There is a light on the bank management board that flashes. Companies find a financial narrow place from a slow recovery march. At the moment, this is a connection that does not hang, but begins to pull up companies that have a tighter balance.
The vicious circle began with an official desire to have a interest rate that preserves the sand and does not deviate from their dollar. The mechanism worked, and in fact, the transfer of transfer (a phenomenon that is achieved when the return is greater than the level of devaluation), of course, is the star investment of the first semester.
Central Bank of the Argentine Republic. (Source: Archive).
In the first quarter, a private loan grew up and stimulated the sale of long -term goods. But with an indicator that did not fall along with inflation (remember that the goal until October is to prevent the exposure to the dollar), it began to generate a default, to which the financial system was not used to. There were many that were funded by 50% or 60% of the annual card, and the annual IPC today is below 30%. Financial purchases slowed down, and a simple quota plan ends (for compensation, the processors of payment of cards will offer 12 parts on their own, but with interest). In the first quarter, only 22 banks were profitable.
This context of a colder economy was also noticed in several private debt restructuring or even default events. Even large companies are difficult to refinance your loan. His problem was that lower sales did not allow him to cope with the capital that they took to increase the shares. These goods are in their assets at a value adjusted for past inflation, which can never be sold. Result: either they are sold according to losses, or losses are directly calculated, which will reduce the clean assets of the companies and reduce their loan.
If this scenario will grow, the need to adjust the private sector will also grow. In the other way to strive for profitability, the companies will not have many options, and that is why we can expect a decrease in employment.
Is there a flotation table? Yes, but it depends on the country to reduce the cost of financing, at least for large companies. But this step today depends on the accumulation of reservations, and repayment of public debt is cleaned. The second table is October elections; The favorable result, without a doubt, will find out the investment horizon in terms of the fact that the structural reforms necessary to reduce the costs of the Argentinean can be approved.
In short, we go to the search for inflation every day to look at the output or entrance to dollars and electoral studies. Argentina, again, will have to spend the winter.
