How's everyone hanging in there with the cost of living these days?

[mmoon]

Next year Argentina will be one of the most expensive countries in the world (in dollars). Similar situation as during Menem's last period 1997, or worse... Deme 2..! then one day the exchange rate went from 1:1 to 3:1 . Then default and collapse.

Don't forget the corralito. That locked up so much local money and allowed expats to come in and swoop up properties. Argentina went from expensive to a relative bargain basically overnight. I remember seeing dozens of gorgeous apartments in Recoleta available for about USD $40K.

 

[Quilombo]

The macroeconomy is in a bad spot, yet Milei and Caputo can't stop congratulating each other because they drink their own Kool Aid.

We've reached the perfect storm of Milei retaining Peronist capital controls (VLLC), the dollar being artificially cheap due to the BCRA interventions in the forex market (dolar planchado), import restrictions/protectionism being retained by Caputo, and salaries being depressed compared to CoL and inflation.

This causes all sorts of major economic distortions and we're beginning to see them everywhere:

• Tourism receipts shifts in favor of outbound instead of inbound, i.e. Argentines leave Argentina to spend dollars abroad, and planes are empty coming to Argentina from wealthy markets since Argentina is expensive in dollars
• Domestic, non-essential (and even essential) consumption plummets, i.e. people buy only what they need to survive, and when they do buy non-essential goods, they do so in neighboring countries
• Tax revenue declines along with consumption, along with the closure of businesses
• Sharp increases in poverty

While it's true that inflation is slowing down, the government has to realize that one of two things needs to happen next: either wages have to skyrocket to catchup with the sharp increases in the cost of living here (doubt that's going to happen) or goods/services have to re-align with the reality of consumers (i.e. deflation, which hasn't happened since 1993 IIRC, or opening up imports with 0% tariffs and no impuesto PAIS). While the later is the most likely scenario, it requires pissing off a lot of powerful interests that are connected to the government (people like Marcos Galperin) who depend on import restrictions for their business models to survive, and it's not like if tariffs were 0% Argentine resellers wouldn't just continue to try and rob people blind.

Long story short, something's gotta give, even when inflation reaches a more manageable level because prices here are insane in every currency and every exchange rate.

 

[zensailor]

Ah, nothing like reading some commie-talk to start the day right!

''commie-talk'' ???? ..... what kind of playground speak is that ? ....what grade school are you in ?

 

[dlish]

Long story short, something's gotta give

I’ve been thinking that since Milei devalued the peso and health premiums went through the roof. “There’s no way this can last!” Here we are, all these months later and nothing is giving at all ….

Just looked up the date, it was December 13. Soon it’ll be almost a year.

 

[nikad]

I’ve been thinking that since Milei devalued the peso and health premiums went through the roof. “There’s no way this can last!” Here we are, all these months later and nothing is giving at all ….

Just looked up the date, it was December 13. Soon it’ll be almost a year.

However somebody, somewhere is making huge profits out of this for sure...

 

[Redpossum]

However somebody, somewhere is making huge profits out of this for sure...

Absolutely, yes, without a doubt. That's how the game is played, no?
And I don't begrudge them the profit, I just really intensely dislike that it's all making things so brutally hard for so many seniors. If I have it rough on an (unusually low) yanqui pension, imagine the horrors of trying to get by on an argentine pension. I don't know how they do it. Family, I guess.

And now they're threatening to cut monthly aid to the disabled -

Discapacidad: el manual libertario para aplicar el ajuste | Citaciones, cartas documento y una causa penal para recortar miles de pensiones

A la sede de ANDIS llegan todos los días desde hace meses centenares de personas con miedo a perder la ayuda que reciben del Estado. El Gobierno las obliga a trasladarse con el pretexto de una "auditoría" y bajo amenaza de darles de baja el beneficio. ...

www-pagina12-com-ar.translate.goog

The usual Google Translate deal, banner is in Castellano and story will initially appear in that tongue, but wait a few seconds and it will change to English.

