Inflation Redux

ReemsterCARP

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Inflation has been endemic since the 19th century Argentina...

Ask JD Perón, ask Hipólito Yrigoyen ask Miguel Juarez Celman... they'll confirm this...
 

RWS

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Quoting "ReemsterCARP": "Inflation has been endemic since the 19th century Argentina...
Ask JD Perón, ask Hipólito Yrigoyen ask Miguel Juarez Celman... they'll confirm this..."
Of course there were inflationary periods in nineteenth-century Argentina; but inflation became endemic only from the second quarter of the twentieth century. (Srs. Perón and Yrigoyen both were active in the twentieth century; we are writing in the twenty-first century.)
 

Stanexpat

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"citygirl" said:
PS - Stanexpat, regarding your comment about the insurance rates for mortgages. I don't take that as a comment on the "stability" that people see here, just a reflection of the fact that lending isn't common practice. Everything is paid for in cash. So if you choose to/need a mortgage, you have very few options & its going to cost you - a lot.
Cann't say I agree with you on this. High interest rates on mortgages reflects what risk the lenders see for future inflation and economic conditions. The lack of mortgages in Argentina isn't because it isn't common practice or the lack of interest by Argentines. The lack of mortgages is the result of banks viewing lending there as being high risk. The fact banks are charging 26% tells me they see high risk and really aren't very interested in making loans. Who would want to borrow money at 26% to buy a house or apartment? If affordable mortgages were available Argentines would have mortgages just like people everywhere else in the world.
 

soulskier

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Positive side of no mortgages in Argentina mean real estate prices are real, no bubble to break!
 

syngirl

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Prior to the crisis mortgages were indeed a firm part of Argentine society. However, part of the reason many people got hit so hard then is because mortgages could be taken in US dollars. Since it was a one-to-one culture, many people took these out and then of course with the fall of the peso, could not make their payments.
Now, mortgages are in pesos. However the limits are ridiculous -- I believe that most banks will only lend a maximum of u$s30k -- which doesn't exactly get you an apartment. this is great evidence as to the faith of banks in invesment!
Furthermore, as reported by one person above, if the interest rates have increased -- I haven't checked in ages, so can't verify -- last year at this time it was 12-18% depending on your approval rating, payment schedule, and amount withdrawn -- it is simply because the banks cannot legally suspend their lending programmes -- at least not without severe interference from government. However, one of my boyfriends co-workers said that Banco Frances is currently not approving any new applications for loans.
Soulskier -- don't deceive yourself, there is definitely a bubble to break. To think there isn't is to be naive.
You're forgetting that many people have indeed taken out credits in the last 5 years that they would not be able to pay if they lost their jobs. Furthermore, although people may be slowing on the taking out of mortgages for homes, they certainly take out prestamos for smaller items -- cars, home repairs, etc etc.
And on top of that you've obviously forgotten about the whole culture of paying in cuotas. How many people do you think really have the 10-12,000 pesos to buy those LCDs and Plasma TVs? And yet they fly off the shelves. No Argentine I know walks into a store and buys their A/Cs, refridgerators, washing machines etc in 1 payment. You can pay in cuotas for everything from underwear to groceries, to your furniture.
Furthermore you can pay for your holidays in cuotas (I know a tonne of people who have) -- I can pretty much guarantee that most of the people on the slopes this season will not have paid for their ski holiday up front.
This is where a huge portion of the country could be screwed if the economy goes to hell -- and credit cards here are just the same as at home, 21% and up for interest rates. Even in the case of a recession here their will be a large portion of the population that slips quickly behind in cuotas, that will stop buying, stop pumping money into the economy, and the entire country could quickly buckle under the weight of individual debt.
 

syngirl

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One other thing -- real estate prices are real? what the???
Not at all.
Please also keep in mind that a tonne of people jumped on real estate development a couple of years ago and started construction on small and large towers. Now the price of materials is soaring and the developers can't get any money out until they've sold their units.
So what happens? They need to keep their margins as high as possible. What's the easiest way to do that? Cut corners of course.
So those poor saps that signed on to the departments a few months or a year ago for an entrega in the next few months will find that all those terminaciones they paid for aren't going to be quite what they expected.
ie the price they paid isn't going to have much to do with what they get.
the price isn't real at all.
And on top of that their's a bunch ofpeople that try to sell their crappy PH that hasn't been renovated in 70 years for the same price per sq m as the 5 year old building next door.
please, we're in Argentina -- no price is a real price. From furniture, to appliances, to any type of service -- the market in Argentina is equivalent to walking into a car dealership in N.A. -- the price you get and the price your buddy gets will have nothing to do with each other.
"Real" prices don't exist in this country. Down to the produce your buying from your verduleria -- someone's getting a better price than you are, believe me.
 
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