The Corner

Digging a Deeper Hole

Argentina’s Kirchner government descends deeper into economic lunacy:

BUENOS AIRES, Argentina — Argentina announced a two-month price freeze on supermarket products Monday in an effort to stop spiraling inflation. The price freeze applies to every product in all of the nation’s largest supermarkets — a group including Walmart, Carrefour, Coto, Jumbo, Disco and other large chains. The companies’ trade group, representing 70 percent of the Argentine supermarket sector, reached the accord with Commerce Secretary Guillermo Moreno, the government’s news agency Telam reported.

“Reached an accord,” eh? Best guess must be that the supermarket chains (a number of which, handily, are foreign-owned) were made a counter-inflation proposal that they could not refuse.

The commerce ministry wants consumers to keep receipts and complain to a hotline about any price hikes they see before April 1. Polls show Argentines worry most about inflation, which private economists estimate could reach 30 percent this year. The government says it’s trying to hold the next union wage hikes to 20 percent, a figure that suggests how little anyone believes the official index that pegs annual inflation at just 10 percent.

Economist Soledad Perez Duhalde of the consulting firm predicted on Monday that the price freeze will have only a very short term effect, and noted that similar moves in Argentina had failed to control inflation. Consumers shouldn’t be surprised if the supermarkets are slow to restock their shelves and offer fewer products for sale, she added.

Consumers should indeed expect shortages, and that expectation will feed on itself.

Zero Hedge has its usual cheery take . . .

What consumers will certainly do is scramble into local stores to take advantage of artificially-controlled prices knowing very well they have two short months to stock up on perishable goods at today’s prices, before the country’s inflation comes soaring back, only this time many of the local stores will not be around as their profit margins implode and as owners, especially of foreign-based chains, make the prudent decision to get out of Dodge while the getting’s good and before the next steps, including such measures as nationalization, in the escalation into a full out hyperinflationary collapse, are taken…

And the odds are increasing that that is where Argentina is heading.

What President Kirchner really needs at this point is a handy foreign enemy to distract Argentines’ attention from the rapidly deteriorating situation at home.

Ah, here we go:

Falkland Islanders were left pinching themselves to substantiate their own being on Wednesday as the Argentine foreign minister said they do not exist… Speaking at a press conference in central London today, Timerman said: “The Falklands islanders do not exist. What exists is British citizens who live in the Islas Malvinas. Timerman refused to take part in talks with William Hague on the issue this morning after the Foreign Secretary insisted representatives of the islanders would be present as well. Legislative assembly members Jan Cheek and Dick Sawle were at the Foreign Office for the discussion and said afterwards they were “disappointed but hardly surprised” at his absence. “It is, and must always be, for them to decide their own future,” Hague said afterwards, affirming the Government’s full support for the referendum and the islanders’ right to choose.

And so the farce continues.


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