Argentina Freezes Supermarket Prices To Halt Soaring Inflation; Chaos To Follow

Tyler Durden's picture




 

Up until now, Argentina's descent into a hyperinflationary basket case, with a crashing currency and loss of outside funding was relatively moderate and controlled. All this is about to change. Today, in a futile attempt to halt inflation, the government of Cristina Kirchner announced a two-month price freeze on supermarket products. 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. As AP reports, "The commerce ministry wants consumers to keep receipts and complain to a hotline about any price hikes they see before April 1."

Perhaps they will. 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 by Argentina's female ruler.

As such expect photos of empty shelves from Buenos Aires to start popping up in a few days, comparable to how threats of a gun and weapon ban by the US government did more for the top and bottom line of US arms dealers than any military conflict ever could.

Sure enough:

Economist Soledad Perez Duhalde of the abeceb.com 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.

In other news Argentina, just like the rest of the "developed" world, appears to have a slight inflation tracking problem:

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.

The BLS has the solution: just exclude any product whose price is rising from your CPI calculation, and voila. For everything else there is a hedonic adjustment.

The ironic comparison to the US does not end there however:

A more effective way to contain inflation would be to “reduce government spending, which is financing an expansion of the money supply, and to have a credible price index.”

Wait, are they still talking about Argentina or the US?

The government announced the price freeze on the first business day after the International Monetary Fund formally censured Argentina for putting out inaccurate economic data. The IMF has given Argentina until September to bring its inflation and economic growth statistics up to international standards. If Argentina doesn’t comply, it could face expulsion from the world body in November.

Well good thing the US complies with the IMF's stringent "seasonally adjusted" data reporting quality control. Or else, the US may have been expelled from the IMF too. And then who would fund the creeping bailout of Europe (aside from Germany of course)?

The IMF censure “is not just a new error ... it’s also a clear example of the organization’s unequal treatment and double standards in regard to certain member countries,” Lorenzino said. “Argentina, just as it agreed with the IMF to do, will keep working to improve its statistical procedures in accordance with good international standards.”

So to summarize: first capital controls, then a currency crisis, then expectations of sovereign default, then a rise in military tensions, and finally - price controls, after which all out chaos usually follows.

Study this sequence well: it is coming to every "developed" country near you in the months and years ahead.

But, as with every other hyperinflationary implosion, there is a silver lining: the stock market is soaring...

... at least in Peso terms. When priced in USD, the 360% stock market "rise" is more like -9% in the past 21 years. But luckily, the general public has a gene that prevents it from grasping the difference between nominal and real - something Ben Bernanke is very well aware of.

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Mon, 02/04/2013 - 21:44 | 3215162 RuiNsPro
RuiNsPro's picture

Argentina is a perfect case of how crappy this hyped-up "freegold" theory fares in the real world. It ain't pretty.

Argentina has basically a 2-tier monetary system. Their government issues constantly depreciating PESO while their citizens choose to save in US$ or Euro knowing full well how weak PESO is. So Argentinians transact in a softer currency and save in a harder one - the freegold principles.

You won't find "fisical prudence", "meritocracy" or whatever beautiful promises these FGers are selling around in Argentina. What you do see is a PESO 20000 to 1 (or so) reverse split every 10-20 years after being printed completely outta shape. Their economy is in perrenial deep sh*t b/c of the currency meltdown.

Mon, 02/04/2013 - 22:52 | 3215289 StychoKiller
StychoKiller's picture

Erm, please to explain HOW printing all those pesos is in the common interest.

Mon, 02/04/2013 - 22:59 | 3215304 RuiNsPro
RuiNsPro's picture

Printing money (in this case PESO) is to benefit politicians that want to spend the money they don't have or bankers that need the fast & furious supply of papers to propel their bubble games. It's not in the common interest. It's in the elites' interest only be it in Argentina, US, Europe, Zimbabwe or anywhere.

These FGers are either shills or merely dancing on the string held by elites like fools.

Tue, 02/05/2013 - 00:07 | 3215465 Temporalist
Temporalist's picture

But you can't print gold.  Isn't that a big part of the equation you don't mention?

Tue, 02/05/2013 - 12:35 | 3216518 IrritableBowels
IrritableBowels's picture

They're still transacting in printed money.

Mon, 02/04/2013 - 23:35 | 3215397 Poor Grogman
Poor Grogman's picture

The only difference between freegold and Argentina's situation at present is that the FG'ers won't allow you to lend your gold.

No I am serious, that is their official retarded statist position.

