In September, Argentine president Mauricio Macri accepted the 2018 Atlantic Council’s Global Citizen Award. In attendance were many of world’s neoliberal power players and policy makers, among them International Monetary Fund (IMF) Managing Director Christine Lagarde.
Facing the crowd, Macri gleefully admitted that “with Christine, I have to confess we started a great relationship some months ago,” referring to a series of loan agreements with the IMF amounting to $57.1 billion dollars. “I expect that this is going to work very well, and we will end up with the whole country crushing on Christine,” he continued. This dynamic of chasing an improved image with the world’s big banks and the dominant economies in the West is emblematic of Macri’s priority to secure a relationship with the IMF and improve the country’s image with global financial institutions. But it comes at a devastating cost for the majority of the population who will suffer from neoliberal policy prescriptions of structural adjustment and slashed social spending, as well as the resulting growing unemployment and poverty.
Meanwhile, Argentina’s debt to the IMF continues to climb. In June, Macri and the IMF agreed on a $50 billion loan. In September, the amount increased to an unprecedented $57.1 billion over three years. During an announcement from the presidential office in August regarding recent agreements with the IMF, Macri told the people of Argentina that this “decision will put an end to any uncertainty that has come about regarding our image on an international level.” In other words, seeking the approval of the world’s international banks and global power players (the U.S. included) is worth the conditions of austerity, the havoc wreaked on the lives of Argentina’s poor, working and middle classes, and the limitations that it will put on future generations of Argentina’s leadership (a limitation that we have seen most recently in Mexico as President López Obrador pushes back against decades of neoliberal policies and conditions agreed to by his predecessors).
In order to afford the repayment plan, the 2019 budget eviscerates social spending, slashing it by 35 percent while increasing debt payments by 50 percent. Christine Lagarde recently defended the evisceration of social welfare, citing a current program in its place that allocates $6 per person among the 13 million poor in Argentina for the last six months of 2018.
» Lees verder
QUESTION: Mr. Armstrong; Our government here in Argentina has told us we should expect more poverty and there is no hope for the future. Socrates has been amazing on its forecasts on our currency. There are enough of us down here who would sincerely ask would you consider advising Argentina to straighten out our economy and nation? You have forecast this emerging market crisis long before anyone else and your solution video on YouTube is very thought-provoking. If we can demand the government meets with you, would you do it?
ANSWER: The sone maybe Don’t Cry for Me Argentina, but it applies to the entire world for what happens in Argentina is merely the beginning of the global debt crisis. We can see from the chart that the dollar has been soaring. However, the Array picked August as the Panic Cycle and that has been spot on. Unfortunately, it does not look like this is going to calm down. We may be headed into a real Emerging Market crisis by October.
The reason why we are able to forecast such events well in advance is rather common sense. As I have said before, every solution to a crisis sets the stage for the next crisis. The Emerging Market debt crisis is unfolding because central banks in the USA and Europe lowered interest rates to “stimulate” the economy and they have no idea about how an economy truly functions. This is all based upon Keynesianism which is in turn based upon an isolated theory of the economy. They never consider that you lower interest rates and there are pensions who simply need higher rates to break-even. Then emerging markets issued debt in dollars with higher yields for the pension funds bought it assuming there was no currency risk. Now we have Portuguese and Spanish banks who would not lend to their domestic economies for there were way too many nonperforming loans so they ran and bought Turkish debt.
What began in Argentina and Turkey has snowballed into broader collapse complete confidence in Emerging Market debt and the pension funds stopped buying and simply are now trying to get out as fast as they can.
» Lees verder
1. The vicious circle of illegitimate debt grapples the Argentine people once again
2. IMF’s $ 50 billion loan surpasses Greece’s previous record
Sergio Ferrari from Berne, Switzerland interviewed Eric Toussaint, international debt specialist
After more than a decade of Argentina’s official “distance” from the International Monetary Fund (IMF), Mauricio Macri’s government has just knocked on the doors of the world’s financial police. The $ 50 billion credit granted by the organization during the first week of June sets an international record and will directly impact the economic and social situation of this South American country. Eric Toussaint, Belgian historian and economist, an eminent specialist in this field and spokesperson for the Committee for the Abolition of Illegitimate Debt (CADTM), based in Brussels, pointed this out. Interview follows.
Q: Why did the Argentine government turn to the IMF, in full view of Argentina’s relations with this international organization in the late 1990s and their dire political consequences? Is the financial top brass of the Macri team despairing?
Eric Toussaint (ET): Since the Mauricio Macri government assumed office in December 2015, its policies have led to a critical situation. Sharp reduction in export taxes have brought down tax revenues, the debt servicing expenditure has been significantly increased (100% higher in 2018 than in 2017). The country is running out of dollars. Currency reserves fell by $ 8 billion earlier this year. Macri needs this IMF loan to continue debt servicing. Private international lenders require such a loan as a prerequisite for continued credit to Argentina. A very large chunk of the IMF loan will be used directly to repay foreign creditors in dollars.
Q: If we look at the Argentine history of the 1990s, this seems to be a scheme of playing with fire…
ET: Yes, of course. But I would like to further explore the background of this appeal to the IMF…
Q- Please go ahead!
ET: This shows that the government’s policy is an abject failure: with a peso that devalued fast; with the interest rate set at a high 40% by the Argentine Republic’s Central Bank;
» Lees verder