Do you fear a crash similar to 2001?

#1
The economic news in Argentina is horrendous with massive layoffs , ,Uncontrollable inflation and a currency that is devaluing faster than any other in 2018. The situation is very serious as there is no plan of action to stimulate the economy. How much longer before it fully collapses like 2001 ? The peso is now close to 30 per dollar rumours say by december it will be 50 pesos decimating the wages of the middle class.
 

garryl

Registered
#2
The inflation is very controllable if Macri wants to control it. It has something to do with his printer. Til now he must have printed hell of pesos that caused the inflation. I think Argentina is in much better position now. People have more emergency $ and it will not be a surprise if there is a recession. So it's probably alright ? If Argentina soccer team plays well, that could delay the recession ;)
 

lamarque

Active Member
#3
I have 0 fear of a new 2001, the situation is not the same, an episode like 2001 was only posible because of the law of convertibility and the extreme irresponsibility. We are in nothing even near to that scenario, the only thing that worries me is a world wide recession because of the stupidity of trump protectionism (what you see with the dollar and the markets in general are mostly external factors, historical high interest rate in unite state sucking all the money back from emerging markets, comercial war between the main economies in the world, an scenario where emerging markets where on their highest, is happening in all the markets in the world, in argentina as it was extremely bullish until now all the bulls are flying away from argentina now so that lead to mayor corrections, and while this last there will be capital flying out of the country). If you look back on time the american protectionism triggered the worst crisis of the century in 1930 for a very similar protectionist war than the one that is promoting now trump, a crisis like that will hit the whole world and the emerging markets will be affected a lot harder, argentina for his history and current need of external debt even more than the collective of the emerging markets, but overall the world while crash in a huge crisis if trump keep going with this war. In 2001 was a different situation.
 
Last edited:
#4
I agree that Trumps policies will make the us economy implode in the next years. The american dollar is the worlds reserve currency but for how much longer ? Argentina with its massive foreign debt can only hold out for how long before it defaults again ? The bad news is that the world economic situation is not favourable and we will not be able to climb out the same hole as easily as 2001 and by 2003 the economy was on a upward cycle that continued for close to a decade.
 

ben

Active Member
#5
2001 will not repeat itself exactly, as lamarque commented the policy of maintaining parity with the USD led to huge strains when currencies of neighbouring countries dropped substantially and Argentina had no control over its own fiscal policy. Those particular strains are not there now.

That said, the economy is still in the tank 2 years later, and the succession of band-aid solutions being tried makes it pretty clear that there is no steady hand on the wheel. INDEC numbers are still not being taken very seriously. The government is still setting money on fire in a (futile) attempt to stop the peso's continuing fall. Just today I read that they are looking at implementing new taxes on purchases abroad and foreign travel, meaning that this government is well on its way to going full K. So something will go wrong, and I will not be surprised to see the K crew back in power in 2019. Given the direction this government is leading things, not sure anyone will even care. Except that when Nestor Kirchner came to power, there was a soy boom to fuel the country's habits, which meant that it took some time for their craptacular policies to bite. That is not the case this time, so in any event it promises to be lots of fun.
 

garryl

Registered
#9
I would not blame Trump for fking up the world economy. The world economy is over due for a correction in BRICs countries, (Europe) and Argentina due to over printing of currencies and economical cycles (too much good times for the lucky bastards).
Argentines are very resilient people, they can cut down cost and live with the minimum. The system will collapse if the same happens to the US. Many people (in US) pay up to a few thousands dollars a months just for property taxes, when they lose their jobs, sh*t is going to happen. Asian and Europe systems are setup much better to withstand crisis. Many Asian countries have almost no cost of owning their homes, no real estate taxes, and low monthly expenses or none. The cost to keep homes is also relatively low in Europe. US is so fked, it can not afford bad economy. Many people think Americans spend too much, that's why they do not have savings. Wrong! It's the property tax, income tax and mortgage/credit card that make Americans poor. Most people can never get ahead, have debt and taxes right below their chins. The only situations that can revolutionize ones financial situations are : inheritance, stock options, extremely successful in business. Otherwise even you are a successful doctor in US, you still live paycheck to paycheck just like cleaning maids.