In other words Freegold = controlled hyperinflation.

Now who would that benefit most in society?

surely not the 1% who could borrow whatever they wish, using pretend collateral, ( not their gold) and then inflate it away while the peasants starve in the empty supermarkets?

Tue, 02/05/2013 - 08:21 | 3215838 Babushka
Babushka's picture

So as I've understood in freegold theory you transact in whatever fiat but save in phisical gold...

And you are saing:Their government issues constantly depreciating PESO while their citizens choose to save in US$ or Euro knowing full well how weak PESO is. So Argentinians transact in a softer currency and save in a harder one - the freegold principles.

Accordingly to you idea USD and Euro is equal gold (which is not).

Get your basics together mate!

Mon, 02/04/2013 - 23:34 | 3215395 yogy999
yogy999's picture

I have one. Nice bang for the buck. (no pun intended).

Mon, 02/04/2013 - 23:54 | 3215444 Imminent Crucible
Imminent Crucible's picture

I had one, in 9mm. I was shooting jellyfish off Alligator point when it slipped out of my hand and went to Davy Jones' Locker. Or one of the Monkees, I forget which.

Mon, 02/04/2013 - 21:55 | 3215189 midtowng
midtowng's picture

The stock market is up. That's all that matters.

Mon, 02/04/2013 - 22:26 | 3215244 Vegamma
Vegamma's picture

2 months to stock up on perishable goods? Shows you we are new to this game.

Mon, 02/04/2013 - 20:42 | 3214979 Jay Gould Esq.
Jay Gould Esq.'s picture

Argentina.

The exemplar of "banana republic."

Mon, 02/04/2013 - 20:58 | 3215027 SHEEPFUKKER
SHEEPFUKKER's picture

How many times Argentina? Really? 

Mon, 02/04/2013 - 21:00 | 3215032 knukles
knukles's picture

Bunches and bunches....

Mon, 02/04/2013 - 21:33 | 3215132 ACP
ACP's picture

Or as Carl Sagan would say, "Billions and billions..."

Mon, 02/04/2013 - 22:14 | 3215225 NoDebt
NoDebt's picture

Oh, if only we still had Carl with us.  We could use his uncanny ability to explain big numbers to regular people like me.  

He would start out by explaining how by 2020 there will be more dollars in circulation than there are grains of sand on all the beaches of the world.  And by 2030 there will be more dollars than there are atoms in the entire universe.  So many dollars that their gravitational field, while small individually, is enough to cause a financial black hole from which no asset can escape- not even light!

 

Mon, 02/04/2013 - 23:21 | 3215357 JoBob
JoBob's picture

+10 for the Sagan VoiceOver. I'm sure I heard his voice....nice!

Mon, 02/04/2013 - 23:24 | 3215364 Pure Evil
Pure Evil's picture

So, where's the douche bag that keeps telling us we should head on down to Argentina to escape the hyperinflating fascists in the USA?

Mon, 02/04/2013 - 23:47 | 3215425 quasimodo
quasimodo's picture

He's in Argentina cleaining the shelves at Jumbo right now

Tue, 02/05/2013 - 01:47 | 3215608 Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

Ya mean Doug Casey? Yeah, he sounds all smug until he's fighting some mamasita for a can of peas.

 

Tue, 02/05/2013 - 08:41 | 3215857 legal eagle
legal eagle's picture

Thanks for the chuckle

Tue, 02/05/2013 - 04:57 | 3215745 e-recep
e-recep's picture

you did remember well, yeah, where is that dimwit?

Tue, 02/05/2013 - 03:41 | 3215712 TBT or not TBT
TBT or not TBT's picture

Carl Sagan would have needed a new line if he was still living.   Add billions and billions week in and week out, all year long, and all you get are a mere few trillion.   What's next after trill-ion.    Gazillion sounds like a joke.   Seriously the whole hyperbole with the big numbers, he'd have to drop that and go, like, imagine the federal debt, and add to that pension obligations...The universe is nearly that big, it...well OK but it's still pretty big.

Mon, 02/04/2013 - 21:04 | 3215043 max2205
max2205's picture

Inflation is like galic to democratics. Ie carter

Mon, 02/04/2013 - 21:19 | 3215089 Hi Ho Silver
Hi Ho Silver's picture

At least once every generation. Just like the Greeks.

Mon, 02/04/2013 - 21:18 | 3215084 Bicycle Repairman
Bicycle Repairman's picture

Japan is the optimistic scenario.  Zimbabwe is the worst case scenario.  Argentina is the likeliest.

