Effects Of A Default On Expats

[Matiasba]

What do you mean "against Argentina?" Do I sense bitterness in that comment because you possibly don't save in dollars? I think one thing is to be against the government, and another thing is to be against the people that make up a country. Ditto on what everyone else aforementioned.

I save in dollars. Against Argentina, agaisnt the peso, against the currency in which argentine live, for a devaluation, for a default, for the depreciation of argentine salary.

 

[ajoknoblauch]

As I said, is very little the people that save in dollars. A tiny minority.

And I dont care of people wanting a stable peso or Argentines not being damaged. This is beyond their will (and Im sure they all have trully good wishes for Argentina). They just want more value to the money they have. Something totally reasonable, everyone would want that. Thats why this is so tricky, and thats why the dollars restrictions. Or you have your money in dollars or you have it in pesos. Everyone dollars, as I sais before (if you read me) is the only way to escape inflation,

I wonder why Argentina is the only country with dollar restrictions (excluding Venezuela and North Korea).

 

[Matiasba]

You have greatly oversimplified matters, Matías. A weak peso can benefit Argentina by making its exports more competitive, and that can stimulate employment. It could make imported goods more expensive, but since the government has decreed you can't import anything anyway, that hardly matters.

you re right. But if you have good numbers on employment, and you have the best salary in Latin America, and you have a reasonable competitive industry for export, you dont need a devaluation.

 

[Matiasba]

I wonder why Argentina is the only country with dollar restrictions (excluding Venezuela and North Korea).

because of the history of inflation we had. As I said, is the only way to escape inflation. BTW its a relative new phenomena, it began in the last dictatorship, when everybody started to refuse to talk of prices in pesos (as Brazil talks of property prices in reales, or Mexico in pesos mexicanos) and started talking of apartment prices in dollars. Due to the importance of Arg econmy in Uruguay, it also happened to them (although they dont have restrictions or inflation).

 

[gpop]

How come all these threads turn into 'The Matiasba Show' ?
I'd like some opinions to the question I posted as an example of what the OP asked to begin with. "...impact us in our daily lives..."

 

[GS_Dirtboy]

Then most Argentines must be against the country. Practically every Argentine I know saves in Dollars - the rich ones, the poor ones (with what little Pesos they can accumulate), and the now-almost-invisible middle class.

If there is a default then there will be no access to outside capital. If there is no access to outside capital then the Dollar reserves drop forcing the government to further cut subsidies and further devalue the Peso, and put more pressure on Dollars that are in country - either through taxes or outright blocking transactions in Dollars. If the Peso devalues significantly there is a very real risk of runaway inflation. Argentina will become even more of an island than it already is. If people's incomes cannot keep up with inflation then that is the spark for civil unrest.

 

[ajoknoblauch]

because of the history of inflation we had. As I said, is the only way to escape inflation. BTW its a relative new phenomena, it began in the last dictatorship, when everybody started to refuse to talk of prices in pesos (as Brazil talks of property prices in reales, or Mexico in pesos mexicanos) and started talking of apartment prices in dollars. Due to the importance of Arg econmy in Uruguay, it also happened to them (although they dont have restrictions or inflation).

Miraculously, Chile has low inflation and no dollar restrictions. How can that be?

 

[thorsten]

gpop: every case is different, so it's hard to find a general answer. Often, a debt comes with a devaluation (and I'd expect this in the case of Argentina independently of a default). In case of a devaluation, it favors those who have either other currencies or real objects like apartments/houses and is disadvantageous to those having savings in pesos. Now given your actual example: if you'd take a credit in pesos and didn't buy the car before the devaluation, you'll be screwed. If you bought the car, it theoretically should favor you (as a devaluation effectively reduces your debt), however I'm not sure which clauses a local credit contract have in such a case.

 

[AmigoArtistico]

you re right. But if you have good numbers on employment, and you have the best salary in Latin America, and you have a reasonable competitive industry for export, you dont need a devaluation.

According the the link that you yourself posted, Argentina is near the middle of the list of salaries in Latin America. Your link is from December, 2013. Argentine salaries (even if you add an increase of 30% to the amount of pesos in that article, an amount which most people didn't get) are about $311/month, below eight other countries (using a blue rate of $12, the only rate that is freely available to the Argentine people).

Have you ever found even one person who believes the shite that you are constantly spewing out (which in this thread is far more offensive than your usual drivel)?

 

[Montauk_Project]

There won´t be a default. Actual debt levels are low. Argentina will not be forced to pay, it will negotiate its way out. This has nothing to do with the current goverment. Argentina is getting backing from many important countries and sectors, because if they are made to pay something outragous this will put the entire financial system in "check mate" because renegotiating debt is a very common thing to do. The solution to this will be political. I wouldn´t worry about this.

If you are currious as to what COULD happen, you can talk to anyone who was here between 1999-2003. (I came at the end of 2002). Money will dry up, almost anything will become very expensive (bus rides, soap, food) and people will sell things at rock bottom prices to pay grocery bills. HOWEVER there is a big difference between 2001 and the current situation. 2001 happened after a decade of economic decline and rising debt levels and due to the pegged dollar to the peso, dependent on imports. Now there are few imports and most things are produced within the country. This would highly mitigate a default, as the economy is almost self sufficient. Also, the economy is in much better shape than the 90s (I know people complain about the economy now, but compared to the 90s there is no comparison).

Talking to people who were here in the 90s (ie, most Argentines), most could see the default coming, there were some obvious signs. I don´t see them now (banks offering plazos fijos at 30% monthly because there was no money in the banks). However, @gpop, this is not me saying that you should or should not buy a new car.