Effects Of A Default On Expats

[ajoknoblauch]

A thread gone Waco B)

When will the Feds surround it? Who are the hostages?

 

[Alicia karr]

A sincere thank you to those that have tried to give me examples in our daily life of that would illustrate effects of a default...But despite my attempt at this not being about politics (I can enjoy a good political discussion on this matter too, but didn't want THIS thread to be about that) it seems to have become that. I care about walking the walk...I'd like to understand how it would be. Not IF, or why yes, why no...but more like "what happens when"...the WHY that I do have, is in WHY is this so hard for some people to do?! Unless I'm the only one that wants to know, or maybe it was a stupid question?!

 

[Alicia karr]

By the way, the banks can access your safety deposit boxes? Or was it an aberration? If true, was it across the board, institutionalized robbery? Or private individuals?

 

[French jurist]

Not sure if that answers it, but if you live in Argentina, you have to live with a doses of uncertainty, that's a component here.


"What happens when?"
Well, an expat making a living in dollars will be the king (or queen) of the world, not like in 2002/3 though. An expat making an income in pesos is in trouble. An expat making an income in pesos, running a business here and creating jobs (mainly women on BAexpats it seems... congratz) is in deep trouble (and should deserve a medal!).

 

[French jurist]

By the way, the banks can access your safety deposit boxes? Or was it an aberration? If true, was it across the board, institutionalized robbery? Or private individuals?

False info to scare you. There won't be any corralito.

 

[mc kenna]

I will try to answer,i think i understand what you are asking........what happens when......(default,devaluation,hyperinflation) you name it,actually happens that first as i mentioned before prices get out of wack then shortage of many things as grocers will have stock but won't put it on the shelves after that,black market or informal market or the latest was barter (2001) trade some old pair of snickers for couple pounds of coffee type thing.Unfortunately there is no formula as per how long it will take from thing to the other(crazy prices to shortages).As far as safety boxes .. yes they were open by the banks by orders of the federal gov
i don't think that is no where near being legal but they did it anyway

 

[GS_Dirtboy]

Whether or not there will be a default doesn't really change how I am preparing for the future.

1. Earn in Dollars if at all possible.
2. If earning in Pesos exchange those Pesos ASAP for Dollars.
3. Cut back on expenses as much as possible. Figure out how to live on 50%-75% of what I make.
4. Invest in appreciating assets.
5. Vote in 2015.

GS

 

[glasgowjohn]

During the hyperinflation days in Chile many years ago , an acquaintance made a serious amount of cash importing toilet paper.

There was no default but there were shortages of many basic necessities including toilet paper.

He read the market well and started importing and storing six months before the shortage.

I accused him of taking advantage of the poor and needy but he countered that thanks to him there was product available.

He retired from business at the age of 53.

 

[Crema Americana]

What daily life will be like depends a lot on the nature of the default, who's in charge, and how things develop. Should Argentina default, it will probably be quite different than 2001. It's a corralito which can really f*** things up, not the default in of itself. I don't think a corralito will happen and even a sudden devaluation probably won't be as bad as 2001 since the peso isn't completely artificially propped up (in comparison to the blue yes, but we're not living as big of a lie as being pegged to the dollar, thankfully.)


From my husband's recollections, this is what happened with the corralito :
First, all spending stops. People not spending means people aren't earning.
You can expect massive demonstrations in front of banks and government houses since people will be desperate for their money.
Widespread looting will soon follow as instability, fear, and desperation take over.
People will be afraid to go out of their houses because of the looters.
Prices will hit the floor as people struggle to keep their businesses alive and earn something. (Exacerbated by the fact prices were sky high to start with.)
People will die and suffer - a few on the streets, but more from not being able to pay for good medical care or proper nourishment. (See Horacio Garcia Blanco.)

Stories from the corralito: http://edant.clarin..../13/e-00802.htm

Expats will probably be fine (especially if they earn, save in, or have dollars and keep their money out of Argentine banks.) Many will probably decide to leave. It's what's left of the Argentine middle class that will take the brunt of it.

The Argentines that I know don't keep significant savings and don't take IOUs -- lesson learned! Pagares will be worth little more than the paper they're written on. (My mother-in-law has a plastic bag full from pre-2001.) Argentines have learned that having a lot of debt isn't really a huge problem as long as you can keep kicking the can down the road. Should a default / devaluation happen, they might even catch a break as debts will be wiped... especially those that have jobs in or run businesses that are near impossible to go under due to need. Spend big during the good times and buckle down during the bad... that's how many survive here. Why plan and save if the government and banks are just going to wipe it out?

 

[Alicia karr]

So I should bring back toilet paper rather than maple syrup or apple products on my forthcoming trip back north.....