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Sat Nov 28, 2015, 05:25 PM

Argentina's Macrinflation.

President-elect Mauricio Macri, elected last Sunday on the right-wing "Let's Change" coalition, is still two weeks from taking office. But already there were widespread increases in wholesale food prices and of inputs from different sectors of the economy. Shortages are, moreover, beginning to develop as well because wholesalers and suppliers are now reluctant to ship goods to retailers and manufacturers on fears of a sharp devaluation once Macri takes office on December 10.

Macri's promise to eliminate exchange restrictions and export taxes on raw materials has generated an escalation of prices on key products from across the economy. A 50-kilo (110 lb.) bag of wholesale wheat flour for bakeries began rising the day after the runoff, going from 150 pesos ($15) to 220 pesos by Thursday - and wholesalers have already announced their intention to raise it next week to 240 pesos ($24), an increase of up to 70% from just a month ago.

Farmers and slaughterhouses are not only speculating on the devaluation itself; but also on the elimination of export taxes and export quantity restrictions, which of course creates a strong incentive to limit local consumption. "The other day I heard a PRO Congressman (Macri's party) say that if people couldn't afford bread, they should look in another bakery," Jorge Alonso, owner of the Elca Bakery, said. "They refer to this as a 'shock of confidence'. Is that all they have to say!? As a businessman I need concrete answers."

According to Alberto Williams of the Chamber of Butcher Shops, wholesale meat prices have also jumped recently: various cuts of beef by 30% this week alone; and chicken, by 25%. Feed corn prices, a key staple to ranchers (most of whom, ironically, were enthusiastic Macri supporters), are also rising sharply, which only adds to the cost of meat in a country known for having the highest per capita beef consumption in the world.

Argentina's growing vegetarian population isn't faring much better: fruit and vegetable prices have also come under pressure by speculators, especially in large supermarkets. A kilo (2.2 lb.) bag of potatoes, retail, rose Thursday to 9.90 pesos ($1.10) - a 300% markup. Squash, another popular Argentine staple, was retailing for 15 pesos a kilo (70 ¢ a pound) last week; it's now averaging 22.90 pesos - a 50% jump. Tomatoes have also skyrocketed 200% this past week.

There are alternative to supermarkets, however, even if less convenient. "I'm afraid of the oligopoly supermarkets and hypermarkets control," said Fabián Zeta of the Horticulture Chamber at the Central Market in suburban Tapiales, which supplies grocery stores across the Buenos Aires metro area and retails to the public as well. "They operate on high profit margins to begin with, and are now marking up prices all they can 'just in case'. The greengrocers who work with us at the Central Market aren't raising their prices."

Recent price run-ups are by no means limited to groceries. Dow Chemical, the largest supplier of plastic to Argentina's toy industry, stopped selling a week and a half ago. "They claim they have no material; but are actually waiting for the devaluation promised by Macri," said Matías Furio of the Toy Industry Chamber. Steelmakers, for their part, are shipping product normally; but Juan Carlos Lascurain of the ADIMRA metal product industry chamber confirmed that they're hoarding raw materials and are forcing their customers to accept being billed after December 10 (at a much higher price).

Manufacturers of industrial inputs for finished products, meanwhile, have begun to reference their prices at 16 pesos to the dollar (rather than the current rate of 9.70). "They have generally increased prices and slowed deliveries. Those who do fill orders have reduced collection times from the customary 45 days to 7," said Fernando Lascia of the APyME small manufacturers chamber. Lascia explained that most industrial sectors are rushing to adapt to the new circumstances created by Macri's promised devaluation. "Polypropylene has already increased 26%. Perfume and stainless steel makers are still filling orders normally; but billing buyers in January and at a 16-peso price reference. Stainless steel makers, in fact, are attaching a rider to their sales stipulating that if the dollar rises above 16 pesos a surcharge may apply."

Argentina's supply chain is highly concentrated in a number of monopolies or oligopolies over each sector of the economy, and this allows them to more or less control prices. Many of the executives at these monopolies are also regulars at the right-wing Idea Colloquium events, and are close to Mauricio Macri and his economic team. It is therefore plausible that many of these recent price increases have been made with the consent of the president-elect.

