How is the Argentinian economy not even in worse shape?

[EL_TIGRE_de_Tigre]

If Argentinians have no consumer debt why is payment in "cuotas" so pervasive? They even ask me at the grocery store if that is how I want to pay.

They have consumer debt FISCAL - They just don't have the means to get into debt anywhere near as close as their US counterparts can.

 

[Ceviche]

If Argentinians have no consumer debt why is payment in "cuotas" so pervasive? They even ask me at the grocery store if that is how I want to pay.

Most middle class have access to the home gifted by grandmother or father. I have seen this a million of times. However, they have NO CASH to spend.

 

[EL_TIGRE_de_Tigre]

Yes, They are cash poor.

Ceviche, You have to admit, some of these structures (Handed down houses etc ...) are in really bad repair. In other countries they may lose their occupancy permit or be subject to being condemned.

 

[on the brink]

If Argentinians have no consumer debt why is payment in "cuotas" so pervasive? They even ask me at the grocery store if that is how I want to pay.

They pay in "cuotas" because of the yearly 50% inflation rate. Over a year, the last "cuota" is half of the initial one.

 

[EL_TIGRE_de_Tigre]

YOU NAILED IT! When the last payment arrives ... They are paying with inflated money - THEY WIN!

 

[antipodean]

Against an average monthly salary "SUELDO" of what?

My point being, it it really small compared to the average person in EE UU who is in really deep!

Here is what I can find with official data about average salaries. Minimum in $18k.

It is true, and fortunate, that there are nowhere near the levels of debt as in the US or other similar countries where household debt is many times the annual income. Countries like Greece learned the hard way and are still trapped in a stagnant reality that in many ways resembles middle and working class Argentina but achieved that accolade almost overnight. It’s only a matter of time for other countries living in a debt bubble.

With inflation like ours, on a fixed income, it makes having the cash to service any debt very difficult since the timing of salary adjustments don’t always align with price or interest adjustments. Some months you win, some months you loose but usually you end up with a discount at the end, but no extra cash to show for it. So maybe we are lucky in a screwed up kind of way.

 

[EL_TIGRE_de_Tigre]

Thanks for posting antipodean.

 

[Jim Prideaux]

Because... Argentina?

But we will see more small business closures. I understand many local shops and business premises are being abandoned or returned to their owners as some traders simply cannot sustain the electricity and rent costs without much trade. At the moment this government does not like addressing these negative issues and shoots down any questions about them as if the journalist asking them was an enemy of the people. Hence I don't think we are getting the full picture just yet.

There are also too many paradoxes blurring the view of the situation.

For example, Jetsmart was given authorisation from the ministry of labour to pay their grounded employees as little as 50% of their salaries and also invite voluntary redundancies and terminations of contract by mutual accord. LATAM (which just declared bankruptcy!) was denied by the ministry of labour to reduce pay for their grounded staff and must pay 100% and is outright prohibited from firing or suspending employees.

Likewise the government is priding itself on ATP payments to employees of private companies but the reality is that many, many employees have yet to receive these payments for April or May despite businesses applying on time and meeting all requisites. If they don't materialise soon then the company is still liable for these costs and it will sink many businesses.

The other aspect is legally dissolving a business / declaring insolvency is pretty difficult to do. I understand there may be some discussions starting in government to change these laws as they know that soon the problem will be too big to ignore and many business owners will (or are already) just "doing a runner" making the situation worse for everyone.

I have a company here and cannot fire or lay off. I’ve had to pay full wages for several months. I’m actually relieved I can afford your help my employees. (Did they thank me? Naw, they adopted the attitude that it was my obligation and their right — but I am still glad they can buy food to eat.)

 

[Jim Prideaux]

I've been here for 13 years and most of that time basically every economist/financial publication/investment firm has continually said Argentina is 6-12 months away from a complete collapse, and it still hasn't ever really come to pass despite some serious economic pain during the entire period. I'm almost convinced the country will endlessly barely escape the worst possible outcome through a constantly evolving set of bizarre economic policies and last second deals.

Argentinians have also learned to sock away money. They actually live modestly even when they entertain. A restaurant may be full but the beverage is Coke and the meal pizza at most tables. At asados, guests contribute a couple hundred pesos each at most. Many people live in the home where they were raised. And of course, many escape the grip of AFIP. The supply of money is finite but they know how to make it go far.

 

[on the brink]

Many people live in the home where they were raised. And of course, many escape the grip of AFIP. The supply of money is finite but they know how to make it go far.

Good point.

Argentinians live and die with the furniture they got when they set up house. Much of it, family hand-downs. No one dreams of "redoing" the living room, or remodeling the kitchen, as is common in the US.

Shopping is not entertainment - people have no linen closets, just two sets of sheets at best.