha Legrand, 96, made her TV comeback with the couple of the year, PASO primary winner Javier Milei and his new significant other Fátima Florez, as the exclusive guests of her show La Noche de Mirtha, guaranteeing a high rating. The normally incandescent Milei did not attack Pope Francis this time beyond saying: “I’m not so far from considering him a Communist” but lashed into his presidential rival Patricia Bullrich as a bomb-chucking “terrorist” in the 1970s. The libertarian hit back against charges of complicity with government presidential candidate Sergio Massa by filling his lists with the Economy Minister’s nominees by charging that there were also many Peronists hidden away in the Juntos por el Cambio lists, including the mayoral candidate in the hotspot of Lomas de Zamora, an exaide of Martín Insaurralde.
FIRES RAVAGE CÓRDOBA
Forest fires in Córdoba last week caused the evacuation of dozens of families with several buildings burned to the ground. The focus of the blaze, which began last Monday, was the Valle de Punilla valley in the midwest of the province. Strong winds, the sequel of drought and high temperatures all contributed to the catastrophe but human agency was also a factor. “An arsonist has been arrested and I hope that the full weight of the law falls on him,” said outgoing Córdoba Governor Juan Schiaretti, who is starting the last week of his presidential campaign, while expressing relief that no human lives had been lost. According to media reports a man of 27 admitted to having started a bonfire to boíl water and then had been unable to control the flames. Three hydrant planes and light rainfall on Wednesday morning had started to extinguish the blaze by midweek.
PRÓVOLO CASE CLOSED
The Supreme Court on Wednesday unanimously rejected the last appeal against the the sentences for child abuse at the Antonio Próvolo Institute in Mendoza, upholding the 18-year prison term of former school gardener Armando Ramón Gómez Bravo who thus joins priests Nicola Corradi and Horacio Corbacho, both sentenced to 50 years for abusing 11 deafmutes aged from five to 17 between 2005 and 2016.
DIRECTOR DEAD AT 90
Jorge Lavelli,one of the defining theatre and opera directors of the las century, died last Monday in Paris in his 91st year, the Argentine Embassy announced. Born in Buenos Aires in 1932, Jorge Lavelli left for París at an early age with his first hit there his 1963 version of The Marriage by the Polish playwright Witold Gombrowicz (who spent over two decades in Buenos Aires after being stranded here by World War II). Lavelli became a naturalised Frenchman in 1977. Unexpected stage effects were his forte.