As CNN Money reported last Sunday on the day of the election (Why Wall Street cares a lot about Argentina's elections 11/22/2015), "Wall Street hedge funds have been waiting years for this day."
But settling with the holdouts, along with implementing new reforms, will likely hurt Argentina's economy in the short term, expert [sic] say.This is hack reporting. Argentina during the Kirchner years (3003-2015) did not suffer "massive inflation." This is a typical features of US business press reporting on developing economies they want to criticize, to point to "massive inflation," because 10% inflation to readers in the United States sounds like the end of the world. Inflation during most of that time was in the 10% range in Argentina, but so was the growth rate of the economy. And employment increased substantially in no small part due to the debt policies, capital controls and price regulations that the governments of Néstor Kirchner and Cristina Fernández put in place.
"Argentina appears to be at a crossroads," says Win Thin, head of emerging markets currency strategy at Brown Brothers Harriman. "After years of economic mismanagement, the people could finally vote for a change of government but the economic adjustment will be painful."
The unresolved debt debacle has shut out Argentina from much of the global economy while it has suffered from massive inflation, declining cash reserves and meager economic growth.
Wall Street was rooting for Macri to win. He has promised major economic reforms and appears most likely to settle with the holdouts.
In fact, it was a period of prosperity and growth unequaled in the history of Argentina.
That's what CNN Money describes as "meager economic growth." And what the guy from Brown Brothers Harriman describes as "years of economic mismanagement."
The article also use the neoliberal speak of the IMF and the Washington Consensus, in which "painful" means that that ordinary workers and the middle class will suffer a reduction of income, employment and opportunity will the oligarchs make out like bandits from the changes Macri is signaling he will put in place rapidly.
And you want to see "massive inflation"? Watch what Macri's policies do to the Argentine economy, which is already experiencing a serious burst of inflation anticipated the drastic and immediate devaluation of the peso Macri is expected to implement. (Martín Bidegaray y Martín Grosz, Habrá más aumentos en pan, carne, aceites y galletitas Clarín 27.11.15; Sebastián Premici, Los precios son los que primero cambiaron Página/12 28.11.2015; David Cufré, Poder adquisitivo Página/12 28.11.2015)
As Cufré's report indicates, Argentines can expect a combination of macrista policies of devaluation, the resulting reduction of purchasing power for most consumers, and cuts in government spending. In the context of the euro crisis, there has been a lot of discussion about how devaluations can boost exports. (E.g., Paul Krugman, Iceland, Ireland, and Devaluation Denial 11/27/2015) And the oligopolistic agricultural giants in Argentina will profit from a devaluation. But the currency policies of Cristina's government were part of a broader economic program involving capital controls and as well as a form of price and wage controls that protected the growth of domestic industry as part of a policy of re-industrializing the economy. "Protectionism," of course, is heresy against the neoliberal gospel. Unless it's a powerful enough industry in a powerful enough economy, that is. Like agrobusiness in the United States.
But the point is, devaluation does not automatically mean a healthier economy. Lots of factors matter. In another favorite neoliberal term of art, it will theoretically make Argentina more "competitive." But competition based on low wages and on policies that wipe out local industries doesn't necessarily translate into a better and more secure life for most people in the country.