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 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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moonstears's picture

Team...that blog, I read it once,most all of it, during an early spam....did not read now but I'd bet it says something like: "woke up, took a dump, dragon lady cooked pigs in a blanket for breakfast..." just fuckin' silly.

matrix2012's picture

You guys are so funny amusing around with the crappy angry sinner thingy, the lines are really entertaining...

A L O L ! !   HA  HA  HA ...  HA  HA  HA 

Tsunami Wave's picture

No more fuck lloyd blankfien page, I-Be-Julia.. and all the other retarded handles you've used here over the many months?

Clayton Bigsby's picture

Food shortages in 3, 2, 1....

IMA5U's picture




honestann's picture

No problemo.  Henceforth WalMart (and others) will only accept grams of gold in payment for products.  And they hereby pledge not to raise prices... EVER.

Fred Hayek's picture

Isn't it wonderful how authoritarians like Kirchner absolutely refuse to learn from history?

Hmm. Let's see what will happen next. Every item will now be changed ever so slightly and repackaged ever so slightly to be a "new" item that can be sold at a new, higher price. Oh . . and shortages and an increasing shift of economic activity to the black market.

Authoritarians are so . . tiresome.

lewy14's picture

We are all Diocletians now.

moonstears's picture

lewy14...What's that mean, are we blaming the Christians?

Fredo Corleone's picture

In addition to his prurient desire to persecute Christians, the Emperor was quite devoted to the imposition of price controls, coupled with currency debasement.

moonstears's picture

I know, Fredo, just jokin'...but you are correct, Sir! When price controls failed, onto find a scapegoat, 'viola, "Christians did it, to the lions with them"! Now we're placated with Beyonce, who made mainstream media flashin' a pyramid sign, was it diabolical, or a shout out to her Egyptian homies??

Fredo Corleone's picture

Beyonce and her "Novus Ordo Seclorum" moment ? Perhaps she is a freemason.

knukles's picture

No shit illuminati writ large
Vigilant Citizen material

francis_sawyer's picture

I went by VC right after the game to see if anybody posted it up... Didn't see anything, YET, but I'm sure they'll get to it [Maybe their server is located in the Superdome ~ lol]... It was fucking obvious... Anyway, maybe VC is busy prepping for the Grammy's... That's usually a 'Moloch' worshipping fest...

Zap Powerz's picture

What a shitshow that was.  And her voice sucked. No wonder she lipsynced the NA.

lewy14's picture

See, this is why I love this blog... I mean where else can you make a cryptic comment like "We are all Diocletians now" and have people just get it...

darteaus's picture

She learned just fine - distract the populace while you strip mine the country and send the money to your Swiss bank account.

TBT or not TBT's picture

Also, stuff will not be there to be bought at the frozen prices.    It will be traded black market in foreign currencies and tangible goods.

Campagnolo's picture

once Argentina lost the war over the Malvinas (Falklands) against England, this country collapse for ever. Anyone that knew how rich Argentina was and what shape is now, will be crying...something similar to Detroit, once the third biggest city in the States, today a ghost town.

francis_sawyer's picture

I was in Argentina in 1990/91... Being hosted by my good friends [a JEWISH FAMILY ~ whocoodanode?]...


Anyway ~ they were fairly wealthy & had a nice place in an upscale neighborhood... The matriarch of the family [actually ~ the patriarch was setting up shop in Mexico City as a way to funnel wealth out of Argentina], was busy spending her money on cheap ass Honda Civics, or almost ANYTHING she could find that was coming in off the boats...

I wasn't in to those things then, but it struck me as so odd [why would this wealthy family be buying up all these crappy old Honda Civics & storing them]?...

Now I know...


Edit: & some clown JUNKS me for that comment... Pffffffffffft...

Almost Solvent's picture

Honda Civics were smart. Run 4eva and they don't draw the ire of the starving masses like an Audi, Beamer or Benz. You could actually drive a Civic (assuming fuel available) and not have to worry as much about that bullet coming your way like an Escalade might bring.

francis_sawyer's picture

I agree they were smart... now...


I never understood it AT THE TIME... IOW ~ nobody TRULY understands anything until reality punches them in the face...

Freddie's picture

I hear what you are saying but this has really been going on since 1950s.m  The Falklands war was sort of a last gasp.  Kirscher and her hubby are total shit. 

