Argentine Central Bank president resigns; second in three months

[sandensea]

Argentine Central Bank President Luis Caputo announced his resignation today - the second central banker to resign in three months.

The announcement comes amid the most severe financial crisis in Argentina since the 2001-02 collapse, which resulted in a then-record $82 billion bond default and massive unemployment.

Caputo, the seventh top economic official to resign in two years, will be replaced by Deputy Economy Minister Guido Sandleris.

Sandleris, 47, is a former academic with degrees from the London School of Economics and Columbia, where he received a PhD. in 2005.

His appointment was, however, met with skepticism due to his own record in government - mostly limited to serving as adviser under conservative President Fernando de la Rúa, who presided over the last collapse, and under Macri since the latter took office in late 2015.

The normally low-profile Sandleris is remembered for a March 1 interview in which he confidently predicted that "2018 will be better than 2017" and that inflation will be at most "19%" - a far cry from the 42% now projected by the central bank, or the 45-50% expected by most economists.

As of June, GDP was down 6.7% and unemployment had risen to 9.6% - the highest level in 12 years.

IMF talks

Sandleris has experience as a visiting researcher at the IMF - with whom President Mauricio Macri is currently in New York negotiating both an $18 billion advance and a $20 billion extension to the unprecedented, $50 billion credit line obtained on June 8.

Macri has already spent nearly all the $15 billion drawn from the credit line on June 22 to prop up the peso, which has nevertheless lost half its value since Argentina's carry-trade debt bubble imploded in April.

The dollar rose another 2.9% in Buenos Aires following today's news, to 39.28 pesos.

The carry-trade debt bubble, known locally as the financial bicycle, contributed to a doubling in the country's public foreign debt to nearly $200 billion in just three years and to renewed fears of a bond default.

The bubble's implosion led to the resignation of Macri's first central bank head, Federico Sturzenegger, in June.

Caputo - first cousin of President Macri's best friend - had been a controversial choice given his appearance in the Paradise Papers scandal last year and his personally profiting from the May devaluation.

Calls for him to resign intensified after he raised the central bank discount rate from 45% to 60% on August 30.

The rate, now the highest among all emerging markets, had been 27% as recently as April and has led to a wave of business bankruptcies and layoffs.

At: https://translate.google.com/translate?sl=auto&tl=en&js=y&prev=_t&hl=en&ie=UTF-8&u=https%3A%2F%2Fwww.eldestapeweb.com%2Fel-nuevo-presidente-del-banco-central-pasado-el-gobierno-la-alianza-y-el-fmi-n49683&edit-text=

Trading their poker faces for long ones, Guido Sandleris (right) and Sebastián Galiani (left) endure a recent press conference by Economy Minister Nicolás Dujovne.

Sandleris's appointment was met with skepticism by the markets, which expect few policy changes from Luis Caputo's disastrous three months as central banker.

$14 billion in reserves were lost under Caputo, forcing Macri to seek $38 billion in new IMF funds this week.

[Judi Lynn]

1. Could Luis Caputo done more damage? He's a fellow Paradise Papers should-be felon, too!

What credentials.

Like Trump, Macri also gets the "very best people" for the highly successful criminal class.

No doubt people were forming pools all over the country for the new guy as soon as Caputo left. There might be a pool for his first colossal blow to the taxpayers, and one for when he finally leaves!

Another financial genius steps up to the plate. I just saw that he has suggested Maradona's face could be featured on the 10 peso bill.



Caputo is the 7th economic expert to "hit the streets" in 2 years. Macri should install a revolving door.

People can only hope Sandleris is a cleaner official than Caputo.

Very strange news, sandensea. Thanks for keeping us current!

[sandensea]

2. Did he really? Wow.

Maradona might as well give up all hope of that happening now, given Sandleris' track record with predictions.

"The economy," he berated a skeptical interviewer in March, would "grow by 3.5%" and not only would inflation be "15 to 19%" - but economists, which by March were already projecting 30% inflation, "would have to revise their projections downward as the results came in."

Now, as you know, inflation's expected to be between 42% (per Dujovne's own leaked estimate) and 50%. That would be the worst since '91.

Like many in Macri's "best team in 50 years," as he likes to call them, Sandleris is also a veteran of Fernando de la Rúa's very rueful two years in office (excuse the bad pun).

Hardly a record that inspires confidence - another favorite word of Macri's.

That said, Sandleris is at least a real economist - rather than a professional money launderer like Caputo (the SEC should have shut down his Miami-based Noctua Partners immediately). So if nothing else, Sandleris will probably embarass Macri - and Argentina - a lot less.

I'd just go easy on those predictions if I were he.

Thanks, Judi, for your keen and often surprising insights. Always a good talent to have when discussing Argentina.