Definitely no person could make a jump, no matter how small, if they did not have a point of support. If such a thing were possible, it would be going against all physical laws. The reason is simple, you cannot jump into a vacuum.

Next Sunday, November 22, our country will participate for the first time in the history of a balloting presidential. There is nothing new in the procedure, only that this time there are two options, and these are final.

That is, they are the best that our political system knew how to process. Each has its benefit, and every benefit entails risk. So, when deciding the vote, what is our support point?

Of the most general ones, a first option would be to evaluate the proposals of the candidates. After the presidential debate, it is not clear what each team would do with the future of the economy.

Generalities abound, without greater pressure of numbers. What is definitely clear is what candidate A conjectures about what candidate B would do, if the latter won (and vice versa).

In our opinion, this does not seem to be a good support point, for the simple fact that each conjecture is mediated by the interest that the other candidate loses.

Another option is to extrapolate from the biography of each candidate, including the achievements and successes of their past administrations, the people who accompanied them, their sayings and contradictions, etc. That is, performing the somewhat detective exercise of inferring future behavior based on what has been observed in past behavior.

This article does not seek to make that job easy at all, although we would like to point out some issues that do not seem obvious at all. Under this scheme, we come up with the following:

– How to separate the relevant from the irrelevant? Or in lunfardo, how to separate the chaff from the wheat? Not every anecdote characterizes interpretable behavior, nor does every past achievement prefigure a future achievement.

– What happens with the learning curve? Regardless of the bias that each citizen has for one candidate or another, both are presidential candidates. They are the best that our current political system can give. They are what society built. Therefore, it is not a risky hypothesis to assume that both took note of their past mistakes and have no intention of repeating them. It is insisted, both.

In this article we insist again with another point of support, which is to observe the current situation of the economy, which necessarily puts limits on the scope of action of the future president.

Returning to lunfardo, having a current photo of the economy (as well as the configuration of the political system, or the citizens themselves) marks the field. It indicates within what limits the game can be played, but not how it will be played.

In this sense, this article offers a partial point of support: it does not offer an explanation of what is going to happen, but it does offer alternatives to filter out what definitely cannot be fulfilled.

Argentina in context

It doesn't seem to make much sense to compare our country with the standard of living of European countries, much less with the US or Canada. These comparisons can serve to establish a sense of improvement in some aspect that is supposed to be better, but not to characterize the performance of our economy.

Our situation is simply different. In the table that we present below, we have made a selection of variables and Latin American countries which - like ours - have benefited from the rise in the price of commodities in the last decade.

In very general terms, the table shows that with respect to the macroeconomic and global integration profile, our country is below the average of the region in all the selected indicators. However, when the social panorama is analyzed, the opposite occurs, Argentina is above average.

All of which seems to tell the following story: there is a good social performance, even a little above average; but it would seem that there are no resources available to sustain it at that level. In any case, this is one of the big questions to be resolved by any voter.

One point to keep in mind is that the inflation It is not a regional problem. To date, Venezuela is the country with the highest inflation in the world, while Argentina occupies third place in the world.

To give an example, the average annual inflation rate in Uruguay as of 2014 was 8,9%; against the 21,4% registered in our country.

A second issue concerns the growth of the region. It is true that Latin America is suffering from the general decline in the prices of its export products and has suffered the onslaught of the international crisis.

After the default, Argentina was isolated from the flow of financial capital flows, so that it did not feel the impact directly, but only when its main trading partners were harmed.

For example, Brazil. In other words, the effects of the crisis did not hit the capital account directly, but indirectly the trade balance. Even so, the region has grown at an average level of approximately 3% annually.

To balance the above, let's observe what happens in the social panorama. It is clear that our country has better results than the average for the region.

The percentage of people between 18 and 64 years old who complete secondary school places us as the third country with the highest percentage. The approval of Law 26.206 promoted secondary education to be mandatory, which led to several plans being carried out so that those people who had not yet finished secondary school could do so.

The second indicator refers to the percentage of people who are of retirement age. The moratorium that was carried out in our country allowed a large number of people to be included in the retirement system coverage, without meeting the contribution requirements. The complete evaluation of this measure undoubtedly requires a separate and extensive report.

Among the benefits of the measure, a greater number of people have been incorporated into the coverage of the retirement system, of whom it is estimated that they devote practically all of their assets to consumption.

On the other hand, social security spending is the highest in the national budget. It represents approximately 30% of it, and the net balance of the social security system is in deficit ten of the twelve months of the year.

Finally, with regard to income concentration, it is observed that the Gini coefficient of our country is the lowest in the region. This means that, according to this indicator, Argentina has better levels of income equality compared to its regional equivalents.

Having made this comparison, let's now see what happens inside the country.

At the end of 2015, what is an average Argentinian like?

In matters of gender It is probably a woman, although it could have very narrowly been a man. She is between 25 to 45 years old, and although she is not the head of the household, she has a job. Perhaps that is one of the reasons why she has some type of medical coverage through social work, the other is because she receives it from her family.

It is also likely that most of her life was spent in the area, or even in the town where she was born. In fact, within the family structure of the home, she fulfills the role of daughter.

