How Long Until Next Crisis?

[ghost]

I am a little bit less pessimistic
1.) In comparison to "developed" countries like USA, most of the EU, etc. Argentina has ridicioulously low debt.
2.) They have a lot of land and natural resources (especially if you don´t take absolute numbers, but put it into relation with population) which is something that always gives you revenue. I.e. unlike India, China, etc. they are at least able to feed themselves.

Argentina has a ridiculously low GDP. The entire economy is about $190 Billion USD. [thats less than one Fifth the state of California maybe one 10th] So take a look at the debt ratio with interest accrued over the past 10 years. And factor in access to credit to drive any form of growth.
They have always had these resources that you mentioned and have failed repeatedly to develop them in a consistant and repeatable manner. Outside investors are required to develop the AR resource stream but are now bailing out for reasons having to do with the poor business environment and the moronic leadership of the country.
So......why would anyone expect things to get better in the future?
Even worse....take a look at the Ks role models, Castro and Chavez. It's hard to be optomistic, ask any Argentine business person.

 

[SaraSara]

Foreign companies are bailing out - Merrill Lynch shut down its Arg. branch three months ago and left the country. Some companies have moved to Brazil, and others to Chile.

For whatever it's worth, a bit of strictly anecdotal information. Yesterday I had lunch with a former Secretario de Economia, now advisor to foreign companies. Said the government was set on propping up the peso until the Oct. 2011 elections, but he doubted it would be able to do it. According to him, the real exchange rate should be seven pesos per dollar, not four as it currently is.

 

[orwellian]

According to him, the real exchange rate should be seven pesos per dollar, not four as it currently is.

That would be so sweet

 

[BaggyWaters]

I think it is fair to say that there is not a market in the world that would not be substantially effected by change in the US dollar. So may governments, MNC and NGOs have large amounts of capital invested in the US economy for it not to effect the global economy.

 

[Conrado]

The new thing about the current scenario is that the Central Bank of Argentina has over 50 billion dollars in reserves, and is monitoring and controlling the exchange rate. The CB has the means to flood the market with dollars in case there's panic. At least for several weeks. The collapse -if it comes- may come in other form.

 

[gouchobob]

How long will it be before Argentina collapses yet again? This time I have a feeling the IMF will not bail them out, and why should they?

Hard to say when. Argentina along with the rest of South America has benefited from strong export demand, primarily from Asia. This has masked the bad decision making by the current government. Sooner or later this situation will change and the consequences of the bad decisions will come home to roost. Watch for a slowdown in Asia and China specifically. If that happens a slowdown in Argentina wouldn't be to far behind. Really depends on what happens in Asia in my opinion and I think this will play out there over the next year or so.

 

[davonz]

The new thing about the current scenario is that the Central Bank of Argentina has over 50 billion dollars in reserves, and is monitoring and controlling the exchange rate.

I am wondering if this figure is actually true, maybe it is like the inflation figures ?

I have friends here who are middle class income earners (4000-5000 pesos per month) and they are finding it hard to make ends meet now, with inflation and wage increases that dont match it, so i wonder how long this can go on ?

China is slowing, will this effect exports from countries like argentina ?

USA is a basket case (like alot of western economies), its going backwards again from what is in the news, company earnings, unemployment etc, so i wonder how much of an effect this will have on china and argentina ?

I do feel that something has to give here soon, it cant keep on going on the way it is without a reality check, as has happened in most of the OECD economies.

 

[SaraSara]

I am wondering if this figure is actually true, maybe it is like the inflation figures ?

I have friends here who are middle class income earners (4000-5000 pesos per month) and they are finding it hard to make ends meet now, with inflation and wage increases that dont match it, so i wonder how long this can go on ?

I do feel that something has to give here soon, it cant keep on going on the way it is without a reality check, as has happened in most of the OECD economies.

I've read that the Central Bank fifty billion dollar reserve is a mirage, as it includes the expropriated ANSES pension reserves, etc. Actually, less than twenty percent of it is uncommitted. There was a very good piece in the paper a while ago - I'll try to find it and post it.

 

[ghost]

And Polostar s.... for brains how can the USA not affect Argentina? Your economic policies and wars have had a huge effect on the world and not for the good for South America in particular . You supported all our dictators as well as Chile our neighbour and then you have a hide that the USA has nothing to do with Argentina . PLEASE........

Who would you blame for everything if you didn't have the USA to point to???? Sure the US has fiddled with SA governments and economies but I think you really need to take a look internally at Argentina and ask what has she done for herself in the last 80 years? Or even better, What has she done TO herself. Stop blaming everone else and grow some balls and run a real country, give people opportunity and insentive, let them build something endruing [longer than 10 years at a time]. Nobody picks on the strong. Stop whining about how all the big boys keep screwing your sister [she's whore, what do expect].

 

[nikad]

I do not like the Ks but I do not see a major crisis/collapse any time soon. I see some adjustments, corrections, maybe a more devalued peso ( say 4.5 to 1 by the end of the year ) and around 5 to 1 on 2011. They must solve the inflation issue though asap.