9/18/2023 - Economy and Finance

2024. The year of sincerity.

By Horacio Gustavo Ammaturo

2024. The year of sincerity.

As in 2001, where the implementation of extreme economic policies led to recession and unemployment, once again Argentines witnessed a new cycle end, which unfortunately could conclude with the same symptoms.We gave the luxury of passing from an open and market model to another increasingly closed and run by the state.Political leadership is once again confronted with the phenomenon of “everyone goes”, only in this case it is presented in the form of absence and disinterest to the time of voting and choosing a candidate arising from the table of a television program, without priors in public or private management, in practice, a theorist.The last elections have launched a strong 65% voters who have no opt for the last few years' proposals, which between the two have divided only 35% remaining.The message of the polls was clear, voted against a management model shared by the traditional proposals that today were no longer majority.The 2001 crisis was the product of the pseudo dolarization of the economy with the Convertibility Law, which served to exit hyperinflation and establish stable rules for almost a decade.

However, the pseudo dolarization far was to resolve that:

  1. Our ruling class has always been ingenious to spend too much. Emitting weights when they can, taking debt in local or foreign currency, resorting to multilateral credit bodies or printing almostmonedas.
  2. Our credit background is one of the worst, we are serial defaulters.
  3. The same legislators, who at one time approve a law in a sense, may at a short time change their discretion, sometimes with retroactive effects, revoke the effects of current rules.
  4. Public and private contracts are interpreted by justice in accordance with the interests of shift power, as a result, sometimes the same clause may have opposite applications.
The years before the exit of convertibility the economy went into recession, left goods in warehouses and in many sectors the payment chain was literally broken. Rejected checks, mortgage and clothing executions, civil and commercial courts covered by proceedings.The theory of the stroke had ceased to pour purchasing power over the majority of Argentines and this, combined with the political weakness of the government of President De Rúa were silent cultivation to violently, disordered and cruelly abandon a model meant by the reduction of public interventions and the free market.Citizenship was in living flesh. Debts in dollars were unworthy. Jobs have lost hundreds of thousands. Companies broke and hunger presented in the form of looting and despair.

Everybody go!

The Argentines stopped believing in politics and their politicians as a driving mechanism for the country's destinations.The leadership of the times found a response to divide the losses between the parties, regardless of what the rules and contracts establish, assist the most needy and intervene to morgue the effects of such a crisis.The abandonment of convertibility, together with the suspension of debt payments and the pseudo-nationalization of private debts in dollars, received the support of most sectors, because there was fresh resources for everyone at the expense of the contracts and agreements of the past.However, They sowed very dangerous seeds, those that compete with good cultures.El Salvador brutal public progress on private put the State in the role of the main booster of the economy.In the last 22 years, state investment has always exceeded private.Work and effort ceased to be the way to access the ticket and under the motto it says “where there is a need there is a right” It has grown two generations with needs and rights, but without responsibilities, under the criterion that through incentives to consumption the economy is only ordered.Then we arrived this year 2023, where the response to the crisis of convertibility reached its exhaustion. The link between total openness and “economic freedom” versus total intervention, price control and multiple exchange rates led us to delay, poverty and inflation again.None of the two extremes were good. The present evil could make us annorate a past, also bad.It is likely, as in 2001 the output of this driving and interventionist model is also traumatic.On the social side, the panorama is much worse than the previous one, 20 years of assistance have promoted the development of a new social strata that does not know the distribution value of employment and work effort as a means to access the satisfaction of needs and desires.State intervention in the prices of goods and services The relationships between them, leaving in their path winners and overcomes, often by the disparity that the norms and employees preach.The exchange rate policy, based on multiple types and inverse to the needs of the treasure chests, punish those who enter currencies and reward those who carry them, therefore, inevitably lack dollars.This punish the value of debt in foreign currency, both public and private, Therefore, the market understands the impossibility, under these conditions, to rely on the resources necessary to honor the obligations.Similarly, debt in local currency is increased exponentially for the fees to pay for the state to “seduce” the captive weight holders to follow in this denomination, something they do more for impossibility than for convenience and desire.Unfortunately, history shows us that inflationary processes are only decreasing consumption, which translates as more poverty.The fight for the distributive cake finds its limit when no one can access to buy a portion, when the stocks accumulate and the perishable products are won. When the financial cost is greater than the expectation of re-evaluation of inventory.This phenomenon has begun. Only the great effort the government makes to sustain a depleted model until the transfer of command takes the inevitable.The next year 2024 will be the sincericide of the economic variables, because the fuel ended up sustaining the multiple lies that coexist, forcing to sincere the relative prices of things.This will highlight the state of disorder and inequity in which the Argentines live, putting at risk the joy of those who do the things to do.That is why what comes will be very hard for everyone and especially for those who command the timan of the destinations of this country, because doing what is to do can be interpreted as suicide.God wants you to be able.

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horacio gustavo ammaturo

Horacio Gustavo Ammaturo

I am Gustavo Ammaturo. I have a degree in Economics. CEO and Director of infrastructure, energy and telecommunications companies. Founder and mentor of Fintech, DeFi and software development companies. Blockchain Product Designer.

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