With regard to your quality of life, measured by the type of home and the services available, you probably live in a house that is connected to the running water network, the natural gas network and the of sewers.

Our typical Argentine has studied in public institutions, but was not able to complete secondary school.

The state as a solution and problem

At the end of 2015, it will be the fourth consecutive year in which the result of the national non-financial public sector (SPNF) shows primary deficit, with the particularity that this has been increasing year after year at a rate well above that of inflation.

So much so, that the accumulated deficit for the first seven months of the year amounts to $45.362M, a figure that is 17,64% above the entire deficit of last year. If the above is added to the payment of interest on debt, in the following table it can be seen that the financial deficit has increased between the accumulated amount of July of each year at a rate of 180%.

In other words, the national state is not only operating beyond its resources, but has also been borrowing heavily to keep up.

Even so, the current problem is fundamentally one of timing. Because? Because for the internal market to be sustained it needs dollars. Currencies that allow the acquisition of imported inputs so that productive activity and the domestic market can - at a minimum - maintain an activity level of 44,46%. One of the ways to acquire dollars is through the balance of trade.

However, if the table of activity indicators is observed, it can be noted that as of September of this year the trade balance practically does not generate surpluses; in a context of delays for payments of imports already made. Which brings us to the most immediate problem, the monetary one.

It's the dollar, it's the peso

In our previous reports we have characterized monetary policy as dominated by fiscal policy. While fiscal spending expands, the primary result is partially supported by transfers from the ANSES Sustainability Guarantee Fund and by transfers from the BCRA, both in favor of the treasury.

In fact, if these mechanisms did not exist, the genuine primary result accumulated at the end of July of this year, shows that the deficit would amount to $109.666M, with a year-on-year increase of 92,91%.

The problem is that by using the different sources of financing by the BCRA in favor of the treasury, debt is being issued or structured.

For the first point monetary base grows, therefore there begins to be greater circulation in the economy. So much so, that at the end of July of this year, the amount for this item had already reached $520.170M; with an interannual growth of 39,95%.

To absorb the excess supply of currency, the BCRA has been issuing letters at an accelerated pace and at an interest rate above 30% average per year. In the following table it can be seen that for July of this year the stock of bills is located at $355.880M; with an interannual growth rate of 57,8%.

Likewise, the lagging balances that are not absorbed have an impact on the general price level or end up putting pressure on the acquisition of dollars, with the consequent loss of reserves by the Central Bank. In this way, the reserve stock registered at the end of July, shows a figure of US$33.943M in the BCRA's assets, with a growth of 17,03% compared to the same month last year.

However, the latest consolidated data available shows an abrupt drop in reserves, as a result of the payment of interest and capital of BODEN 2015, canceled on October 4 of this year. What the table also does not show is what the composition of those reserves is. That is, how many dollars are genuine property of the Central.

With regards to price adjustment, in the following table we show two indices. As of July 2015, INDEC inflation shows a growth of 14,85% compared to the same month of the previous year; while CENDA-CONGRESO inflation shows notably higher growth, around 27,15% year-on-year.

Of course, in our country annual parity payments have been implemented in order to counteract the effects of inflation.

The problem with this mechanism is that it generates an inertial increase in prices for the following period, in addition to distorting the relative price system, since the unions in the sector with greater bargaining power are the ones that can gain greater improvements for their members, with certain independence of their productivity. As always in economics, every benefit has its cost.

Finally, the internal increase in prices at a growth rate above the devaluation rate ended up having repercussions on the real exchange rate of our economy, appreciating it. What does this mean? That the value of goods produced in Argentina measured in dollars became significantly more expensive compared to other countries; thus harming the possibilities of placing our assets abroad.

In summary, if the current problem is obtaining genuine dollars in order to maintain the level of activity, making our exports more expensive goes in the opposite direction to solving the problem.

Something is missing from all of the above argument: the capital account. That is, the possibility of dollars entering the country either through portfolio investment, direct investment, or taking on debt. The problem is that this option is nullified by the disastrous Judge Griesa's ruling against Argentina.

Which leads to two large sets of options, either dollars are obtained through financial instruments established bilaterally with other countries (as is the case of the swap with China), or an exit is negotiated with the holdouts in order to be able to return to enter international credit markets.

Meanwhile, on the domestic front, the presence of the stocks added to the inflationary scenario, adds pressure for the BCRA to sell the dollars that it does not yet have and that it is seeking to obtain.

Give me a foothold and a lever big enough, and I will move the world

In recent months, the end of 2001 has been remembered with great insistence. To close this article, we propose a different exercise. Think about 2003, when the characteristics of what was called model They had already been consolidated. Which were?

• High real exchange rate (depreciated)
• Fiscal surplus
• Commercial surplus
• External debt relief
• High social spending

Of all these characteristics, to date only the last one remains standing. Furthermore, the circumstances in which the solution to the crisis was created, that is, the terrain where it was possible for that solution to work; They included the following factors: low rate of installed capacity and high rate of unemployment, pesification of debts in dollars, strong prior devaluation and high international prices.

The terrain that this article portrays on the photo of the economy today, clearly shows that none of these factors are present.