Apparently taking a page out of the Spanish government's playbook [9], Argentines in the Santa Cruz region were surprised yesterday afternoon when at least five bright yellow armored trucks accompanied by heavily armed police paraded through the city. Just weeks after Kirchner's Peroniost government lost the election, and coming after five office fires (destroying banking and economic files from the current regime), local press reports [10] the trucks loaded up with $130 million of banknotes at the airport and driven to banks in the region where outgoing President Kirchner's sister-in-law is governor. Amid comments by the central bank that there are no reserves left [11], and ongoing discussions of larger banknote denominations and (implied 50% devaluations) [12], one could only speculate where the officially "business-as-usual" transfer of $100s of millions of banknotes will end up.
[13]
As local press reported (via Google Translate)... [10]
The passage of these trucks through the city, road banks and other unspecified places, attracted wide attention of ordinary citizens who quickly settled in social networks, in the mystery of what was happening...
Un amigo saco estas fotos ahora en Rio Gallegos, dcnas d camiones d caudales!!Los Kirchner se mudan? @CFKArgentina [14] pic.twitter.com/Sy3ftETVuR [15]
— ANDY....MUJER (@andyhowez) November 25, 2015 [16]
This time, however, the situation is more complex and has other more politically tinged.
@radiomitre [17] @Lanataenel13 [18] @luisnovaresio [19] río gallegos copado de camiones de caudales.una prueba más del vaciamiento pic.twitter.com/IfnLnTVtu1 [20]
— MARIANO FERRARO (@MARIANOMFERRARO) November 25, 2015 [21]
As The Bubble's Bianca Fernet reports, [22]
the money was intended for Santa Cruz’s new governor and outgoing President Cristina Fernández de Kirchner’s sister-in-law, Alicia Kirchner, as well as her Tierra del Fuego counterpart Rosana Bernton.
The reason? The local informant alleges that it is to allow Alicia Kirchner’s government to pay salaries and end-of-year bonuses so as not to draw local attention to additional public spending. The province allegedly runs a massive deficit, and this cash from the outgoing national government would buy enough time to negotiate with the new government down the road.
This is speculation. However, five armored vehicles suddenly driving from airports to banks warrants a better explanation than, “This is something routine we always do, you’ve just all somehow managed to never notice it 15 days before a government changeover.”
This is one of the reasons why the national government refuses to make the transition before Decmber 10th, according to sources close to a national official, if these movements are not made ??now, then they will be blocked.
Caravana de transporte de Caudales en Gallegos Santa Cruz 24 11 2015 pic.twitter.com/fy0T22OVxC [23]
— GUILLERMO FUSTER (@guillermofuster) November 25, 2015 [24]
OPI Santa Cruz concluded [10],
This "means that the machine does not stop," - referring to the printing of banknotes, which in turn feeds the vicious circle of devaluation and inflation, since by injecting more current without support, the currency depreciates.
And of course the corruption continues.
Perhaps this explains why President-elect Macri has this succinct statement last week...
- ARGENTINA’S MACRI SAYS NO DOLLARS LEFT IN CENTRAL BANK
As hyperinflation begins to run rampant, and as we detailed previously contrary to government figures, the Massachusetts Institute of Technology’s Billion Prices Project found that the price of essential foods has increased six-fold in the South American nation since 2008.
[25]
[27]
The Cristina Kirchner administration has ignored repeated requests by economists, banks, and other financial institutions to issue larger-denomination bills. Some 42 percent of Argentineans deemed it necessary in a 2014 survey by Argentina-based pollsters Poliarquía.
However, President Kirchner chose to redesign existing notes instead. Earlier this year, the government introduced a new AR$50 bill depicting the Falkland Islands, an archipelago in the South Atlantic ocean subject to a lingering territorial dispute between Argentina and the United Kingdom.
In 2012, Kirchner launched a AR$100 bill with the face of Eva Perón, the wife of former President Juan Perón and an iconic figure for Peronists. Most recently, the government updated the AR$10 note, adding security improvements and revamping the image of founding father and creator of the Argentinean flag Manuel Belgrano.
The new designs, however, have done nothing for Argentineans’ increasingly bulky wallets.
“Printing money out of control generates inflation, and that renders larger denomination bills necessary,” Iván Carrino, an economic analyst for IG and author of Cleptocracia, tells the PanAm Post. “Trading large sums has become an inconvenience.”
In a country where real-estate transactions are normally done in cash, even buying a new car can be burdensome and potentially dangerous. Since a new vehicle costs no less than AR$100,000, buyers need to carry at least 1,000 bills, Carrino explains. “You need to take a bag with you.”
According to the Central Bank of Argentina, two-thirds of the notes in circulation are AR$100 bills. ATMs quickly run out of smaller denomination notes as withdrawal rates increase. “Today, you go to an ATM, and they don’t have AR$50 or AR$20 notes anymore,” Carrino says.
The Argentinean National Mint has been unable to cope with the public’s demand for cash, and the government has outsourced the printing of bills several times. This year, the government has contracted Chilean and Brazilian mints to print additional cash ahead of the holiday season, according to local media reports.
Between January and August 15, 2015, the Central Bank printed 519.4 million AR$100 bills — 52 kilometers worth, if the bills were placed side by side.
Argentineans know inflation all too well. Since the creation of the Central Bank in 1935, the country has only experienced five years of inflation between 0 and 2 percent, according to Nicolás Cachanosky, Denver Metropolitan State University assistant professor of economics.
“Inflation is a consequence of money printing, and this leads to the necessity of larger denomination bills,” Carrino concludes.
