As the financial situation in Argentina gets more dire, the government is stepping in to make things even worse:
[President Cristina] Fernandez, a center-leftist, is embracing increasingly unorthodox economic policies as she seeks to sustain activity, which analysts say is vulnerable to insufficient credit.
“We’re going to tell the 20 principal banks… they have the obligation to lend for production and for investment,” Fernandez said in a televised speech.
“The central bank’s going to establish the conditions,” she said, adding that state-run banks should not have to shoulder the entire responsibility for business loans.
She said the loans would carry a maximum interest rate of the Badlar reference rate, which was 11.9pc per year for private banks in June, plus 400 basis points. The minimum loan period would be three years.
Officially, inflation in Argentina is running around 25%, so forcing banks to loan money out at half the rate of inflation seems like asking them to dig their own economic graves.
H/T to Tim Worstall for the link.
