The New York Times reports Argentina’s Macri Trounced in Primary by Voters Angry Over Economy.
The results were seen as a vindication of Mrs. Kirchner’s comeback plan, which was met with surprise and skepticism when she announced it in May. The deeply-polarizing former leader, who has been indicted in 11 corruption cases, tapped Alberto Fernández, a more moderate politician, to run as president.
Analysts said Monday that they saw little room for Mr. Macri to recover, warning that the electoral loss would only worsen the economic problems that have dogged his administration.
“This is irreversible,” said Lucas Romero, who runs Synopsis, a local polling firm. “Beyond the numbers themselves the result will have an impact on the economic situation that will prevent the government from changing people’s perspectives.”
Argentina’s currency fell, and its bonds and stocks plunged as investors, who had put significant faith in Mr. Macri’s belt-tightening efforts, braced for the possibility of a victory by Mrs. Kirchner.
Critics accuse her of overseeing a deeply corrupt government that distorted official economic figures and relied on a patchwork of unsustainable subsidies and social programs to retain political support.
Triumph of the Left
The Wall Street Journal reports Argentine Peso Dives After Populist Peronists Gain Edge in Vote.
- The peso initially weakened more than 30% against the dollar after pro-business President Mauricio Macri was dealt a resounding defeat in a primary election Sunday against Alberto Fernández, a leftist whose vice-presidential running mate is former President Cristina Kirchner, a firebrand nationalist. The peso later recovered some ground.
- Argentina’s central bank stepped into currency markets Monday, auctioning off $50 million to try to support the peso. The bank’s benchmark interest rate jumped to 74%, from 63.7% on Friday, according to local reports.
- The Merval index in Buenos Aires closed 38% lower on Monday after jumping 7.7% Friday on expectations that Mr. Macri would come in a close second place in Sunday’s primary, a mandatory vote that determines which parties will be able to run candidates in the October election.
Via translation from German, please consider the Triumph of the Left-Wing Populists Brings Stock Market Crash to Argentina
Vote of No Confidence
The Argentine Merval has slumped 37% today. In US dollar terms, given the peso slide, that means the stock market has lost half its value. IN ONE DAY. Has any major(ish) stock market ever had a one-day performance like that? pic.twitter.com/Yu9Q5KnlLH
— Robin Wigglesworth (@RobinWigg) August 12, 2019
Hooray for the Left!
The comeback of Peronist Cristina Kirchner in Argentina leads straight to stock market crash. Merval collapses by a whopping 34%. Peso crashes 20%. https://t.co/Q7BYLpQvmF via @welt pic.twitter.com/txAXFYEHka
— Holger Zschaepitz (@Schuldensuehner) August 12, 2019
Mike “Mish” Shedlock
More on corruption:
Lol, whinging about socialism forgets that Macri failed to improve the situation. It’s silly to be shocked that ordinary people are “punishing” Macri when his “solutions” have punished ordinary people while having no effect on the economic situation.
Cutting taxes, slashing subsidies, and pushing for international investment isn’t going to magically create jobs or improve the economy.
Ordinary people decided to punish themselves economically, even more, by voting for socialists.
PLEASE… can we all pitch in a few bucks and buy Bernie, Warren and AOC one way tickets to the socialist utopia of Argentina? I’m OK if the three idiots want to get off the plane in Venezeula or Bolivia. Socialism has the same result everywhere.
Have to wonder what sort of dumb pills their supporters are taking
“The chart really adds some perspective. Yes, it’s a horrific crash, but it takes the values back down to where they were 4 months ago.”
No – Much worse
Factor in the Peso
For anyone still thinking that socialism and protectionism won’t wreck a modern, prosperous nation, Argentina, since 1930, has been a cautionary tale.
The chart really adds some perspective. Yes, it’s a horrific crash, but it takes the values back down to where they were 4 months ago. There was an incredible 50-60% YTD gain.
You are correct on the Merval Index (which is the DOW Jones index for Argentina) just crashed 35% – but still is positive going back to April, 2019.
However, the currency also crashed 25%.
That is a 60% haircut in ONE DAY for any foreign investor in the stock market.
Add in if you own any Argentinian bonds – you took another 25% haircut.
And did I mention inflation is running at 35-55%?
So basically – the average investor (and especially foreign investors) are well down the road to being wiped out.
This is Zimbabwe/Venezuela-like stock market math.
And the best strategy is “not to play…”
The Kirchners came to power in 2003, after the Argentine economic collapse. During their reign (2003-2015), the GDP per capita has quadrupled. Even though this has been caused partly by simply reaching rock bottom in 2002 and partly by commodity boom and then worldwide ZIRP, I can’t blame the Argentines for wanting more.
OTOH, Macri’s reign brought accelerated devaluation of peso in a much shorter time than during Kirchnerism.
I am not endorsing one or the other. I am simply stating how things look from the point of view of an average Argentine.
She is a former soap opera actress. Anyone that thinks that she has “the answers” to Argentina’s problems is an even bigger ignoramus than she is.
The voters don’t care. All they see is the results correlating with the Kirchners vs Macri.
As an idiot passer-by to South American polit-economics, it looks to me like the IMF may have caused this ruin.
Thank you for pointing out that the default that set these crises in motion was the laissez-faire policies of Carlos Menem government, and not some socialist firebrand.
OTOH — A bit over hundred years ago (late 1800s), Argentina had more wealth, better eduation system, and a higher standard of living than the USA (which was an emerging market at the time).
Argentina, like much of South America, went socialist and has had economic suffering ever since.
The USA went capitalist and we have (historically) enough surplus to fund stupid welfare and corrupt government and still have resources to keep capitalism going.
Only a moron would consider Bernie, AOC or Warren
I will also add that that so called quadrupling of GDP per Capita is almost pure inflation, even Macri is seeing 55% inflation per year. It just leaped by that much again with this vote. Just the thought of such a corrupt socialist back in power as Kirchner is enough to ruin the Argentine economy.
They are all socialists — Macri, Kirchner and the IMF ding bat Lagarde who “bailed them out” using other people’s money ’cause she is an “expert”. Lucky for Argentina, Lagarde is about to destroy Europe. Unlucky for Argentine, all the other socialists are still there.
But the USA would be pleased to send Bernie, AOC and Warren on a one way ticket to Argentina. Three for one special, no need to return any of them.
Socialism causes suffering, and everyone who supports it deserves blame.
“the GDP per capita has quadrupled.”
I’m sure some of it was real (particularly given the initial low base) but in general GDP is little more than a reflection of inflation, of which there was plenty during Kirchner’s tenure.
There is a lot more inflation during Macri and GDP is flat.
Another thing – uneployment rate went from 21% to 6% during Kirchner’s and then from 6% to 10% during Macri.
I am not defending socialism. Kirchners started from a low point, while Macri started from a high point. He had it much more difficult. But that doesn’t really matter.
You left off AOC – Send her down there too – and of course Jeremy Corbyn
The solution is obvious: just put the guy who the people voted for in jail, like the do in Brasil. Then, pick the right wing servant of corrupt capitalism who’s got 100 x more indictments and know as Mr Ultimate Corruption Himself…again like they do in Brasil.
The people voted for socialism and corruption.
And they are going to get it – good and hard.
Maybe Bernie and Warren can fly down there and show them (and Venezuela) how it is done with the right people in charge.
Its a scathing indictment of the college system that anyone graduates thinking socialism might work. What institute of higher learning would hire “professors” who refuse to see centuries of failure and economic suffering?