Mess too much with the market, and this is where things can end up.
A sign in the window of Quintex, a hardware store in the Wilde neighborhood of Buenos Aires, shows the effect of the peso’s biggest devaluation since 2002. “Out of respect for our clients, this store will remain closed until our providers set their prices,” it reads. Other shopkeepers chose not to wait to see the results of last week’s 15 percent depreciation, raising prices as much as 30 percent on appliances, electronics, wine and other goods that aren’t regulated by the government, while supermarkets seemed to abide by food-price accords reached earlier this month. President Cristina Fernandez de Kirchner left for Cuba over the weekend, days before the start of a regional summit, leaving top aides to try to contain price increases as investors raised bets on further declines in the peso.
Cuba. Of course she did.
Pessimists will wonder what will happen to the supply of goods when their vendors are not able (these food-prices are not that voluntary) to get a price for them that reflects market realities. The recent Venezuelan precedent (although there are plenty of others to pick from) is not encouraging.
Bloomberg, again:
[Argentine] Cabinet Chief Jorge Capitanich said the government is monitoring prices to prevent abuse. Household appliances, cars, electronics and other goods with a percentage of imported parts will be subject to a permanent monitoring, he said….Capitanich and Economy Minister Axel Kicillof have both said the peso has now reached an “acceptable level” at about 8 per dollar, a signal the central bank may continue to spend reserves to keep the rate in check. Argentines pay as much as 11.7 pesos per dollar on the black market.
Retailers “always find a good reason to raise prices; a change in the exchange rate, it’s humid outside, any excuse,” Kicillof said on public TV yesterday. “They lie and steal.”
Where have I heard that sort of talk before?
Oh yes, here (via the Guardian):
The Venezuelan authorities have called in the army in an attempt to shore up the economy, deploying troops in shops to rein in rising prices in a country where shortages are rife and inflation has soared to around 50%.
Soldiers have been sent into stores run by the country’s largest electronic retailer, and the president, Nicolás Maduro, warned that his policy to stem rising prices would extend to shops selling shoes, clothes and other goods.
“We can’t just close the businesses; the owners have to go to jail,” Maduro said in a televised speech.
It’s hard not to think that matters are about to get very much worse in Argentina, a potentially rich country repeatedly ruined by politics. What a waste. What a tragedy.