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peppertree's Journal
peppertree's Journal
December 21, 2023

Bypassing congress, Argentina's Milei decrees sweeping economic deregulation and privatization measures

Argentine President Javier Milei announced a barrage of legal and economic deregulation measures that will, if passed by congress, fundamentally alter the Argentine state’s role in society and the economy.

Among the announcements were the abolishment of laws regulating the rental market, supermarket supplies and state purchases. He also announced moves that pave the way to privatizing Argentina’s state-owned companies.

The measures will be implemented via decree - and are effective immediately, despite constitutional provisions barring decrees over fiscal or penal law.

The chief of staff then has 10 days to send it to Congress, where it will be debated in commissions before it is sent for debate by lawmakers.

Argentina's inflation crisis, which had reached 160% in November (the last full month of the center-left Alberto Fernández administration), has tipped into hyperinflation since Milei devalued the peso by a record 51% overnight shortly after taking office - with inflation now projected to reach 30% in December alone.

The announcement touched off a massive, left-wing demonstration in downtown Buenos Aires - with pot-banging cacerolazo protests later heard in middle-class, right-leaning neighborhoods in the capital and elsewhere.

Middle-class support had proven decisive for Milei's runoff election victory a month ago.

At: https://buenosairesherald.com/politics/milei-decrees-sweeping-economic-deregulation-and-privatization-measures

Buenos Aires residents respond to today's far-reaching price deregulation and privatization decree by far-right President Javier Milei with pot-banging cacerolazo protests - historically associated with right-wing, middle-class voters (a key Milei constituency).

The decree - which opposition lawmakers have slammed as unconstitutional - follows Milei's record, 54% overnight devaluation last week that has quickly tipped Argentina's inflation crisis into a hyperinflation crisis.
December 13, 2023

Argentine economy minister - who profited from last major devaluation - announces deep cuts, record devaluation

Argentina’s Economy Minister Luis Caputo announced a package of ten austerity measures Tuesday evening - chief among them a devaluation of the peso by a record 54%, taking the official wholesale dollar exchange rate from 366 pesos to 800 pesos.

The decision was part of a package mostly consisting of government cuts the minister said were to “neutralize the crisis and stabilize economic variables.”

The "shock" package also included deep cuts to provincial and social aid transfers, transport and energy subsidies, public works, pensions, and other cuts totaling 2.9% of GDP.

The program also included tax hikes of 2.2% of GDP - mainly through import and export tax increases (which Milei had loudly campaigned against), as well as a steep income tax increase by way of reduced standard deductions.

The cuts and tax hikes - which in a statistical table released by Caputo purports to eliminate the nation's budget deficit - fails to take into account the deep recession similar shock devaluations have inflicted on Argentina in the past.

Caputo said the devaluation — a 118% exchange rate jump — was to provide the agribusiness and industrial sectors “the appropriate incentives to increase production.”

Black and blue

It is the steepest devaluation of the peso since early 2002, when the Argentine peso plummeted after the 2001 foreign debt crisis - during which Caputo served as an adviser to then-Economy Minister Domingo Cavallo.

Cavallo - who endorsed newly-elected far-right President Javier Milei - became reviled for using US$13 billion in IMF loans to finance capital flight - only to then impose deep cuts and a bank withdrawal freeze that plunged the nation into riots and depression.

Later named Finance Secretary when Trump ally Mauricio Macri took office in late 2015, Caputo, 58, was among numerous Macri officials and relatives found to have purchased millions in dollar futures contracts ahead of Macri's 40% devaluation that December.

Caputo's Axis fund made US$50 million from betting on the move - a devaluation he himself arranged.

The country's perennial "blue" (black) dollar - which Milei had pledged to make redundant by lifting currency regulations - jumped 12% today to a record 1,115 pesos.

Retailers have meanwhile reported a dramatic 100% jump in wholesale prices - on top of 40% increases the week before Milei took office last Sunday, leading to hoarding and shortages.

At: https://buenosairesherald.com/economics/argentina-chainsaw-plan-revealed-deep-cuts-record-devaluation

Argentine Economy Minister Luis Caputo winces as he announces yesterday's "shock" measures - including deep budget cuts, steep tax hikes, and a record daily devaluation of 118%.

Caputo pledged that the measures would balance the budget and stabilize the nation's economy - already battered by a foreign debt crisis inherited from his former boss Mauricio Macri in 2019, as well as by a record drought last year and 150% inflation.

Similar shock measures in Argentina in the past have invariably resulted in deep recessions however, as well as a massive wealth transfer from working and middle classes to the country's notoriously tax-averse elite.
December 6, 2023

Argentina's Mileise: Retailers report wholesale price hikes averaging 40%, ahead of shock devaluation

Retailers in Argentina have reported wholesale price hikes averaging 40% since the November 19th election of far-right candidate Javier Milei to the presidency.

The jump in wholesale prices comes amid fears that the incoming Milei administration - which takes office this Sunday - would enact a shock devaluation of the already battered peso, which has already lost over half its value so far this year.

Among the sharpest reported increases, have been those for dairy and personal hygiene (50%), packaged bread (65%), and vegetable oil (200%).

