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Sept. 10th-16th: What We Learned This Week

What has happened the last seven days?

Today 12:04 PM
The visible consequences of inflation.
The visible consequences of inflation. Foto:AP/ NATACHA PISARENKO

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ALL CHANGE AT TOP FOR NATION’S HIGHEST COURT

Carlos Rosencrantz is the new president of the Supreme Court after a 4-1 vote on Tuesday, thus ending 11 years at the helm for Ricardo Lorenzetti. (For in-depth coverage see our editorial on Page 2 and Pages 10 and 11).

CONVERTIBILITY? AGAIN? $40/USD!

The White House’s National Economic Council Director Larry Kudlow yesterday said that the only way the Argentine economy could take off would be to “peg the peso to the dollar”, thus reviving the convertibility in force between 1991 and 2002. In an interview with Fox News, Kudlow also cited the US Treasury as being “profoundly involved in this discussion,” further stating that most Argentines would prefer to deal with the US Treasury than with the IMF. He went on to say: “You cannot create money without a reserve in dollars,” adding that convertibility worked in the 1990s since it banished inflation and maintained prosperity, suggesting that “we need to do it again.” Kudlow said that everybody was asking why this monetary crisis was happening under a president supposedly incarnating change, answering this question by saying: “Argentina still has a Central Bank and to solve this problem once and for all, must dollarise.” Interestingly, “Argentina needs to dollarise,” was precisely the headline of a Wall Street Journal column by Mary Anastasia O’Grady two days previously as her remedy for a peso halved in value, inflation of 40 percent, recession and interest rates of 60 percent to stop capital flight. Meanwhile, the peso is selling at 40 to the dollar!

PROTESTS PICK UP

Social discontent intensified in Argentina last week with two massive protests – on Wednesday picket organisations and state workers crippled the central 9 de Julio thoroughfare for seven hours, accompanied by soup kitchens nationwide, while the next day teachers, pressing their pay claims with a march from the former Education Ministry building to Congress, had only a slightly less disruptive effect on downtown traffic.

DUJOVNE HEALTH SCARE, IMF TALKS CONTINUE

The government is seeking to speed up its negotiations with the International Monetary Fund (IMF) to advance payment of the next tranche and to permit greater flexibility in Central Bank intervention against the rampant dollar but the acceleration has taken its toll on Economy Minister Nicolás Dujovne (recently back from Washington), who was rushed to hospital on Tuesday evening with chest pains, remaining there for 14 hours. The health scare followed a long day negotiating the 2019 budget with provincial governors, alongside President Mauricio Macri.

GOVERNORS & 2019 BUDGET

President Mauricio Macri gained broad provincial support for a 2019 budget with a zero fiscal deficit following a meeting with 18 of the 23 governors (plus City Mayor Horacio Rodríguez Larreta) on Tuesday. Zero deficit will require 400 billion pesos of extra cuts, of which the provinces are being required to absorb a quarter – they were also asked to assent to the emergency decree eliminating the Solidarity Fund giving provincial and municipal governments a certain percentage of soy export duties, to which they agreed, promising their support in Congress for the bill to confirm the decree. In return the provinces will be allowed to up the stamp tax and levies on personal assets. The governors also pressured Macri to scrap ATN Treasury remittances, which they perceive as arbitrary, usually favouring progovernment provinces.

EYE-WATERING INFLATION

August inflation was 3.9 percent – the worst in 28 months – reaching 24.3 percent so far this year, the INDEC national statistics bureau announced on Thursday. Meanwhile core inflation was measured at 3.4 percent. Communications (12 percent), utility bills (6.2 percent) and food and beverages (four percent) were the main culprits. INDEC also posted a 5.8 percent contraction for May.

JONES HUALA TO CHILE

Mapuche activist Facundo Jones Huala was extradited on Tuesday to Chile where he faces charges of arson and the illegal possession of firearms. On the other side of the Andes Jones Huala has responded with an original form of hunger strike which entails refusing water but not food.

SEARCH FOR ARA SAN JUAN

Defence Minister Oscar Aguad said this week that the reported location of the submarine ARA San Juan, missing since mid-November, would not be confirmed before the end of next week at the earliest, adding that it would be impossible to refloat the vessel if over 400-500 metres below the surface, as a new search for missing vessel began. The hunt is in the hands of the United States company Ocean Infinity, which has been given 60-120 days to locate the submarine and which has now reported the “plausible possibility” of a find. It would be “extraordinary” to find the submarine, said Aguad, “not only from the human standpoint, for the families of the [44] crew members, but for the legal investigation” under Caleta Olivia federal judge Marta Yáñez, with the help of the black box. Ocean Infinity experts, aboard its ship Seabed Constructor, are optimistic because they have the latest technology and knowledge of the location of the explosion reportedly destroying the submarine..

NO MORE MEDAL FOR CRISTINA

Ecuador’s National Assembly has stripped former president Cristina Fernández de Kirchner of a national medial the Andean country bestowed on her in 2016. CFK, who is currently a senator, is being investigated in Argentina for alleged corruption. “It is not possible for people who are traitors to public faith and their own ideology to enjoy important decorations” like the Manuela Sáenz medal, a statement read.A statue of her late husband, former president Néstor Kirchner, was removed from a square in Quito three weeks ago.

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