Blue Dollar 2013 Projections .... Blue Sky...!!
- Thread starter Rich One
- Start date
I went to my "cueva" guy late last week and asked him what he thought 1) about the illegality of what we were doing and 2) what he thought the price of the blue dollar would be in the coming months.
On the first one, he admitted that he was very worried about AFIP and the troubles he could get into if he were caught. But he's a free-market guy and really likes to make money (but is honest and not greedy) and he will do what he can to continue. Which includes ensuring that anyone he currently does business with is extremely careful about who they refer to him, requiring these references to be well-known to the referrer and not just an acquaintance. After the attitude that Sockhopper displayed related to how we are all insulting Argentinos with our illegal activities, I have to say that I can understand his requirements and I have been extremely faithful not to break his confidence. I'd hate to bring someone in who, being a foreigner I figured would understand what was going on, but rather would cozy up to the authorities here and get this guy in trouble. I'm not accusing Sockhopper or anyone else on this board of this, but it opened my eyes a bit to the possibilities of something along those lines happening.
It's unfortunate in that I have been contacted by a number of individuals asking for references to my cueva and I have had to refuse them because they are not even acquaintances, much less well-known to me. I remember when I first came here and my problem was paying my programmers in dollars - what we were doing at the time was not illegal (as far as I know at the time) but getting money into the country was still very difficult without a cueva and I completely understand the boat many foreigners find themselves in here in relation to bringing money into the country.
He also told me that he doubted very much the individual (not the "cuevista") making the exchange would get anything more than a slap on the wrist, but admitted that he wasn't a lawyer and not to take his word on it. I tend to agree with him, however, but neither am I an Argentine lawyer..
On the second one, he told me he thought the blue rate would possibly hit 7 by the end of the year (only 10 more days to go!), but almost certainly sometime in January.
On the first one, he admitted that he was very worried about AFIP and the troubles he could get into if he were caught. But he's a free-market guy and really likes to make money (but is honest and not greedy) and he will do what he can to continue. Which includes ensuring that anyone he currently does business with is extremely careful about who they refer to him, requiring these references to be well-known to the referrer and not just an acquaintance. After the attitude that Sockhopper displayed related to how we are all insulting Argentinos with our illegal activities, I have to say that I can understand his requirements and I have been extremely faithful not to break his confidence. I'd hate to bring someone in who, being a foreigner I figured would understand what was going on, but rather would cozy up to the authorities here and get this guy in trouble. I'm not accusing Sockhopper or anyone else on this board of this, but it opened my eyes a bit to the possibilities of something along those lines happening.
It's unfortunate in that I have been contacted by a number of individuals asking for references to my cueva and I have had to refuse them because they are not even acquaintances, much less well-known to me. I remember when I first came here and my problem was paying my programmers in dollars - what we were doing at the time was not illegal (as far as I know at the time) but getting money into the country was still very difficult without a cueva and I completely understand the boat many foreigners find themselves in here in relation to bringing money into the country.
He also told me that he doubted very much the individual (not the "cuevista") making the exchange would get anything more than a slap on the wrist, but admitted that he wasn't a lawyer and not to take his word on it. I tend to agree with him, however, but neither am I an Argentine lawyer..
On the second one, he told me he thought the blue rate would possibly hit 7 by the end of the year (only 10 more days to go!), but almost certainly sometime in January.
I'm not either, but as I understand it, it has a lot to do with their paying back their debts and the interest rate they must pay. I know that the official inflation rate has to do with the interest they pay as well. I'm not 100% sure how all these tie together though.
The Government notes that the discussion of the exchange rate should not only be mindful to productive sectors: a devaluation excessive wages could strike again, as with the 2002 strong exchange rate adjustment. The essence of this thinking is that a peso devaluation acts as a transfer of wealth from fixed income sectors (employees) to export sectors. So who are lobbying in favor of devaluation are looking for just that: increase profits at the expense of those who have no foreign exchange earnings.
REMMIRAMALDI
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The US may use low inflation to reduce their defecit exposure: It may be part of the American political pretense unfolding (Kabuki Dance)
The value given to currency is based financial perception, demand and latitude of influence. Currency has no collateral; the gold standard limited the volume of US currency in circulation. Today there is approximately 16.8T dollars in circulation. There is not enough gold in this earth to collateralize 16.8T.
