Does anyone else feel there might be a peso collapse this year?

[Redpossum]

> It’s not just the politics, it’s society. It requires a change in mentality and I just dont think culturally it will.

I wonder about this too. Is the 'healthy and prosperous' economy that Milei wants, supported culturally?
Or is he envisioning an economy that is simply too much to ask?

I'm reminded of the EU and Greece. In order for Greece to receive help from the EU in order to prevent a national default, draconic measures were demanded that simply didn't match the culture over there, and led to Greeks forever hating those in charge of the Euro zone. Similar fates loomed for Spain and Portugal and still do. To simplify-to-clarify: the Greeks just weren't used to working this hard (or as much perhaps) and paying the kinds of taxes (and other financial and fiscal discipline) that people in North-Western Europe were used to.

Sorry, no, this is not true. At the time when these events were taking place, Greeks were working more hours per month than their German counterparts. Nice try with the "lazy Greeks" trope, though.

What you haven't mentioned is that the IMF loan extended to Greece required the Greeks to purchase a large number of Leopard tanks from Germany. This is the sort of thing that's never mentioned in public; large international loans almost always contain "set-asides" which are effectively kickbacks. The Greek government was also forced to cut pensions to the bone, leaving elderly Greeks to starve.

 

[Ronnie Hotdogs]

> It’s not just the politics, it’s society. It requires a change in mentality and I just dont think culturally it will.

I wonder about this too. Is the 'healthy and prosperous' economy that Milei wants, supported culturally?
Or is he envisioning an economy that is simply too much to ask?

I'm reminded of the EU and Greece. In order for Greece to receive help from the EU in order to prevent a national default, draconic measures were demanded that simply didn't match the culture over there, and led to Greeks forever hating those in charge of the Euro zone. Similar fates loomed for Spain and Portugal and still do. To simplify-to-clarify: the Greeks just weren't used to working this hard (or as much perhaps) and paying the kinds of taxes (and other financial and fiscal discipline) that people in North-Western Europe were used to.

Greeks work some of the longest hours in Europe, although most of that is spent smoking and drinking coffee...
I've worked in Greece for a time for a Greek company and culturally the Greeks are quite similar to Argentines.

 

[daveholman]

Greeks work some of the longest hours in Europe, although most of that is spent smoking and drinking coffee...
I've worked in Greece for a time for a Greek company and culturally the Greeks are quite similar to Argentines.

It's not a matter of hours worked. It's about productivity. And low productivity is not *just* lazy workers. It's also excessive regulation diverting money away, and a lack of investment by government and companies in productivity enhancing systems and equipment. Finally, it matters how much of the population is in the labor force. High un- and under-employment impact the overall productivity of the country.
Argentina's GDP per capita is a tad higher than China's, and both are 1/6th of the US's. That's not because US workers are smarter or work harder. It's because of lower taxes and regulation, and decades of investment in productivity enhancing technology.

 

[Redpossum]

It's not a matter of hours worked. It's about productivity. And low productivity is not *just* lazy workers. It's also excessive regulation diverting money away, and a lack of investment by government and companies in productivity enhancing systems and equipment. Finally, it matters how much of the population is in the labor force. High un- and under-employment impact the overall productivity of the country.
Argentina's GDP per capita is a tad higher than China's, and both are 1/6th of the US's. That's not because US workers are smarter or work harder. It's because of lower taxes and regulation, and decades of investment in productivity enhancing technology.

All true, if you measure by absolute GDP, but if you look at GDP measured in terms of PPP, or Purchasing Power Parity, it's a very different story.

Purchasing power parity - Wikipedia

en.wikipedia.org

The second paragraph is the one that's relevant to this discussion

 

[JeffR]

All true, if you measure by absolute GDP, but if you look at GDP measured in terms of PPP, or Purchasing Power Parity, it's a very different story.

Purchasing power parity - Wikipedia

en.wikipedia.org

The second paragraph is the one that's relevant to this discussion

Excellent point. It's also important to look at the "product" that is being produced and measured as part of the GDP. I remember reading a while back that about 25% of the US GDP is attributable to rent-seeking activities such as interest income, bank late fees and charges, etc. So, to make the math easy, if the US GDP is 4%, about 1% of that 4% is from financialization. That's a lot different compared to actually making something.

 

[Redpossum]

Here's a good practical example of Purchasing Power Parity

Nasdaq futures tumble on Chinese AI fears

The tech sector has plunged after China released a free ChatGPT rival operating on cheaper and less advanced chips

www.rt.com

China has reportedly unveiled an AI to rival ChatGPT, but running on a much cheaper chipset.

Bitcoin is also down about 4% as I write this.

 

[QuilmesSlo]

No peso collapse this year. IMF looks good (handled at least); foreign investment looks good.

 

[sergio]

No peso collapse this year. IMF looks good (handled at least); foreign investment looks good.

The 11 billion IMF loan is dependent on dropping the CEPO. That will surely cause the dollar to gain ground against the peso.

 

[on the brink]

If the dollar gains ground, so will inflation.

It's a never-ending vicious cycle, I'm afraid.

 

[chris]

If the dollar gains ground, so will inflation.

It's a never-ending vicious cycle, I'm afraid.

yes but I have a feeling that the dollar will rise quite a lot with inflation a lot less. Current prices in dollars are totally unrealistic