Argentina 2022 - 2032

[steveinbsas]

So i was right after all, building that bunker wasn't a waste of money lol

Aren't you glad now that no one had the "vision" to buy it when you wanted to sell?

 

[on the brink]

Heading for my own little bunker in Colonia.

 

[Reply Guy]

Nope. Real estate will never get as cheap as it was in 2002 in Argentina. Everything was at fire sale prices then. You have to remember that many people that had money trapped in the banks couldn't withdraw it. The banks were limiting to something crazy like $400 US equivalent a month back then. Almost no one was buying then.

Prices were in free fall. The market is lower vs. peak prices but prices are still relatively high price per m2. Just like real estate prices in the USA in 2010-2012ish, prices will simply never go back to those levels again. That was the bottom.

I'm speaking about real estate. I'm not expert in other types of distressed assets in Argentina. Just out of curiosity, what do you believe Reply Guy the "distressed assets" that might be at bargain basement 2002 type prices?

Early Retirement,

Thanks for your response. I didn't mean that assets return to 2002 levels, but that there is a massive decrease in asset prices similar to 2002. I wasn't here for the previous crash, but I heard that everything was on sale - real estate, land, antiques, Argentine ADRs, etc.

You have to remember that many people that had money trapped in the banks couldn't withdraw

Is there the possibility of this happening again? Doesn't the government require the banks to hold a certain percentage of Arg bonds to finance gov spending? They are raising interest rates, value of bonds will decrease.

 

[Reply Guy]

This is going to get so ugly. They are desperate.

'La mayor traición de Massa': duras críticas de la oposición a la venta de bonos en dólares de la ANSeS

Desde Juntos por el Cambio hasta la izquierda apuntaron contra la medida anunciada por el ministro de Economía para intentar contener al dólar.

www.clarin.com

 

[MilHojas]

Argentina bonds fall after govenment orders public sector sale

Argentina’s dollar bonds fell in early trading Wednesday after the government said it would force state-run institutions to sell the securities to the private sector.

www.batimes.com.ar

The government will issue two decrees to execute the change. The first will force public sector institutions to sell dollar debt to the market under local Argentine law through a schedule that policy makers will establish. The second will mandate the same institutions to swap their global bonds controlled under New York law for bonds in pesos.

 

[QuilmesSlo]

Ugly as the news is, the government is not in a position to cause a shock like 2002 again.

 

[Reply Guy]

https://www.nytimes.com/2008/10/22/business/worldbusiness/22argentina.html

Remember, they nationalized the pension funds to protect retirees.

 

[gracielle]

Automatic Google Translation of entire article:
22 March 2023 at 3:52pm

Diego Bossio: “Están jugando a la ruleta con los ahorros de los trabajadores”

El extitular de la ANSeS criticó la decisión del ministro de Economía, Sergo Massa, de pesificar los bonos que la caja de jubilados tiene en dólares; “En vez de gestionar con responsabilidad, están especulando con el patrimonio de los jubilados”, dijo

www-lanacion-com-ar.translate.goog

Diego Bossio: "They are playing roulette with the savings of the workers". The former head of the ANSeS criticized the decision of the Minister of Economy, Sergio Massa, to pesify the bonds that the retirement fund has in dollars; "Instead of managing responsibly, they are speculating with the assets of retirees," he said....Through his social networks, the economist published a series of messages in which he analyzed the decision of the current administration....

My addendum: Diego Bossio is an economist and former K official who led the ANSeS between 2009 and 2015,

 

[Redpossum]

Would someone care to take a stab at explaining exactly what this means?
Hopefully with a minimum of political rhetoric & personal opinion, and an emphasis on objectivity?

 

[antipodean]

Would someone care to take a stab at explaining exactly what this means?
Hopefully with a minimum of political rhetoric & personal opinion, and an emphasis on objectivity?

Here's a stab at it.

ANSES holds the state pension fund. ANSES needs to borrow money to pay the pensions today and tomorrow for which it collected contributions yesterday. To borrow money it issues bonds that to date have been both in USD and ARS. The government is now ordering ANSES (and other public entities) to change the USD public bonds they hold (which people are willing to pay a higher price for) into ARS bonds (which people are not willing to pay a higher price for but may prefer if cheap enough) and turn them over to the private market and thus (or hopefully, according to Massa's gamble) bring down the price of the USD bonds already in the market. These bonds are the CCL and MEP FX rates, meaning less demand for these bonds and less traded publicly, the lower the price of the CCL and MEP "dollars" and the government stands to "save" about $3,7bn in doing so over the next weeks/ months.

The risk however is that the market traditionally doesn't have much appetite for ARS bonds and the minute sh!t hits the fan they end up in the sewer, meaning when it comes time to pay all those pensions ANSES may run into serious troubles being able to raise the funds it needs. Especially if tax collection is down due to crisis/drought/capital flight and whatever else is going on at the time and unable to borrow from international creditors.

To see how bad it is for pensioners already consider that in 2015 the minimum pension was US$277, in 2017 it was US$364 and now in 2022 it is US$150, putting Argentina second lowest in Latin America next to Venezuela which is currently at US$6. With this in mind, pensions are already dangerously on the brink of passing the point of no return.

Why is Massa's government doing this? Because they need to service an upcoming $4bn debt obligation and with a brecha of 100% and insufficient reserves the only options they have are a) cut spending b) devalue the official FX rate c) borrow money from international creditors or d) slow the day-to-day outflow of USD or e) default.

Why is option D so problematic? Because it incurs a major mid-long-term risk for the pension fund simply to gain a few short months of "breathing space" before coming back to face the same obligations with the same problems in a few short months.