Cry for me Argentina
Cry for me Argentina
With the news from 22/11/19, published by a brazilian journal "Valor Economico", we assume that another death cicle started. This time the victim was Argentina.
Like we have ssen in Venezuela since the third election of Hugo Chavez in 1999, the country started a left turn witch historicly ends with terrible results. The reasons for that are written on another text called 6 reasons why socialism does not work (will be transleted latter).
There are three panic buttons that governaments press when in total despair in extreme cases.
1 - Freezing prices - Venezuela
2 – Wages increase – Exemple Venezuela
3 – Block the acess or move of capital – Curralito Argentino
As we can read on the journal news, the governament will increase the wages in 50% while freezing the prices of products and services. Now, lets try to figer out what will be the racional thought of economic agents about this measures.
1 - Common people - Will become very with more money and stable prices. In their wonder world with more money they can buy more items.
2 - Suppliers - Will think about to do with the new prices. They wont sell their products with losses so they might decide to quit operations and fire workers. Like it happened in Brazil on 80's, the meat retailers decided to keep the the oxen in the pasture.
3 - Investors - Will be the first to run away from the coutry before it is too late. Others will start to act in the shadows far from governament sight
So, what can we expect next:
1 - Scarcity of all source of goods and huge lines on the remaining ones. Increase of the black market
2 - Social caos without basic products exactly is ocorring in Venezuela
3 – Another debt default. Since "Curralito" in 2001, Argentina never had the world confidence. With an imminent new default with extreme currency losses it maybe never ever get back on their feet and get togheter Venezuela experiment in a post Apocalipse world.
When the fase is bad it is realy bad. Not even on soccer Argentines are winning. The popular team River Plate just lost the final of Libertadores da America to the brazilian team Flamengo.
The argentines realy have reasons to cry!