Credit Card Sales Crash
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sesamosinsal
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It's exactly what the government wanted. The financing provided by banks is inflationary.
steveinbsas
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It will be interesting to see the effect this has on businesses like Fravega and Garbarino. Sales of many items previously available for purchase almost interest free en cuotas of twelve to eighteen months will no doubt be drastically affected. Not only are the retail outlets in jeopardy so are all of their suppliers. Without "cheap credit" the sales of appliances and electronics are going to plummet.
This is likely to affect a lot of people (primarily, Argentina's working "middle class") in a very negative way.
This is likely to affect a lot of people (primarily, Argentina's working "middle class") in a very negative way.
sesamosinsal
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Nothing was ever interest-free. It was just built into the overall price. You were incentivized to put it on your credit card, but the 30% inflation was still tacked on. Whether you paid it in 12 installments, three or one, everyone was paying the interest. I am unaware of how much the stores themselves made off of this, but it must be so important they are essentially unable to lower their prices by more than 5-10 percent. In other words, they got used to that added cash flow, and now (especially now) can't do without it.
The government's aim to bring down inflation amid a recession and global economic stagnation is pure stupidity to me. If I were in the Central Bank, I'd be far less worried about inflation and more worried about keeping the exchange rate competitive. Instead, they pursue policies that cut government spending while 1) hunting down Argentine money abroad so they can stop printing money and 2) raising interest rates sky high to encourage excess pesos to be deposited in fixed term accounts; all of it together depresses the exchange rate, hurts Argentine competitivity, encourages imports and disincentivizes investment into the real economy.
If you're a local or foreign investor, why invest your money into productivity when you can just put it in a LEBAC and make ~20% annually, withdraw, and buy dollars at the same or a lower rate?
As I know they are not stupid, the only conclusion that I come to is that they must represent different interests, certainly not the interests of those who rely on the real economy to survive.
The government's aim to bring down inflation amid a recession and global economic stagnation is pure stupidity to me. If I were in the Central Bank, I'd be far less worried about inflation and more worried about keeping the exchange rate competitive. Instead, they pursue policies that cut government spending while 1) hunting down Argentine money abroad so they can stop printing money and 2) raising interest rates sky high to encourage excess pesos to be deposited in fixed term accounts; all of it together depresses the exchange rate, hurts Argentine competitivity, encourages imports and disincentivizes investment into the real economy.
If you're a local or foreign investor, why invest your money into productivity when you can just put it in a LEBAC and make ~20% annually, withdraw, and buy dollars at the same or a lower rate?
As I know they are not stupid, the only conclusion that I come to is that they must represent different interests, certainly not the interests of those who rely on the real economy to survive.
Gringoboy
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The entire credit card issue in this country is a conundrum to me, apart from the fact that many merchants have very little incentive to operate with credit cards bearing in mind the swinging costs involved for the merchant. These can go up to 45% of the value of the sale after bank charges, IVA etc in some cases, depending on what plan is agreed with the bank. If you (as the merchant/shop) want the money in your bank account as quickly as possible, it's more expensive than waiting two weeks for it to arrive.
Not to mention the lack of trust with banks here and the resulting cash-based society, resulting in a very credit card unfriendly environment.
Why, for example, don't the likes of Rapipago accept cards, or kiosks or so many petrol stations? Black money breads more black money and it's up to the banks and tax authorities to give more positive incentive.
Drive from here to Cordoba, Mendoza or Salta as I have done and you'd better make sure you've got a suitcase full of cash. Absolutely effing bizarre, especially when you see a sign that says Visa, Mastercard etc only to find that the shop has an A4 scribbled note that says 'tarjetas suspendidas' when you come to pay.
Not to mention the lack of trust with banks here and the resulting cash-based society, resulting in a very credit card unfriendly environment.
Why, for example, don't the likes of Rapipago accept cards, or kiosks or so many petrol stations? Black money breads more black money and it's up to the banks and tax authorities to give more positive incentive.
Drive from here to Cordoba, Mendoza or Salta as I have done and you'd better make sure you've got a suitcase full of cash. Absolutely effing bizarre, especially when you see a sign that says Visa, Mastercard etc only to find that the shop has an A4 scribbled note that says 'tarjetas suspendidas' when you come to pay.
