Editorial. The collapse of the Milei Plan

Let’s start with a definition that is irrefutable: what we saw yesterday (Friday) was the consummation of the resounding failure of the Javier Milei and Luis Caputo economic program.

In what other way can it be called to sign a new agreement with the Monetary Fund for such a desperate salvage that accepts the imposition of devaluing in the midst of an inflationary regrowth? That is, in the midst of a new price shoot (INDEC reported yesterday that the March average index of 3.7% and 6% in food and drinks), the fund imposes a program that is … inflationary, in exchange for a disbursement of 20 billion dollars of which 12 thousand would enter next week.

Recall that until before yesterday they said they swore and rejured that they were not going to devalue and Milei said that the dollar could go down to 600 pesos.

Allow me a digression about the question of discourse or speeches before going to the content. There is a very typical resource of governments in crisis that is to consider that if the words change, if they soften the terms, if they use euphemisms, you can change reality. Then a devaluation is promoted, but it is not devalued, “it floats”; When inflation rises, in reality “the descent is interrupted”; Obviously the rates do not increase, “they are sinned.” And so. The issue is that reality is stressed in being more powerful than speeches and ends up imposing itself the same, despite the illusion of the rulers.

Well, to the devaluation imposed by the Monetary Fund using the Minister of Economy as a spokesman and the President as a delegate, they call it “flotation between bands” (from $ 1000 to $ 1400), but the agreed program is a classic of the IMF: devaluation, flotation, demanding goals of accumulation of new reservoirs new retirement reform and more of tax adjustment.

There are several edges to analyze this agreement (we will talk to Pablo Anino), but basically with the arrival of new debt they may have bought time, but they will not be able to reverse the failure of the plan, on the one hand; On the other, the index that must be followed is that of inflation (we insist yesterday it was reported that in March it almost doubled) that the government and analysts presented as the main political asset of the government.

A former president of the Central Bank declared these days that “the transfer at prices is direct, but it will stop because salaries come behind inflation.” That is, another punishment is coming to the workers’ pocket, which if it has any brake are the same salaries that are already destroyed. Ah, now I am calmer.

There were several “actors” who advanced what was already happening. On the one hand, the chain of trade that prices were already increasing considering that the dollar anchor was unsustainable and went to a devaluation; On the other hand, those who had access to privileged information and bought dollars at $ 1100 yesterday (the BCRA sold $ 400 million on Friday), this in a practically criminal maneuver.

And finally, society or popular majorities that had been expressing (according to all opinion studies) an increasingly critical position that was expressed in the fall of the image of Milei and its government; and that it was also demonstrated in the forcefulness of the general strike last Thursday. Discomfort that had already been advanced with the mobilizations in and in support of retirees; March 24, etc.

Let’s see, when the inflation index was confirmed, it was finished understanding why a strike that was summoned almost routinely, had a high adhesion that surprised many people and, above all, those who have no link with the real world of workers, which includes 99% of journalists.

And this raises an important methodological issue to think about reality and perspectives. We must try to discern the strictly economic implications that these announcements contain, but reduce the discussion only to the economy does not allow the real dimension of the crisis and the failure of Milei.

The first thing that arose was the comparison with 2018. Yesterday a lid of the Clarín newspaper of September 27, 2018 that said: “The IMF advances 18 billion to Macri and the dollar will float between bands.” Exactly a month later, on October 27 of the same year, the cover of the same newspaper announced: “The IMF approved the plan and sends 24 billion dollars to face the recession.”

And people immediately came out (starting with the government) to say that it can have similarities, but it is different because at that time there were billions in pesos in Lebacs and other instruments, that there are less chance of running, etc.

Of course, these people who see these economic advantages “forget” (puts) political considerations: Macri in 2018 went to the bottom after having won the legislative elections, that is, theoretically with greater political strength.

Milei is going to be delivered to the IMF at a time of extreme weakness, when his image falls, when he comes from facing a overwhelming general unemployment and in a framework where there will be new claims for parity, when he comes several blunt parliamentary defeats (they turned to the two judges he proposed for the court, voted a commission to investigate the fraud of $ pound) and, in addition, when he has many possibilities of losing the elections he has for the elections in front (tomorrow in Santa Fe, then the city of Buenos Aires, then the province, and so on).

The whole history of Argentine crises was that of a succession that economic crisis that feedback to the political crisis and political crisis that feed the economic crisis.

Therefore, there is no doubt about Milei’s debacle. At this point, the important thing is not what Milei does with his defeat, but what we do with the defeat of Javier Milei.