Mon, 02/04/2013 - 22:51 | 3215288 bigkahuna
bigkahuna's picture

Argentina with a whole bunch of people kicking each others asses.

Tue, 02/05/2013 - 00:56 | 3215533 Jam Akin
Jam Akin's picture

Kicking?  We'll be lucky if it is limited to mere kicking...

Mon, 02/04/2013 - 20:46 | 3214991 Muppet Pimp
Muppet Pimp's picture

Pay close attention Brazillians!  You posess immense potential guys.  Stop the leftists in your country now, and prosper.  Brazil has huge opportunities afoot, it would be a damn shame if they squandered it in search of the elusive free lunch.  Do what needs to be done and seal the deal by showing the world you can host them safely in your home.  The world needs more real leadership, not leftists failure.

 

 

Preste Brazillians atenção! Você posess imensas caras potenciais. Parar os esquerdistas em seu país agora, e prosperar. O Brasil tem grandes oportunidades em andamento, seria uma vergonha se desperdiçou em busca da elusiva almoço livre. Fazer o que precisa ser feito e selar o negócio, mostrando ao mundo que você pode hospedá-los com segurança em sua casa. O mundo precisa de uma liderança mais real, não falha esquerdistas.   Não deuses trabalho do Brasil!
Mon, 02/04/2013 - 21:10 | 3215058 trav777
trav777's picture

brazil is the country of the future and always will be.

Problem in brazil is oligarchy and the response by the electorate is to try to "vote" themselves some loot too.

Everyone in that country is on the take.

Mon, 02/04/2013 - 21:16 | 3215080 Zap Powerz
Zap Powerz's picture

This behavior seems to be common among humans.

You cant stop it, but you can profit from it.

Mon, 02/04/2013 - 21:26 | 3215110 TBT or not TBT
TBT or not TBT's picture

Quoting de Gaulle will get you nowhere.

Mon, 02/04/2013 - 21:34 | 3215137 Rustysilver
Rustysilver's picture

Trav.

Brazil has been the country of the future for how many decades.

Mon, 02/04/2013 - 23:58 | 3215450 Dapper Dan
Dapper Dan's picture

 two words, Eike Batista

A few more words,

http://www.charlierose.com/view/interview/10851

Tue, 02/05/2013 - 06:06 | 3215769 matrix2012
matrix2012's picture

CHARLIE ROSE DEEP SHIT....the WS mouthpiece!

Tue, 02/05/2013 - 12:41 | 3216544 IrritableBowels
IrritableBowels's picture

fuck charlie rose

Mon, 02/04/2013 - 21:15 | 3215075 goldenbuddha454
goldenbuddha454's picture

Brazil has the hottest chicks in the world.  They could export them to the U.S. and we'd pay top dollar and save a few marriages along the way.  I love Brazil.  Popozuda!

Mon, 02/04/2013 - 22:18 | 3215230 goldenbuddha454
goldenbuddha454's picture

BTW, I miss HELPI!

Mon, 02/04/2013 - 23:26 | 3215373 Pure Evil
Pure Evil's picture

I've noticed that we seem to be importing a lot of uggos from other countries.

What's up with that?

Tue, 02/05/2013 - 00:58 | 3215537 Jam Akin
Jam Akin's picture

The better "talent" is headed to other parts of the world, to nations with more financial "runway"...

Mon, 02/04/2013 - 22:23 | 3215237 Acet
Acet's picture

Dude, you have no idea what you're talking about.

Brasil was right wing all the way for decades and it remained a real shithole the whole time. It only ever came out of its slumber because a leftist government was elected and they introduced things like conditional help for the poor (the condition being that they sent their kids to school). Before Lula, the country had only 2 classes, rich and poor - no middle class - and now it actually is growing a middle class.

Oh and by the way, your Google translated bullshit doesn't sound correct in Portuguese. Amongst other things, there is no such expression as "free lunch" in Portuguese.

I see that the brainwashed, politically limited, ignorant American segment of this site is out in force today.

Mon, 02/04/2013 - 23:19 | 3215350 disabledvet
disabledvet's picture

this is what happens when you discover that "worthless pampas" is in fact a gold mine:http://www.ft.com/intl/cms/s/0/34756116-1333-11e2-ac28-00144feabdc0.html those rates went from 15% to 7.25% in only 15 months. sound money obviously had a lot to do with it...but also discovering more land than imaginable and created a "live able society." stop paying your taxes America (save for Social Security.)http://www.global-rates.com/interest-rates/central-banks/central-bank-br...
clearly we have a first world economy here...and these rates are happening in spite of the massive spending for the (rigged) Olympic Games coming up. And the (rigged) World Cup as well. Talk about a lot of worthless spending for something where the outcome isn't in doubt...only the bankruptcy. Well...at least they're discovering the value of honesty in money.

