Argentina Is an Economic and Social Catastrophe

Sept. 9, 2019 (EIRNS)—Although Argentina’s President Mauricio Macri claims his only purpose now is stabilizing the nation’s currency market and ensuring “tranquility” in the next few months, the underlying situation in the country is explosive. Social upheaval stemming from the hideous conditions of austerity imposed by Macri’s IMF policies over the past four years, plus an uncontrollable debt and financial crisis, have combined to produce a national catastrophe.

Many analysts fear that popular rage is such that containing it over the next two months may be impossible. Nationwide protests and strikes are demanding that Macri declare “a national food emergency” to attend to the needs of the poor.

The speculative bubble that Macri’s policies of total deregulation have caused, depending entirely on a booming carry trade, has now burst, as a result of the run on the currency, devaluation, and capital flight that followed the Aug. 11 primary elections, in which Macri was trounced by opposition leader Alberto Fernández. The emergency measures taken in the last two weeks, including “reprofiling” debt and imposing “light” exchange controls, have not changed the underlying reality. Since Aug. 9, reserves have dropped by $15.7 billion, to $50.5 billion. Note too, that the exchange controls don’t touch speculative money flows at all. Early in his term, Macri eliminated all exchange controls, letting speculators do whatever they wanted.

According to the Observatory of Foreign Policy and International Conjuncture (OCIPEx), of the $37.1 billion in hot money that entered the country through July, 95% of it—$35.4 billion—fled the country prior to the Sept. 1 imposition of exchange controls. The estimate is that $8 out of every $10 disbursed by the IMF ($44 billion thus far), has fled the country.

The Sept. 4 Contexto reports on findings of a team of economists known as the “Economic Project,” showing that between 2016 and 2019, there were 4,074 industrial firms (many of them small to medium-sized) that were forced to close; 120,233 workers (some put the figure at 200,000) lost their jobs. While in 2015 there were 1.3 million industrial workers, by June of 2019, that figure had dropped to 1.1 million.

The national statistical agency, INDEC, reported that in June, industrial production fell year-on-year by 6.9%, and 1.8% compared to May. In the first six months of 2019, industrial production dropped 9.4% year-on-year. As of June of 2019, industry was operating at 59.1% of installed capacity.