The equation is simple: that the inflationary impact of Macri's promised devaluation be felt before he takes office on December 10.

At: https://translate.google.com/translate?hl=en&sl=es&u=http://www.pagina12.com.ar/diario/economia/2-287137-2015-11-28.html&prev=search
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The mere forecast of a devaluation is already causing wholesale prices to jump further and faster than any anyone, even the staunchest Kirchnerists, had feared.

How long before Macrinflation, become a Macrisis?

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Response to forest444 (Original post)

Sun Nov 29, 2015, 11:21 AM

1. Spectacularly bad, and he hasn't even been sworn into office, yet. Astonishing.

Dow Chemical isn't hiding its intentions, either. They are too powerful to worry what people think, apparently.

So much treachery going on already, forest444. It would appear this is going to turn into a real free-for-all, and the people will lose, of course. Just like before the Kirchners.

Certainly appreciate your placement of these facts right before our eyes. It's going to get very hard for anyone to justify what is going to happen under Macri. Greedy soulless cretins.

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Response to Judi Lynn (Reply #1)

Sun Nov 29, 2015, 11:55 AM

2. The Macri attitude: 'If people can't afford bread, they should look in another bakery'

That's what one of his congressmen had to say about this sudden price crisis.

Marie Antoinette has apparently reincarnated, and she's now a Macri congresscritter.

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Response to forest444 (Original post)

Sun Nov 29, 2015, 10:50 PM

3. Argentina is going to regret this election so much.

 

Lets just hope the damage this fascist causes isn't irreparable.

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Response to Daniel537 (Reply #3)

Mon Nov 30, 2015, 12:55 AM

4. The 'Shock Doctrine' strategy Naomi Klein warned about:

Push the economy over a cliff (and early on, for best Machiavellian effect). Make sure your backers can gain from the crisis itself - such as by way of a sharp devaluation, which benefits the rich who hoard dollars at everyone else's expense.

Blame the damage exclusively on your predecessors. Repeat claim often, even if you can't explain it.

Use the crisis to privatize and outsource everything you can, and at fire sale prices.

Dismiss critics as "the voices of the past." Use violence if need be, taking care to send in provocateurs to justify it.

Let foreign (typically "market-friendly" media do the rest: let them sell the lie for you, and in turn cite their rave reviews of your own "good, tough" work.

Serve with a splash of lime, and enjoy.

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Response to forest444 (Reply #4)

Mon Nov 30, 2015, 01:07 AM

5. That sounds just like Chavismo in Venezuela

 

Except change "privatize" to "expropriate," and add "fire all original personnel and managers from these businesses and replace them with loyal but utterly unqualified fanatics or corrupt military." And then change that last bit to "Silence all private media (or buy them off or threaten them) and let State (typically pro current-party-in-power) media do the rest"

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Response to Marksman_91 (Reply #5)

Mon Nov 30, 2015, 12:58 PM

6. Here's to better days ahead for Venezuela, Marksman. It'll take a while; but they'll get there.

And no doubt about it: malice and selfish bad faith are certainly not the exclusive province of the far right (as in Macri's case). The far left can certainly be every bit as destructive.

Far-anything is usually followed by catastrophe. A lesson our GOP friends would be wise to remember (but of course, won't).

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Response to forest444 (Reply #6)

Mon Nov 30, 2015, 01:42 PM

7. I agree, all kinds of extremism from any side is detrimental as a whole

 

I think it's important for governments to find a good common ground between a socialist welfare state and a free-market capitalist economy. Unfortunately too many countries don't have a reliable enough system of checks and balances like there is in Northern Europe to keep the big-heads from becoming corrupt and gaining too much power.

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Response to forest444 (Reply #4)

Mon Nov 30, 2015, 06:26 PM

8. It's an ancient pattern, by now, isn't it? Works every time for them, so far, unfortunately.

Just in a day's work when you intend to "make the economy scream."

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