Buenos Aires in or out

[LAtoBA]

Though I am not currently living in BA, I have kept up with the economic outlook in South America. More and more my prediction last year that the Argentine economy would likely experience a contraction after the elections or in early 2013 is looking to be a reality. Stagflation (inflation + recession) is a serious threat.

The subsidy gimmicks that Cristina used to keep up the appearance of economic stability before the elections are finally starting to give way. Also, import restrictions along with overall global economic weakness (especially in Asian export markets) is a serious problem for the country.

The Bad

- Argentina's creditworthiness or sovereign debt is deteriorating.....fast. In fact credit default swaps (basically insurance to cover Argentine bonds) have increased higher than in any other country in Latin America in recent months.

- Inflation is expected to reach over 30% in 2013. As everyone knows official stats are BS.

- Worst of all the economy in 2012 is on track to barely expand. It's likely that the economy will flatline or show extremely tepid growth in 2013.

- A budget shortfall is expected


The bad for those earning in Pesos / Good for those earning in dollars

- The Argentine peso is also facing a lot of devaluation pressure.

And last but not least. Argentines are probably becoming increasingly agitated because the euphoric but ephemeral growth in the last few years is finally starting to wear off. In other words--Argentina's growth in recent years wasn't based on fiscal prudence and policies geared towards long-term economic growth, but on a dependence of economic strength in Asian markets (as top importers of Argentine goods) and government policies that served to stimulate growth in the short-term, but also increased inflation.

In other words: it's the morning after the party and everybody's beginning to feel the effects of an inevitable hangover. How massive or small it's going to be is hard to say.

I'm really torn on this as I really like Argentina and obviously devaluation and recession would make Argentina, once again an affordable option for me. On the other hand I certainly don't want to see Argentines suffer from poor policy decisions and at least from an economic perspective, an inept government. Just have to see how it goes.

 

[sesamosinsal]

It's hard to analyze Argentina's situation without looking at the entire global economy. While things have slowed down a bit here, Argentina is hardly alone. The World Bank has said that Argentina might even grow more than Brazil this year. We shall see. What's really scary economically right now isn't Argentina or Latin America, though.

It's the on-going debt crises in the U.S. and Europe.

The U.S. and Europe are treading on very shaky grounds at this point. The velocity of money in the U.S. is at the lowest level in more than 50-years. In other words, the Fed keeps expanding the monetary base, but the money isn't being spent on products/services.

And Europe. Oh my, Europe. Investors are paying the Germans to hold their money for two-year bonds. Need I say more?

I know we all hate on Argentina because of the crime, imports, dollar restrictions... But looking outside, this entire planet is in precarious economic straits. Sooner or later, everything that so many here love about the U.S. or Europe (i.e. cheap electronics and unfettered imports) is going to come to an end. It's all being financed with debt. The trade U.S. trade balance, for example, almost hit a deficit of one trillion USD in 2008. That is unsustainable, as we're seeing now.

Argentina's import controls and currency restrictions are preventing Argentina from declining into the situation facing most OECD member states. We may or may not like it, but it's math. You can't spend more (imports) than than you earn (exports) without taking on a ton of debt, and it is DEBT that is crushing U.S. and European economies right now. In part, the U.S. velocity of money is so low because fresh money from the Fed is being used to pay off debt. And, of course, for every dollar the Fed injects, more debt is created...

We live in interesting times, and I'm not so sure I'd pack up for the U.S. or Europe if I were going to leave Argentina.

 

[prunes61]

In or out of Argentina depends on whom we are talking about. Retirees have a different point of view than youngsters seeking to support a family and earn a living here.

Sure California has it's problems, the State is broke and the job market sucks. But if you have a stable job and no debt it doesn't get much better, IMHO.

What if you are a retiree living on a fixed US income (as many, if not most, expats are)? Then the fact that the state is bordering on bankruptcy and that as a consequence thereof public services are compromised is a major consideration. For example, utility expenses in Cal have gone through the roof. Even in light of the recent, somewhat dramatic increase in the cost of utilities in BA, they are still dirt cheap compared to Cal.

There are a variety of restaurants and as you mentioned, you can eat VERY well and very cheap in much of Southern California, especially San Diego.
Shopping anywhere in the USA seems like a dream for Porteños and everything is cheap. Clothing, shoes, electronics all are super cheap in the USA. Absolutely many cities in the USA right now are cheaper than it is in Buenos Aires when you factor in cost of housing, cost of food, cost of medical insurance.

I agree that clothing, shoes (maybe) and electronics are cheaper in the US, but that is not what retirees spend their money on. I disagree that the cost of housing in BA (rent or buy) is more expensive than in livable cities in the US. Of course, if you want to compare BA real estate prices to those in parts of Detroit, Baltimore or Compton you may find comparable values (though I doubt it). Do you want to live in Detroit, Baltimore or Compton? How would you compare the quality of life in those places to the quality of life in BA?

