The elected president, Javier Milei, and the current president, Alberto Fernández, met yesterday at the official residence of Quinta de los Olivos, clearing up doubts about the collaboration of the current progressive government in the transition to a new regime led by the extreme right. libertarian.
An even more uncomfortable meeting was planned yesterday afternoon when the vice president and former president Cristina Fernández, whose governments made it possible to try many responsible for crimes against humanity of the military dictatorship, was scheduled to receive Victoria Villarruel, defender of the impunity of many of these soldiers, who will replace Fernández in the vice presidency.
Alberto Fernández and Milei tried to develop a plan to prevent, to the extent possible, financial turbulence during the twenty days of interregnum until the inauguration of the president-elect on December 10. It will not be an easy task in a country with inflation close to 150%, an unpayable external debt and a dollarization plan defended by Milei that threatens to further destabilize the exchange rate between the peso and the dollar.
A first indication of the hidden risks was a rise of up to 10% in the dollar yesterday when the exchange market opened after the holiday Monday. Everyone knows in Buenos Aires that a rise in the dollar soon translates into even higher prices in supermarkets.
Javier Milei is trading higher in everything except the currency market. The Stock Market rises and the shares of privatizable companies skyrocket, notably the oil company YPF, whose sale is being considered just when the gas bonanza of the Vaca Muerta wells, in the west of the country, begins.
The anarcho-capitalist is a hero for the young fans of cryptocurrencies in the skyscrapers of Puerto Madero, on the banks of the Río de la Plata, and for the stock brokers on Wall Street as well. But in the currency market the euphoria was conspicuous by its absence yesterday Tuesday and the Argentine peso began what, according to everyone agrees, will be a strong depreciation.
The result, paradoxical for the chainsaw candidate, who intends to “exterminate” inflation, is that in the first experimental phase prices are going to skyrocket even more than now.
“Things are going to get worse before they get better,” says Alberto Ramos, the economist responsible for Latin America at the powerful Wall Street investment bank Goldman Sachs. Ramos calls Milei’s plan to liberalize and dollarize the Argentine economy “the largest economic experiment in the world in the next two years.”
The mega-experiment will have results that few ordinary citizens in Argentina, even Milei voters, anticipated after listening to the speech of the libertarian hawks. “Inflation is going to skyrocket even more, up to 200% or 300%; “This is more than a risk, it is an imminent reality,” explains Ramos in a telephone interview from New York.
Milei is going to drop the peso as a necessary precondition of his controversial dollarization plan. “She promises to dollarize and people are trying to get ahead of the event by selling their pesos,” says Ramos. The closer to dollarization, the more the peso will sink and the more prices will rise until generating the risk of hyperinflation (over 500%), warn the economists consulted.
At the same time Milei wants to dismantle the system of controls on the prices of public services, which will cause even more inflation. Another stock market analyst, Martin Kalos, in Buenos Aires, warned in the LP Online media that “the dollar has no ceiling” due to the expectation of dollarization. The prices don’t seem to have it either.
For Milei it will be better if the price increases occur during the transition period. He has even insisted that “hyperinflation would be a good environment to adopt the dollar as a currency. Hence the misgivings of the defeated candidate and current economy minister, Sergio Massa, about participating in the transition.
Each statement by Milei, no matter how reckless, impacts the psychology of savers and speculators, who alternate between dollars and pesos for their savings and investment. The Argentine elite keeps $250 billion in offshore centers, where they do not pay taxes, while another $200 billion is kept in banknotes stored in Argentina. “Dollarization will not harm them; Those who do not have dollars or access to dollars will suffer a lot,” said an Argentine economist based in the United States.