 

[LuckyLuke]

I have this theory that Milei is floating on the backs of middle class (mattress) dollar liquidations, repatriation of exterior funds, and blanqueos causing temporary artificially high demand for pesos. The government should be rolling in dollars right now but they've barely increased their net foreign reserves because they have a ton of foreign debt obligations and backlogged requests for import financing. How much of those underground dollars are circulating in Argentina is unknown, but I once heard 11 billion worth. Eventually, they will run low, and the pressure on dollars will be too much for the market to ignore. We will then see the dollar rate start to ratchet up again. How long that will take is any man's guess. This is in my opinion an unsustainable situation.

 

[FrankPintor]

I have this theory that Milei is floating on the backs of middle class (mattress) dollar liquidations, repatriation of exterior funds, and blanqueos causing temporary artificially high demand for pesos. The government should be rolling in dollars right now but they've barely increased their net foreign reserves because they have a ton of foreign debt obligations and backlogged requests for import financing. How much of those underground dollars are circulating in Argentina is unknown, but I once heard 11 billion worth. Eventually, they will run low, and the pressure on dollars will be too much for the market to ignore. We will then see the dollar rate start to ratchet up again. How long that will take is any man's guess. This is in my opinion an unsustainable situation.

Perhaps we could start to "war-game" or forecast scenarios?

We've had the utterly unconvincing hagiography of Milei and his iron triangle by dead economists here, and the no more convincing disconnected pontification by people in Asia and Marbella.

No, we have people, actually here, like @Redpossum who are seriously worried about the prospects. Personally, I'm not hugely worried, we may, by luck, have built our house in the nick of time, and in time, we should only have to deal with "expensas" (not there yet, though, still fixing up). People like @Quilombo want to get started on the property ladder. @Lanick wants to supply us with organic veggies (which is not a half-bad idea, but the market needs to be scoped out). Can any of this happen?

People (expats) are worried. What's coming? What should we do?

 

[Quilombo]

I have this theory that Milei is floating on the backs of middle class (mattress) dollar liquidations, repatriation of exterior funds, and blanqueos causing temporary artificially high demand for pesos. The government should be rolling in dollars right now but they've barely increased their net foreign reserves because they have a ton of foreign debt obligations and backlogged requests for import financing. How much of those underground dollars are circulating in Argentina is unknown, but I once heard 11 billion worth. Eventually, they will run low, and the pressure on dollars will be too much for the market to ignore. We will then see the dollar rate start to ratchet up again. How long that will take is any man's guess. This is in my opinion an unsustainable situation.

Reminds me of And the Money Kept Rolling In (and Out):

When the money keeps rolling in, you don't ask how... When the money keeps rolling out you don't keep books...

My personal guess is that everyone close to Milei and Caputo know that this isn't sustainable, and as such the plan is to simply take everything that isn't nailed down for as long as possible, then act surprised when things go tits up. I hope to be proved wrong, but you can't have a macro economy where the average person earns less than $500/month, rent costs $393/month, grocery prices rival Spain and the US, and healthcare rates increasing 100% above monthly inflation; there can be 36 cuotas sin intres, but the factura comes the same and has to be paid with the $107 left over.

 

[LuckyLuke]

Reminds me of And the Money Kept Rolling In (and Out):

When the money keeps rolling in, you don't ask how... When the money keeps rolling out you don't keep books...

My personal guess is that everyone close to Milei and Caputo know that this isn't sustainable, and as such the plan is to simply take everything that isn't nailed down for as long as possible, then act surprised when things go tits up. I hope to be proved wrong, but you can't have a macro economy where the average person earns less than $500/month, rent costs $393/month, grocery prices rival Spain and the US, and healthcare rates increasing 100% above monthly inflation; there can be 36 cuotas sin intres, but the factura comes the same and has to be paid with the $107 left over.

Exactly, don't ask how and don't keep books. Everybody is scratching their heads asking how this is possible because they keep trying to do the math with the formal statistics and formal economy. But there's a wooshing sound of informal dollars being deflated from the balloon here that nobody except "smart money" has ears on. Right now banks are rolling in dollars, but there's only so many one trick ponies like a blanqueo that you can pull out. Eventually it will be invested and spent. Milei can slow down the printing of pesos, eliminating budget deficits and encourage foreign investments to try to balance the dollar/peso equation. But it's like a teeter-totter, you can only push one side down so much to raise the other side before the weight of foreign obligations pushes it back down again. Milei is running out of time...