Considering the purchasing power of the parallel US$, food and dining out in BA is cheaper than in LA or San Diego (and the less desirable cities mentioned above) of course not taking into account senior citizen meal deal facilities. Such facilities may not exist in many US cities or may not be easy accessible for qualified seniors if they do exist. My wife and I can walk over to our neighborhood boliche and have a truly great meal for a total of $20 including a glass of house red each. Hard to find that anywhere in So Cal or even Detroit for that matter.

The only thing you have to consider is many cities are very spread out so public transportation isn't good like in NYC. Places like San Diego, LA, Dallas, Miami and many other cities you have to have a car. Whereas in Buenos Aires you wouldn't need a car.

Ease of transportation/mobility is a key factor in maintaining a high quality of life for a retiree. New York City and BA are great places because a car is not at all necessary and local transportation is easy and cheap. As you say, not so in most other US cities.

But you are absolutely correct that you can live in the USA for as cheap as in Buenos Aires all things considered.

I don't think this is an accurate statement since housing and food (and medical) are the main elements of retiree expense. Unless you want to live in an urban wasteland, the cost of (decent) living for those with US$ incomes in BA will be cheaper than in livable US cities, especially if one can get decent, low cost medical insurance.

As far as where the better place to buy property. IMHO you have to consider all the factors. Are you living to buy as investment or to live? Are you renting an expensive place every month? Lots of things to consider.

If it's a straight question of investment play, I think it's a no brainer and the USA is a much better play as long as you're buying in the right area.

Buenos Aires real estate is still pricey. I don't think now is a good/wise time to buy with all the uncertainty with the country, the laws, the restrictions, the controls. Literally nothing is positive about the country now. An eventual crash is likely in the next few years.

Sure, people can argue that real estate won't crash which is probably true. But you know what? It definitely won't rise too much with everything going on. In fact, there is a far greater chance real estate prices in Buenos Aires will decline rather in increase over the next 2 years.

So my thinking is why buy now?? Sure, if you're the type that will live there permanently then sure it can make sense if you find the right property. But it certainly isn't cheap.

I don't think the average retiree is contemplating investment value when seeking living space. Though good apts in BA cost a mere fraction of what comps in So Cal (San Diego or LA) cost, for those with limited resouces it isn't even necessary to tie up one's nest egg by buying an apt. One can find unfurnished, long term rentals in nice areas of BA for prices much cheaper than comps in livable US cities, especially those in So Cal. I think that for the equivalent of $1000/mo, one could rent a very nice apt in a very nice BA neighborhood. For that same money you would not get diddly squat in any So Cal city (including Compton). Maybe in Detroit, though, if you want to live there.

Chris I think you make excellent points about retiree issues.
A few years ago I think Buenos Aires was a FABULOUS place to retire. Especially after the last financial crash. It was dirt cheap, salaries were super low, real estate was cheap.

It was a FABULOUS time IF you were not an Argentine. For the locals it was a disaster. Eventually, the disaster was ameliorated with an offsetting return to reality for foreigners/retirees.

I heard it's {medical care} gone up with inflation so I assume each year it's going up at least 20% to 25% or more.

It will not go up that much in terms of US$ cost.

I believe many of the medical insurance plans in Buenos Aires can ban you over 60 years old if they want. I think if you start before then, they won't kick you out but what if you're already over 60-65?

The cost of health ins is a serious issue. I have an international policy from a major carrier that covers all my MD and hospital expenses in So Am (I spend blocks of time in other So Am countries). I am 69. It now costs me $6800 per year (and that's with a $5000 deductible). I don't know what local AR plans would cost. I have never heard they were not available for seniors. I am going to guess they would cost less than mine.

There are upsides and downsides to retiring in Buenos Aires. Definitely having US dollars will help but you still have to face the tremendous annual inflation and red tape, restrictions and controls.

A US$ income eliminates a lot of the red tape etc especially with xoom.

You are right, after 60 it is hard to impossible to get into Argentine health plans and they are EXPENSIVE at that age. A lot of the readers here are in their 20's or 30's and have NO idea how expensive these plans are for the elderly. I repeat: MEDICARE is FREE and covers 80% of costs. The remaining 20% is covered by health insurance that is a LOT cheaper than what a retired person would have to pay in BA IF he/she were allowed to enter. And guess what: MEDICARE, unless Obama messes it up, allows you tom use the BEST hospitals in the US if you want.