Calmyourself's picture

At least her husband is room temperature hopefully she will soon follow..

edb5s's picture

Problem solved!  Wow, that was easy.  On to the next one.

Freedumb's picture

Well, just for completeness, they still need to change the method they use to calculate inflation so that inflation no longer happens like the BLS

Timmay's picture

Months and years? Hoping for days and weeks.

moonstears's picture

In 2011/2012 heard Jim Rogers say "I worry about 2014". Recently read J Williams at shadowstats say 2014, as well. I think both of them are VERY cedible thinkers in economics. We got some time??

balz's picture

Armstrong says Fall of 2015.

IMO we are in a Long Descent scenario as explained by John Michael Greer: each "recovery" leads to another drop, which mean less complexity and less oil used, which create another "recovery", and then another drop.

This will get ugly, but not like 2008. Much slower. Some people will try to buy the bottom, but they will realize later that it was not a bottom at all... Look in the 70s; it will play out the same.


seek's picture

My bet (and math) has been on 2015-2018 for some time now, and I wouldn't disagree with Amstrong here.

However, I'm always surprised at how they can keep the plates spinning, but know they can't forever. The timing on this thing is a bitch, because it's non-linear and dependent on psychology and faith of the masses. I'm convinced when it happens, the speed of it will catch everyone by surprise, even TPTB.

The old "tanks in the streets' scenario used to scare congress in 2008 isn't going to hold water. Anything of value will be gone in less time than it takes to move a meaningful military presence. DHS' procurement of firearms and ammo will be discovered to be woefully short of what would be needed to even buy a few more days time.

Temporalist's picture

Did those people learn to buy gold and silver yet?


If not they're really dumb.


Also, there is no inflation.


Print MOAR!!!

Matt's picture

fool me once, shame on you. Fool me ... I can't get fooled again!

Joebloinvestor's picture

I would like to see the record of when price controls actually worked.

Sophist Economicus's picture

But, but, but,  Krugman said Argentina was a South American wonder story!!!!

knukles's picture

Read his shit.  Advocating endless printing.  The Trillion Dollar Coin Solution

Actually, methinks he has named his blog/column properly, for he as a liberal, like most liberals, has no conscience.

donsluck's picture

I disagree. The biggest difference between a conservative and a liberal IS conscience. Only the liberal feels guilty.

TBT or not TBT's picture

Is that why they're all about good intentions, I mean on the surface anyway?

WmMcK's picture

A conservative is a liberal that's been mugged.


A conservative is a liberal that has been mugged twice

Fixed it for you

chump666's picture

Keynesians like smoking angel dust.

Drug of choice apparently.


chump666's picture

Should be watched closely re: Argentina and China USD black-markets on hyperinflation hitting emerging markets.

BUENOS AIRES--Argentine stocks closed sharply lower Monday as investors around the world appeared to act on renewed concern about Europe's financial and economic crises.
The benchmark Merval stock index fell 2.9% to 3428.69 in volume totaling about 55.8 million Argentine pesos ($11.25 million).
Power distributor Edenor (EDN.BA, EDN), which has seen wide swings in recent months, led the declines, falling 5.3% to ARS1.07. It was followed by its parent company, power generator Pampa Energia SA (PAMP.BA, PAM), which fell 5.2% to ARS1.27.
Just one Merval share rose Monday. Telecom Argentina SA (TECO2.BA, TEO) gained 0.6% to ARS24.55.
Securities tied to economic growth, also known as GDP warrants, also did poorly. The TVPA fell 0.93% to ARS47.80; the TVPY fell 1.06% to ARS46.60.
Meanwhile, Argentina's black-market peso opened the week notably stronger against the U.S. dollar, closing at ARS7.72 to the dollar, according to the financial daily El Cronista. On Friday it traded for closer to ARS8.
Argentina strictly rations the sale of dollars and other currencies, forcing many people into the black market if they really need other currencies for travel or to save.
Rising demand for the dollar, spurred largely by tourists who need greenbacks to travel abroad, has pushed the gap between the official exchange rate, which is closely controlled by the central bank, and the black-market rate to a new high.
Government officials consistently have downplayed the significance of the black-market peso, saying that trading of it is minimal and has no impact on the broader economy.
Officials expect an avalanche of dollars to hit Argentina in a couple of months when farmers start exporting a record soybean crop. Those dollars should help contain demand, reducing pressure on the black market.
The official exchange rate closed at ARS4.983 on the MAE wholesale currency market.