Cities across the country have meanwhile announced imminent bus fare hikes averaging around 30% (with some, such as as Mar del Plata and Posadas, more than doubling fares), and health insurance premiums - which Milei has announced will be deregulated - are expected to jump 35% in January.

Consumer prices - which in Argentina are now reported weekly - rose 3.1% in the week after the runoff election, and 10.8% over the past month. But December inflation is expected to approach 20%.

Milei had repeatedly stated during his campaign that he would have the peso devalued "to the blue level" - a reference to the black ("blue" ) currency market currently representing a 160% hike in the official dollar/peso exchange rate (from 379, to 955 pesos).

Incoming Interior Minister Guillermo Francos said recently that an official rate of "between 600 and 650 pesos" would be "reasonable" - which still equals a 58 to 71% devaluation at current rates.

The consensus among economists is that this sharp devaluation will be largely transferred to prices.

"The impact on inflation will be quite large. It's only worth remembering how after the post-(August 13th) primary devaluation of 22%, the (monthly) CPI jumped from 6 or 7% to more than 12% for two consecutive months," economist Federico Zirulnik with the center-left CESO think tank noted.

"Imagine what can happen with a devaluation of almost 80%."

At: https://www-eldestapeweb-com.translate.goog/economia/inflacion/dolar-a-650-pesos-anticipan-un-traslado-a-precios-y-una-retraccion-del-consumo-2023126052?_x_tr_sl=es&_x_tr_tl=en&_x_tr_hl=en&_x_tr_pto=wapp

Sticker shock: A consumer inspects hastily marked new prices in a Buenos Aires grocery store four days after far-right candidate Javier Milei's victory in November 19th runoff elections.

Wholesalers issued have price hikes averaging 40% since then, amid what's expected to be a devaluation of anywhere from 58 to 160% from the incoming Milei administration.

Consumer prices in Argentina have already risen nearly 150% over the past twelve months.
December 3, 2023

Bolivia gets green light for full Mercosur membership

Bolivia is set to become a full member of the South American Mercosur trade bloc following a decision on Tuesday by the Brazilian Senate to approve the country's admission.

The vote on the accession of Bolivia to Mercosur is expected to be formally concluded during a regional summit on Dec. 7 in Rio de Janeiro.

Brazil President Luiz Inacio Lula da Silva, who holds the temporary presidency of the trade alliance that also includes Argentina, Paraguay and Uruguay, welcomed the expansion.

Bolivia's full membership has been eight years in the making. Concerns over the solidity of the country's democratic institutions had long delayed its admission.

At: https://www.reuters.com/world/americas/bolivia-gets-green-light-full-mercosur-membership-2023-11-29/

Bolivian President Luis Arce (left) joins close allies Lula da Silva (brazil) and Alberto Fernández (Argentina) during a South American unity at summit in Brazil last May.

The South American nation of 12 million cleared the last procedural hurdle to join Mercosur - a common market of 273 million people and a combined GDP of $2.9 trillion (excluding Venezuela, which was suspended in 2016).
December 1, 2023

Argentina's Milei picks former neo-Nazi to key Treasury Solicitor General post

Argentine President-elect Javier Milei announced that right-wing lawyer and one-time neo-Nazi Rodolfo Barra was tapped as the nation's next Treasury Solicitor General upon taking office on December 10th.

Barra, 75, had earlier served as Justice Minister during the freewheeling Carlos Menem administration, until evidence emerged in 1996 that he had belonged to the neo-Nazi Nationalist Union of Secondary School Students (UNES) during his teens in the 1960s.

Barra then joined the fascist Tacuara Nationalist Movement - of which UNES was a high-school chapter - and on at least one occasion hurled tar balls at a Buenos Aires synagogue.

Tacuara attacked numerous Jewish temples and synagogues following the 1960 detention of Nazi fugitive Adolf Eichmann. Following a string of robberies and murders, they disbanded in 1966.

Barra's nomination was condemned by DAIA (the nation's foremost Jewish federation), the Argentine Jewish Appeal - and even the Argentine Forum Against Anti-Semitism, which is made up mostly right-wing Jews whose 'Together for Change' coalition has largely joined Milei's incoming far-right regime.

The key post - known in Spanish as the Procuración del Tesoro de la Nación - oversees the country's bar associations and the Argentine federal government's litigation powers, particularly in regards to economic disputes.

The office had most recently been at the center of controversy during right-wing President Mauricio Macri's 2015-19 tenure, when then-Procurador Carlos Balbín was sacked in 2017 after objecting to a $750 million payout to toll road operators in which Macri was a shareholder - and after which he sold his shares at a large profit.

At: https://www-pagina12-com-ar.translate.goog/690992-si-fui-nazi-me-arrepiento-quien-es-rodolfo-barra-el-procurad?_x_tr_sl=es&_x_tr_tl=en&_x_tr_hl=en&_x_tr_pto=wapp

"Herr Minister": A 1996 Noticias newsweekly cover features then-Justice Minister Rodolfo Barra (in Swastika, and in lower inset) after evidence of his high school-era membership in neo-Nazi groups emerged - leading to his resignation days later.

Relegated mostly to academia in later years - largely in institutions run by the right-wing Catholic sect Opus Dei - Barra re-emerged in public life this week when President-elect Javier Milei tapped him to lead the key Treasury Solicitor General post.

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