Not exactly true. The cost of medicare coverage is deducted from one's social security payments. I believe the current cost for basic coverage is about $120/mo. Yes, that is still much cheaper than an international plan for which retirees would have to pay. I don't know the cost of local plans for foreign nationals, but I agree the expense is a major consideration.
By the way, why the Obama messes up remark? The Affordable Care Act expands medicare coverage to more people. It does not limit coverage.

PUBLIC TRANSPORT: From Boston to Washington, all East Coast cities have extensive transportation systems mostly with new or relatively new buses and rail vehicles. In some cases state of the art, a far cry from BA. And the price for seniors: FREE. Free is cheaper than BA. Many US municipalities provide vans for people where public transit doesn't exist or where the person is handicapped. I believe usually free.

I admit to lacking sufficient knowledge to dispute the assertion that all East Coast cities have extensive mass transit systems, mostly new or even state of the art. I do tend to doubt that all east coast US cities have free and easily accessible, new systems. In BA local transportation is very cheap and very accessible. To live in a nice US city that has free and accessible, expect to pay a lot for food and housing.

COST OF MAINTAINING an apartment in BA: Depends. I have high "expensas". ABL and utilities have soared. Not sure BA is any longer cheaper than living in an apartment in major US cities.

The monthly gas and electricity bill of my San Francisco homeowner neighbor exceeds 3000 pesos/mo (US$500). He has a small home and the climate is such that he probably uses his heating system about as much as one would have to in BA. The cost of utilities in So Cal has soared.

If you are in good health, BA can be a good place for a retiree for a few months of the year but YEAR ROUND? I beg to differ with those who say it is. My mother has made many trips to BA and we have discussed all these matters. Just from the standpoint of facilities for the elderly, the US is far more advanced.

There are pros and cons. Some of the pros of BA are the art, culture, cinema, theater, large expat community, wide variety of dining choices and entertainment that a large metropolis with an educated populace has to offer.

 

[earlyretirement]

prunes61, you make some great points but I think you are intermingling some of my posts. One OP asked about a few questions and my answers weren't talking about someone retired then someone else brought up other points about retirees. But you are intermingling some of the ideas I had. Not all of it applied to retirees.

I also agree with you that very desirable West Coast cities are more expensive on housing but there are many big metropolitan cities that aren't on the West Coast that aren't too bad.

I do think there are some great points made on this thread. Buenos Aires will always be a desirable place for some people and a not as desirable place where you just visit a few weeks a year for others. Nothing wrong with either group.

 

[chris]

$6,800 for supplemental health insurance is a great deal however you say that this covers you internationally. My mother pays under $200 month for full coverage for what Medicare does not cover. As for the $120 deduction from Social Security, you have to pay this for coverage like it or not. I am not sure you can avoid it but even if it is optional, most Americans would not want to lose the option of medical care in the US so you wind up paying for health insurance in BA in addition.

If you questi9n the high cost of good health insurance for Seniors in BA, call OMINT, OSDE etc. I doubt they will take you of you are over 60 and almost certainly not of you are over 65.

Public transportation: Boston, New York, Newark, Trenton, Philadelphia, Wilmington, Baltimore and Washington all have extensive public transportation systems. The best are naturally in the major cities: New York, Philadelphia, Boston, Washington. All of these cities have extensive subway systems and bus networks. Boston, Newark and Philadelphia have light rail as well, very extensive commuter rail systems etc. New York has the world's most extensive subway system, Washington has a superb modern system. Air conditioning is standard on buses and subways. Suburban trains are modern, clean, air conditioned. Seniors pay nothing or highly reduced fares. I'd point out that my mother is not able to take buses in BA because of the huge gap between street and the floor of the bus. It is simply too hard for her to board a bus - and then the drivers take off before people are even on board Very dangerous. Buses in the US have lifts so that when an elderly person gets on the bus lowers itself to street level. Drivers know that they must take care and time to allow the elderly to safely board the bus. The same is absolutely not true in BA and it is a major consideration for many Seniors.

Baltimore: What is your problem with Baltimore? The city has some lovely urban neighborhoods, interesting nineteenth century architecture, a great waterfront, fine museums and cultural institutions, excellent schools and universities, fine restaurants and is close to Washington.

 

[prunes61]

prunes61, you make some great points but I think you are intermingling some of my posts.

I'm sorry if my style of combined reply to the several posts above mischaracterized what you had to say. I think we may agree on many points. Moreover, people of good faith can certainly disagree on these kinds of things.

I do think there are some great points made on this thread. Buenos Aires will always be a desirable place for some people and a not as desirable place where you just visit a few weeks a year for others. Nothing wrong with either group.

Totally agree.

$6,800 for supplemental health insurance is a great deal however you say that this covers you internationally. My mother pays under $200 month for full coverage for what Medicare does not cover. As for the $120 deduction from Social Security, you have to pay this for coverage like it or not. I am not sure you can avoid it but even if it is optional, most Americans would not want to lose the option of medical care in the US so you wind up paying for health insurance in BA in addition.
If you question the high cost of good health insurance for Seniors in BA, call OMINT, OSDE etc. I doubt they will take you of you are over 60 and almost certainly not of you are over 65.

