Röd öppning Red Opening 20 November 2023

 


Argentina’s New President Wants to Adopt the U.S. Dollar as the National Currency

But Latin America’s third-largest economy is broke and lacks funds to swap the nearly worthless peso for the greenback

“To begin with, you need access to capital markets to convert the entire monetary base into dollars, and you don’t have them,” 

https://www.wsj.com/world/americas/argentinas-new-president-wants-to-adopt-the-u-s-dollar-as-national-currency-86da3444




1991 the peso had been fixed to the dollar at a one-to-one rate under a currency board system. 
1 Peso = 1 Dollar

Jfr Carl Bildts försök med fast växelkurs vid samma tid

On November 19th, Mr Milei surpassed expectations and won 56% of the vote

 in the presidential run-off, compared with 44% for Sergio Massa, a stalwart of the Peronist movement, which has governed Argentina for 28 of the past 40 years. 

His coalition, Liberty Advances, won in 20 of Argentina’s 23 provinces, plus the city of Buenos Aires. In his victory speech, Mr Milei promised to make “drastic changes” to end Argentina’s century-long decline and return the country to being a “world power” within 35 years.

Yet, despite what at first glance appears to be a clear mandate, the firebrand Mr Milei will not find governing easy. His coalition was only created two years ago. It commands the support of none of Argentina’s powerful governors, and will have only 38 of 257 seats in the lower house of Congress, and seven of 72 seats in the Senate.

https://www.economist.com/the-americas/2023/11/20/is-argentinas-new-president-too-divisive-to-fix-a-broken-economy



When there’s no real alternative, there’s no problem, as the saying goes. 

And that may be the logic of Argentina voters on Sunday who rejected the catastrophe of Peronist rule in favor of impulsive and charismatic outsider Javier Milei, who promised what for Argentina is the radical change of free-market economics.

Mr. Milei, a Congressman and self-described libertarian

Mr. Milei will now get his chance to clean up the mess, and this will be harder than winning the election. The Peronists control the largest faction in the Argentine Congress and will oppose him every step along the way. Some of his proposals lack detail. 

He says he’ll dollarize the economy, which could work if there are enough dollar reserves to manage the transition. He wants to abolish the central bank, but it isn’t clear what would replace it.



Don’t Cry for Milei’s Argentina - Last Tango in Buenos Aires

Central banks are divided in four categories: the bad ones, like the Federal Reserve, the very bad ones, like the ones in Latin America, the horribly bad ones, and the Central Bank of Argentina.

Great stuff. A self-described anarcho-capitalist who wants to abolish the central bank and do away with the country’s currency, he represents change and an ambition to make things better. He’s now been given that opportunity fair and square, and a fascinating experiment awaits.
John Authers


Don’t Déjà Vu Me, Argentina.

Oh what a circus, oh what a show. 

https://englundmacro.blogspot.com/2023/08/dont-deja-vu-me-argentina.html


Argentina The IMF has no good options—but it may have just selected the worst




Argentina




Argentina 




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Stupiditetspakten går mot sitt sammanbrott

Den tyska regeringen överväger att göra en drastisk översyn av budgeten för nästa år, inklusive minskade restriktioner för nettoupplåning, i spåren av förra veckans domstolsbeslut. 

https://www.di.se/live/tyska-regeringen-overvager-att-latta-pa-skuldbromsen/

Germany’s constitutional court has repeatedly proved its readiness to be a pain in the backside of want-to-get-it-done policymakers. It has long been weaponised by opponents of the European Central Bank

Tyska domare kommer att låta det passera vad lagen än säger

Till och med de smartaste EU-advokaterna har ännu inte hittat sätt att förena ett rent räddningsinstrument med no-bailout-klausulen i Maastrichtfördraget, och hitta ett sätt att avvärja en kamp i den tyska författningsdomstolen.

https://englundmacro.blogspot.com/2023/11/rod-oppning-red-opening-18-19-november.html

EU prepares to reform its fiscal rules, informally known as the stability and growth pact



Är Stabilitetspakten Stupid? Olli Rehn, Prodi och Persson






AT1s, or additional tier one bonds

This month, in an epic plot twist, UBS itself issued a substantial $3.5bn of AT1s.

 They will initially look very like the old Credit Suisse bonds, though UBS says the terms will be amended once shareholders agree. It says that rather than being wiped out in a crisis situation, they would convert into equity, bringing Swiss AT1s into line with the norm elsewhere.

The UBS issue commanded extraordinary demand. The order book topped $36bn, or 10 times the ultimate issue size, as investors queued up for the 9.25 per cent coupon.

https://www.ft.com/content/f9e74d9c-d1c8-4426-9088-ff03c85e3d05

Swiss regulators have committed shameless expropriation. So much for the safety of Zurich

Ambrose Evans-Pritchard Telegraph 21 March  2023

“The AT1 instruments issued by Credit Suisse provide contractually that they are written off in full in the event of a trigger event (viability event), in particular when extraordinary government support is granted,” the regulator said in a statement. 

https://englundmacro.blogspot.com/2023/03/for-any-country-it-would-be-financial.html

Tier 1 Capital: Definition, Components, Ratio, and How It's Used

https://www.investopedia.com/terms/t/tier1capital.asp



Ex-politikern och mångmeriterade styrelsemannen Björn Rosengren bötfälls

 av Finansinspektionen för aktieköp i Izafe – där han är ordförande – inför halvårsrapporten i år i strid med marknadsmissbrukslagstiftningen.

Trots straffavgiften blev köpet en vinstaffär för Björn Rosengren.

https://www.di.se/live/fi-botfaller-bjorn-rosengren-kopte-aktier-infor-rapportrusning/

Europe needs a new framework for Turkey

https://www.ft.com/content/a7d0d60e-fcea-4c9a-a3d6-2b62794642db

EU and Mercosur 

https://www.ft.com/content/f3d47ad6-1b85-4395-8382-f444090da06e


Fastator med Björn Rosengren och Carl Bildt i styrelsen har satt överbelåning i system

 Det har nu kommit till vägs ände när räntor rusar och obligationer i flera led förfaller. 

SBB ser ut som ett lågriskbygge jämfört med Fastator.

https://englundmacro.blogspot.com/2023/09/fastator-med-bjorn-rosengren-och-carl.html











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