MercoPress. South Atlantic News Agency

Inflation “rapidly raveling” Kirchner's economic model

Lavagna said that Kirchner does not undertand economics

Former Argentine Economy minister Roberto Lavagna and considered the architect of the spectacular recovery of the Argentine economy following the 2001/02 melting and default said that former president Nestor Kirchner “does not understand economics” and his economic model is “rapidly raveling”.

"There are people who do not understand the workings of economics including the former president", said the former member of Kirchner's cabinet. Lavagna added that "Kirchner sometimes makes short term decisions which seem innocent but with time finish leading us to major and central problems such as is currently inflation in Argentina". Lavagna said that the current model, (which he originally founded) "still resists" but the "model is rapidly raveling" since there are people who do not understand economics "and think all decisions regarding the economy must be taken from a political point of view". "In the nineties we were told that politics should not interfere with economics since it was all technical", said Lavagna, "which was a huge mistake, as is a huge mistake to consider as is happening now that all must be seen from politics". When asked about the farmers' conflict Lavagna warned that the situation is "mired" because of "a lack of technical expertise and a certain political capriciousness from the government". "I see the government in much confusion to face the conflict and you must be very careful because there are people ready to try and make financial killings with the situation". However the president of the government's Banco Nacion said that "there are no objective conditions" that could destabilize Argentina's financial system, in spite of "tensions created by the farmers lock out". "There's no fertile soil for capitals to leave Argentina or for the US dollar to begin climbing in the money exchange houses", said Mercedes Marcó del Pont. With the ongoing negotiation and non encounter with farmers, "in a highly sensitive market such as the financial market we come across conducts leading to small and limited actions in money markets, even when we know that the financial sector always holds significant speculative components". But Argentina today is solvent, the economy is working strongly so any tension in financial markets can be rapidly and easily neutralized, she added. "Argentina keeps growing with huge profit margins in the camp, particularly among soy harvesters". "Even those economic interest betting on 3.50 pesos for the US dollar or money fleeing overseas, or sending e-mails to scare savers with a deposits' freeze", will see their speculation crash against the soundness of the Argentine economy and international reserves.