No. You can opt out for certain coverages. I didn't enroll in Medicare B (cost of MDs) so I don't pay this $120. Consequently, when I had my knee done in NYC last year (by the team MD of the Mets, though I had my choice of the Nets and Jets, too) I had to pay my surgeon (actually my travel rider of my international policy paid, THANK GOD), but my hospital expense was nevertheless covered by Medicare A. It's confusing.
I admit total ignorance about the availability and cost of health ins especially for seniors in BA, but confess surprise at your opinion that a 6800 premium cost with a 5000 deductible is cheap even for the full coverage my policy affords while in So Am.

Public transportation: Boston, New York, Newark, Trenton, Philadelphia, Wilmington, Baltimore and Washington all have extensive public transportation systems. The best are naturally in the major cities: New York, Philadelphia, Boston, Washington. All of these cities have extensive subway systems and bus networks. Boston, Newark and Philadelphia have light rail as well, very extensive commuter rail systems etc. New York has the world's most extensive subway system, Washington has a superb modern system. Air conditioning is standard on buses and subways. Suburban trains are modern, clean, air conditioned. Seniors pay nothing or highly reduced fares. I'd point out that my mother is not able to take buses in BA because of the huge gap between street and the floor of the bus. It is simply too hard for her to board a bus - and then the drivers take off before people are even on board Very dangerous. Buses in the US have lifts so that when an elderly person gets on the bus lowers itself to street level. Drivers know that they must take care and time to allow the elderly to safely board the bus. The same is absolutely not true in BA and it is a major consideration for many Seniors.

I agree that many US cities have good mass transit systems, significantly better equipped than those in BA. Are these mass transit systems free for seniors?

Baltimore: What is your problem with Baltimore? The city has some lovely urban neighborhoods, interesting nineteenth century architecture, a great waterfront, fine museums and cultural institutions, excellent schools and universities, fine restaurants and is close to Washington.

You had me convinced that I had completely underestimated Baltimore until you mentioned it was close to Wash DC.

 

[trennod]

To understand how Argentina is going, there is no point comparing it to Europe and the USA, need to compare apples with apples, ie compare it with economies that are similarly agricultural & commodity based, ie Canada and Australia are not a bad start. Brazil, Chile would probably be the closest in Latin America.

 

[sesamosinsal]

To understand how Argentina is going, there is no point comparing it to Europe and the USA, need to compare apples with apples, ie compare it with economies that are similarly agricultural & commodity based, ie Canada and Australia are not a bad start. Brazil, Chile would probably be the closest in Latin America.

To discount what is happening in the U.S. and Europe in an overall evaluation of the Argentine economy is unwise. It's important to understand global supply, as well as global demand. After all, one is irrelevant without the other.

The United States--the country that prints the currency of international trade--is extremely important in this subject. The massive expansion of the monetary base, coupled with a money velocity that hasn't been as low for more than half a century, has all sorts of repercussions for global demand, dollar liquidity, the value of the dollar itself, etc. If the U.S. is so irrelevant in terms of "how Argentina is going," why does almost every market in the world--including the Merval--react to U.S. economic data, e.g. U.S. unemployment?

At any rate, my point in comparing Argentina to the U.S. or the EU was to question this assertion that Argentina is going to hell in a handbasket, and that the economic difficulties here should be a motive for those originally from the U.S. or the EU to move back to their home countries. Things could be better economically in Argentina, but they do not compare to the dire situation that the U.S. and the European Union find themselves in.

 

[Crema Americana]

Things could be better economically in Argentina, but they do not compare to the dire situation that the U.S. and the European Union find themselves in.

That may just be a matter of time since things always seem to arrive a little late in Argentina.

 

[earlyretirement]

To understand how Argentina is going, there is no point comparing it to Europe and the USA, need to compare apples with apples, ie compare it with economies that are similarly agricultural & commodity based, ie Canada and Australia are not a bad start. Brazil, Chile would probably be the closest in Latin America.

Well, I think the comparisons are between where certain expats might originally be from. I'm I am American with permanent residency also in Argentina and those are the two main places I live in..... then I'm going to compare quality of life between those two places.

I'd assume any expat from X country is going to do the same thing.

I don't really care what the quality of life is in Australia, Hong Kong or Canada compared to Buenos Aires. I'll never live in those places so I don't care how great or how terrible quality of life is there.

I only compare quality of life compared between Argentina and the USA, where I'm originally from. And I can tell you that the quality of life for my family (especially my kids) is 10000% better here in the USA.