How ugly has it gotten, or not?

[rickulivi]

After the primary election, the financial markets in Argentina collapsed. It got very ugly. The peso is down around 30%, the stock market in dollar terms is down 50% and the dollar bond market an equal amount. Market participants feel miserable, and that includes me too! Well, I am a happy person but these losses are terrible

Can you share your views about how this latest financial disaster is affecting the mood of every day Argentinians?

 

[FallenAngel]

It depends on what is your comparable. If you are comparing Argentina to what it was 3 years ago, then it is pretty ugly now. If you are comparing Argentina to what it will be 3 years from now, then right now is a golden age.

 

[AlexS]

At the end of next year things will get very ugly. It will be interesting to see if FF will be able to hang onto power. Not a political statement, just that the coming economic tsunami will be so intense that it may wipe out whoever is in control. No amount of financial tricks will be able to contain it.

I would say the mood is a bit gloomy at the moment, but Argentines are an incredibly resilient people.

 

[bobsnowpuppy]

If whoever is in control is “wiped out”, what would then be the alternative form of governance?

 

[AlexS]

Not suggesting that there will or should be an alternative form of governance. It's just that whoever is in power during a severe economic downturn usually gets most of the blame (unrightfully so), and sometimes the political pressure is such that they step down and are replaced by someone else. Maybe their Vice President, another election, etc.

 

[bobsnowpuppy]

Perhaps this is the plan all along. That the newly elected president must step down and guess who becomes the new president?!

 

[rickulivi]

One of my hypothesis is that the current government and major media portrayed the Ks as financial Draculas, and they were very successful at convincing the financial markets of this vision. Call it effective propaganda. My question is: are the Ks really financial Draculas? Obviously they believe in more controls, but the current government imposed few controls, and the results have been poor.

Although financial assets have dropped in value dramatically, one investment that has not is real estate prices. Why? Are regular real estate investors and homeowners less fearful of the Ks, or did they not really believe the Dracula campaign.

I guess time will answer these questions. What is your opinion. Are Ks really financial Draculas or was that just propaganda?

 

[AlexS]

Perhaps this is the plan all along. That the newly elected president must step down and guess who becomes the new president?!

That's true. The Ks may be corrupt, but they certainly aren't stupid.

 

[AlexS]

Although financial assets have dropped in value dramatically, one investment that has not is real estate prices. Why? Are regular real estate investors and homeowners less fearful of the Ks, or did they not really believe the Dracula campaign.

I guess time will answer these questions. What is your opinion. Are Ks really financial Draculas or was that just propaganda?

The first part, I think Perry is probably the expert here. My thought would be that real estate prices haven't dropped in value as dramatically is because the real estate market is relatively inelastic due to Argentines using it as a safe haven for savings.

For future profits of businesses are the Ks financial Draculas? Probably. They will tax their exports more. Make it harder to move profits offshore. They also align themselves more with China, Russia, Iran, Venezuela - the anti-western powers so to speak. This all brings fear to the markets. Discourage further investment in the country. In the short term though this can be effective. Gives the government more money to distribute to the lower class, increases consumption.

 

[perry]

It depends on what is your comparable. If you are comparing Argentina to what it was 3 years ago, then it is pretty ugly now. If you are comparing Argentina to what it will be 3 years from now, then right now is a golden age.

Do you believe that in 3 years the situation Iin Argentina could be like Venezuela today with a completely devalued currency and hyperinflation ? I am very angry and sad what is happening to this country and the gross mismanagement of its finances . I have just come back to Buenos Aires after a few months overseas and the mood in Buenos Aires is one of a city preparing to be invaded. There is a sense of doom and gloom and its completely unrecognisable from the vibrant city I knew from 2004 to 2011.

Last night I was in Plaza Serrano at 2am in the morning and I could have shot the place up as there were so few people there maybe a dozen people with over 10 bars open . How can these businesses stay open with their very high costs ? When I first moved here Plaza Serrano even on a Monday night was absolutely chock a block full of people as was Calle Baez Las Canitas and Calle Fitzroy in Palermo Hollywood . All these neighbourhoods are suffering terribly from the financial crisis .