Tue, 02/05/2013 - 01:57 | 3215616 goldenbuddha454
goldenbuddha454's picture

Move to France.  Hollande and you should get along well and he won't even require you to work for the 6 months of vacation you'll get every year.  Its a leftist's paradise.  You can tax and spend to your hearts content.

Tue, 02/05/2013 - 02:38 | 3215674 ersatzteil
ersatzteil's picture

I don't see how you consider Brazil, an economic powerhouse with a growing middle class despite widespread inequality is some leftist paradise comparable to France, a European social democracy with neo-colonial military ventures.

The right-wing governments of Brazil's past did a great job laying the foundations of a thriving aerospace and auto industry. But labor laws were virtually non-existant and little was done to combat the old vestiges of racism and class stratification.

Lula brought a voice to labor; capital is still dominant in the struggle, but modern reforms have given the middle class a chance to grow and take a voice in Brazil's future. I don't see what is so leftist about that.

Tue, 02/05/2013 - 02:10 | 3215636 ersatzteil
ersatzteil's picture

Neither does the word "Brazilians". But really, Brasil is looking better every day; it would be a blast to live there if it wasn't for the damn difficult visa issues, courtesy of our own US State Department's insistence on making visas difficult for Brasileiros.

Diplomatic reciprocity is a bitch.

Tue, 02/05/2013 - 04:26 | 3215718 TWSceptic
TWSceptic's picture

You're wrong of course. It's not socialist ideas that helped Brasil. It's capitalism, and more freedom. It's funny that whenever a country improves economically and becomes more prosperous, socialists try to claim that it's a result of their ideology. The reality is that socialism and corporatism only slow economic growth. And this is exactly what is happening in Brasil if you would pay better attention. The full potential of Brasil is not reached, it's still being hold back by stupid regulation and many stupid taxes. Socialism is NOT helping the poor, it's keeping them poor.

You can apply that last statement to yourself, silly rabbit.

 

Tue, 02/05/2013 - 07:12 | 3215773 Acet
Acet's picture

It was a mix of both.

Lula had policies which were a mix of Capitalism and Socialism. Certainly the condicional help for the poor as long as they sent their kids to school thing is not something you would see in a purelly Capitalist system.

Brasil tried pure Capitalism for decades and it didn't work - it just created this incredibly unequal society with high crime and low productivity. It was the mix of both systems that got the country in the path of growth.

To me this makes sense, since Capitalism on its own does not have solutions for the poverty trap problem (quite the contrary, it's riddled with feedback cycles where having capital and connections trumps having skill and ability) so potentially highly productive members of society - think a new Einstein - are born in poverty, never get an education, never get a real chance and thus never reach their potential, which is bad for them and bad for society as a whole (since this is multiplied by 100s of thousands).

The whole thing wouldn't have worked if he had tried Marxism V2, nor did it work before when the country tried American style Capitalism.

 

 

[PS: Just re-read your comment and your argument is a bit of a caricature of itself. Here's one of your sentences, with a slight change

"It's funny that whenever a country improves economically and becomes more prosperous, capitalists try to claim that it's a result of their ideology"

By the way, I'm neither socialist nor capitalist, just a guy that thinks for himself and tries to find his own way - it usually looks surprisingly like a balanced mix of policies - rather than regurgitate somebody else's ideas and going around accusing people of being {INSERT CONTRARY POLITICAL AFFILIATION HERE}]

[PPS: Didn't downtick you - gotta respect somebody else's ideas, even if they sound like they lack a propert foundation of really thinking hard about things]

[PPPS: By the way, you misspelled skeptic in your avatar name]

Mon, 02/04/2013 - 23:57 | 3215449 chdwlch1
chdwlch1's picture

How many is a BRAZILLION?  Does that come after QUDRILLION? Oh well, I guess we'll all find out soon enough...FUCK YOU BERNANKE!!!

Tue, 02/05/2013 - 03:12 | 3215693 cornedmutton
cornedmutton's picture

Yesssss

Let the hate flow through you.

Tue, 02/05/2013 - 07:34 | 3215805 krispkritter
krispkritter's picture

Once you hit a Brazillion, everyone gets a haircut...

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