Martin Redrado.(Listen to him, Kirchner. He's actually making sense.)
The fall-out from the decision by the Leader of all Argentina (and his wife) to pay off the country's $6.7Bn Paris Club debt via this Presidential Decree has been totally predictable:
The Paris Club Group of Creditors, via its head honcho Xavier Musca, said "We consider that Argentina is making a good decision, if everything is confirmed and implemented". He also said that paying the debt off will help "repair the economic credibility of the country."
The IMF said "We welcome the normalization between Argentina and its creditors yada yada........."
The wolves in sheep's clothing known as ATFA (check out their shadowy background in this previous post) came out with a predictably dickhead interview that included, "...it's still to be seen whether the President really wants to correct the economy of the country or if she is only trying to avoid the next default". These crooks' binary worldview couldn't possibly imagine a third scenario where Argentina becomes an accepted member and doesn't have to crawl to their armtwisting tactics (no surprises that it's the scenario I prefer).
Local opposition politicos have done the normal stupid things like trying to get the courts to block the payoff, saying that Central Bank funds aren't allowed to repay this kind of debt. Don't worry, Xavier; not a snowball in hell's chance of this one bearing fruit.
Local exponents of the dismal science wrung their hands about using Central Bank reserves to pay off the debt. The fact that Argentina now saves over U$350m in debt servicing and that no country its size ever needs 50 large one tucked away in the bank vaults doesn't seem to occur to them. They then crawled back into their ivory towers.
But as mentioned on Tuesday, this bit of tidy financial housekeeping can only be a good sign. No matter what spin opponents would like to put on the matter, STFU is still the order of the day.
Typical IDEA memberHowever, the local business community still has its own gripes, and being the spoiled brats that they are will be looking to have their cake and eat it over the question of country inflation (around 8% officially, but really around the 20% to 25%). At the IDEA ( Institute of Argentina Empresarial Development) summit happening now, 93% of the preening suits on display ranked inflation as their top concern. "Do summink 'bout it, Klishtinaaaa!!" they all shout.
The argy Peso vs US dollar: $3.04 right now
Argy Peso vs Braz Real: nuff saidBut of course, Señor Bizdude will then come back with the "NOOO!!! You're killing my export biz you fools", the same chant as we've heard for at least three years whenever something as radical as Economics 101 is proposed to them. I mean, look at that chart again and then point to the way Brazil's exports have been murdered by forex rates...NOT.
However, this time ArgyBizDude might have to lump it. Word is that Martin Redrado, anglophile and big cheese at the Argentine Central Bank (BCRA) is pushing los Kirchner to finally...FINALLY allow the peso to revalue. In off-the-record-third-party gossip (that's from a normally pretty accurate source), Redrado is reported to have said to his inner circle that the weak Peso has had its day and that monetary policy must be changed to attack inflation.
I for one hope that Klishtina listens to Redrado. There's no point in 9% GDP growth if inflation robs the country of the benefits. If Argentina can successfully swap its 8%/9% GDP growth and inflationary pressure for a 5% longer-term growth rate and lower inflation (not the BS number served up by INDEC, but the real number) the country will be in much better structural shape. It can then truly give the finger to ATFA vultures and all the other detractors who only see gloom and doom on the near-term horizon.