Low inflation, and “trust” on US securities as a solid place to park cash allows for the dollars to retain it's “perceived” value. It's also the world's currency where the most expensive commodity it valued at; Oil. Quantitative easing by the feds is creating not only an artificial demand for US Treasuries by buying & selling short/long yield Treasuries, and by proxy creating a low interest environment, normally associated with a robust economy. That could change rapidly if the US financial cliff is not resolved in January 2013. The Chinese already have reduced their US treasury exposure considerably in the last year.
A global domino effect to follow, and the dollar will take huge hit, the Arabs, and future speculators in Oil will be pissed off: Oil is valued in dollars.
Republican intransigence on raising taxes defies logic; why create uncertainty. Perception is reality and essential for financial markets to function on virtual wealth.
They haggling over a trilllion in revenues over 10 years creating uncertanty. If the stock market over-reacts we could see a few trillion dollars of market capital value evaporate in weeks. Fight for a trillion, only to see 3T of capital wealth evaporate in stocks, bonds, commodities, derivatives value.
For all we know, this may all be a concerted ploy to create a US financial “crisis”. Lunatics are running the US goverment. Currency markets will devalue the dollar, due to it's high exposure, in turn a devalued dollar will reduce the deficit in two ways: Interest payments with devalued dollars & US treasuries, when re-deeming at maturity, will have a value lower than when originally invested in.
Que Sera Sera
Of course, that is an obvious result of the devaluation, and I've heard this reason before, but I don't think it's a completely valid, because it can't be maintained and trying to maintain it artificially for an extended period of time (years in this case) is going to cause more and more problems. Also, seems to me that in a point where one is already limiting exports in a big way that this is not really making any difference. In fact, seems to me the limiting of exports to begin with was brought about because of what you describe.
What about the values of bonds in dollars that Argentina is trying to pay back related to the devaluation? I thought this was one of the biggest reasons the government was trying to keep the the dollar and the peso as close together as possible. And the lying about inflation had something to do with the interest rate on bonds as well I thought.
I don't trust any reason/explanation that comes out of the government's mouth as to why they are doing things.
Faced with a drop in international trade is key to protect and strengthen the domestic market, while sustaining consumption levels. The policy measures adopted in recent years in Argentina in crisis contexts aimed at protecting the domestic market and preserve employment levels. In this sense we understand today the administration of foreign trade to advance the process of re-industrialization, import substitution, industrial policies, which aim to protect specific sectors with potential vulnerabilities-the progressive redistribution of income - also a positive impact on consumption, and employment protection policies, among others.
Not arguing with you on that count, but don't other items have to be factored in as well to re-industrialize? For example, here, labor laws and heavy tax burdens on businesses are still an encumbrance to opening factories, as well as the absolute fact that no country in the world can manufacture everything they need and have everything they want at the same time. Are they going to manufacture every screw to go in every piece of machinery? Are they going to mine heavy metals and such needed to create circuit boards, not to mention fabricate the machinery that is required to produce the circuit boards, etc?
To me, the government makes a good excuse as to why they are doing things, but they are either being completely illogical in thinking that will work, or they are lying about why they are doing it - or both.
When the fact is, if they would lift import/export restrictions, remove some of the horrible labor laws and the tax burden and fix the justice system plenty of manufacturing would return on its own as investors saw a reason to invest in such things again.
It's one of the reasons the US is and has been losing so much manufacturing. I don't buy the idea that it's low wages in other countries alone, for example. It's expensive to go set up manufacturing in other countries, unless you are talking nearby (Mexico, obviously, for the US), but many of the factories large corporations are setting up are halfway around the world. Not nearly as many would leave the US if the bureaucratic weight and cost of doing business hadn't been steadily increasing over the last few decades.
To me, the government makes a good excuse as to why they are doing things, but they are either being completely illogical in thinking that will work, or they are lying about why they are doing it - or both.
When the fact is, if they would lift import/export restrictions, remove some of the horrible labor laws and the tax burden and fix the justice system plenty of manufacturing would return on its own as investors saw a reason to invest in such things again.
It's one of the reasons the US is and has been losing so much manufacturing. I don't buy the idea that it's low wages in other countries alone, for example. It's expensive to go set up manufacturing in other countries, unless you are talking nearby (Mexico, obviously, for the US), but many of the factories large corporations are setting up are halfway around the world. Not nearly as many would leave the US if the bureaucratic weight and cost of doing business hadn't been steadily increasing over the last few decades.
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