IKN

He was right, you were wrong. Live with it.

Argentina’s government is going full-out Keynesian to stave off recession. The plan is to bolster new car sales by offering a state plan for easy ways to pay on new cars. There are three plans being mulled (and it’s quite likely that all three become reality), but the base idea is to offer credit to buy a new car on and interest-free 48 month payment system of P$800 per month (about U$230 right now). Here’s La Nacion’s report on the plans so far.

To be quite honest, it’s a very good plan. Not only does cash move vertically, but it also supports the key auto manufacturing sector in the country. Side effects will be multiple, including boosting the car parts industry and other related sectors such as steelmaking. The bottom is likely to drop out of the second-hand market, but that will only make access to autos cheaper for the lower socioeconomic strata…..the idea is to keep the money flowing, no?

Here are three charts that show the state of play in Argentina’s car auto industry right now. The first chart showing sales is the key, perhaps, and clearly shows the drop off in sales last month. However the other two charts, namely production and exports, also demonstrate the inertia setting in and the way that Argentina cannot rely on outside sales to prop up the industry (72% of those units exported go to Brazil).

For sure we’re about to hear a whole bunch of criticism from economists and analysts and such about this plan. But after the total and complete failure of the model they’ve foisted upon us these people should STFU immediately. John Maynard is back, and he’s going to save us from the mess that Milton, Alan and all their friends have made. Pity those nations that try to free market their way out of this mess.

UPDATE: Here’s Reuters on the story in English