Wrapped in a Shakespearean climate in mid-March, several doubts about current political and economic events will probably be cleared up.
Being an election year, the marketing slogan "It's the economy, stupid", a milestone in the campaign in which Bill Clinton was elected, focuses on how Massa's "endurance plan" unfolds to position himself/herself at the Front and its candidate and reach the end of the mandate without surprises.
It is a plan that does not contemplate any fundamental structural reform that contributes to improving the average productivity of the economy, without which trying to integrate into the world by generating better quality jobs and remuneration as a way of mitigating poverty becomes a chimera.
Its main axes go through stabilizing inflation around 3 or 4% per month, high, but not explosive, avoiding a drop in economic activity and without delays in remuneration, with special emphasis on those most neglected.
With a competitive exchange rate, without increasing the gaps between the different dollars existing in the market, trying to increase the squalid reserves of the BCRA.
It is therefore convenient to dwell on issues that could stress and jeopardize the entire scheme without pretending to be exhaustive.
Drought:
The agro-economic dependence to fill the BCRA's tank with dollars depends to a great extent on the climatic factor.
The forecasts are not encouraging, affecting the volume of the coarse harvest.
The impact on yields will not only affect the volume of foreign currency that can enter, tax collection will be reduced, the food chain will see the normal supply of feedlock products altered, especially beef, pork and poultry.
This, in turn, can affect the final price on the shelf, with price increases jeopardizing the reduction in inflation.
Inflation:
a key piece of Massa's "endurance" plan consists of having a CPI "stabilized" for March around 4% per month.
Doubts arise if he succeeded, and if so, with what tools did he achieve it.
It is one thing to obtain it through a change in expectations resulting from a better ordering of the macroeconomy via deficit reduction, monetary issue, genuine influx of dollars, etc.
Another very different thing is with greater repression of price controls with legions of trade unionists/picketers touring supermarkets, plus a turnstile to control imports, multiplying differential exchange rates for different sectors, increasing the mess of relative prices.
The prices controlled by the State, such as tariffs, continue to lag behind, preventing the reduction of the mass of subsidies with their fiscal and monetary impact.
The disorder of relative prices without unequivocal signs of them in the market causes them to be determined more by defensive actions of the agents tending to preserve their working capital.
Dangerous pent-up inflation is brewing, largely dependent on prevailing expectations to establish how controllable it is.
Value of the dollar:
we have a dollar-dependent bi-monetary economy, not because there is a lack of dollars, there are surpluses among those kept under the mattress, deposited abroad, improvements for export, potential for incoming tourism, etc.
The problem is that there are plenty of pesos for an increasingly reduced demand for these.
This produces a flight from the holders of pesos to the dollar, either through the consumption of products with a high component of inputs in dollars, such as cell phones, or hoarding dollar bills.
The focus must be on the speed of money circulation, that is, the demand for pesos that the BCRA cannot control because it is a sovereign decision of the market, and not so much on the money supply, a tool that the BCRA does control.
It is possible to have zero issuance with high inflation, as happened in the last stretch of the Macri government, because, among other factors, despite the fact that the flow does not increase, the demand for pesos falls compared to the existing stock of the same due to unfavorable expectations due to different circumstances.
Ultimately it will be the prevailing expectations that will set the gap between the exchange rate established by the BCRA and the one sought by the market.
This, in turn, will seal the fate of the "endurance" plan.
The repurchase of U$S 1000M of debt announced aims to try to influence the gap between the different exchange rates and the one set by the BCRA.
Government wrestling with markets with an uncertain end.
Politics:
it can help to stabilize expectations or generate a deafening noise that promotes a generalized save whoever can and however they can.
By mid-March, the electoral calendar forces potential candidates and fronts to define their respective quo vadis.
Cristina, with the recitals of her conviction in the Road Cause, will have to decide whether to continue not running for any position or review her argument as a banned candidate and apply for who knows what position.
Before that, the media show of the trial of the Court will be at its peak, feeding its doctrine of lawfare or burying it.
A crucial decision is whether to appeal the ruling or, taking refuge in a mystical victimization, he does not appeal and renounces his privileges, leaving the prison sentence and proscription to assume public office without the need for the Supreme Court to issue, never to the vice presidency with its legitimization. of the popular vote.
This hypothesis seems crazy, but it is a way of setting the country on fire if you continue to think that the Front loses nationally and in the province of Buenos Aires.
It would no longer be a peronization of Cristina, rather a "Neronization" generating an unprecedented institutional crisis.
Macri will have to define how he wants to play and the rest of the ducklings in the different groups will determine his immediate future.
How to clear up the unknowns of possible political scenarios will largely align the conduct of society as a whole and the prevailing expectations, sealing the fate of the "endurance plan."
Joint Degree in Economics and Philosophy, University College, London
look too
Confusion over Massa's move that sacrifices 10% of the reserves
The obsessions of Cristina Kirchner and Sergio Massa's Green October plan
