Is Argentinas Economic Collapse Imminent?

[syngirl]

I have to admire all you expats putting up with all that chaos and imminent economic meltdown - it takes a brave person to live in these type of circumstances risking ones savings and earnings. It's times like these that I really appreciate the stability in the USA.

Weren`t you the one asking about bringing the ferrari down with you? How'd that work out?

 

[bigbadwolf]

Joe at least set some kind of physical evidence as his criteria. As for the rest of you predicting collapse, do you have anything kind of actual criteria you would call collapse beyond seeing kale in the verdulerías? or is it just some kind of nebulous concept?

For what it's worth, IMHO it's very easy to make the argument that the US is in a long term financial crisis (depressed labour market, decreasing household wealth...), but I would be more inclined to call that a crisis rather than a collapse.

If you use Orlov's taxonomy, the next step for Argentina will be commercial collapse, and then political collapse. But Argentina's been there before (2001). And there it will stop.

Probably the nuanced difference between crisis and collapse is that in the latter -- according to Orlov -- there's no way to get out of it. The financial crisis (if you wish) in the USA will not subside and the US has been on life support since 2008 (or 1974, if you wish). There's no recovery except in the BS pronouncements of the stooges, er politicians, who are paid to read from the teleprompter.

But I'm digressing. For Argentina the next step will mean a crisis in the currency (already here, arguably), which will make credit more of a problem, and by implication day-to-day commerce and exporting and importing. Buying things with the peso will become more difficult, and perhaps there may be shortages in day-to-day essentials which even the use of dollars cannot circumvent. But this is conjecture.

 

[Musicman]

Hi there - I decided to keep the Ferrari here in Houston for time being and delayed my move - kind of glad I did that given the increasing turmoil down there and also the growing malaise in Brazil has shaken my appetite for business adventures in the southern cone at least in short term until we see how all this plays out - anyway things are pretty much booming up here in the states

Good luck to you all in crazy Argentina

 

[mrporoto]

As this is about finances,anyone know what the current situation is about taking a few dollars across to Colonia,been out of it for sometime,can one still take out 10k withot hassle?Any info appreciated.

 

[camino no tomado]

Chile did not have an "honest dictatorship" ...

Indeed. Has there ever been such a thing?

 

[ajoknoblauch]

Indeed. Has there ever been such a thing?

Until the facts came out, Pinochet apologists claimed his regime was corruption-free (leaving aside, of course, the issue of extra-judicial executions and disappearances).

 

[Jaredberryman]

To me a collapse means soaring unemployment rate, disgruntled society, and political turmoil. To me 2001 was a collapse. I don't think such a collapse is quite yet imminent, but it could happen soon. Rather, what's probably going to happen is that Cristina will spend all the reserves left by the time she leaves office, leaving the next government in a bind. After a year or two of that government, that's when the problems will begin. There won't be much money left, and not enough to pay planes de trabajo, salaries for government workers, etc. So there will be either hyper hyper inflation like in the eighties (where prices change by the hour, not by the day or week), or there will be high unemployment, or both. Either way, everyone will get really upset and disgruntled, people will lose jobs, and then people will look to get rid of the government in power. Due to the mess that the next government inherited, I predict that it will not last two years. However, I think this collapse will not be as bad as 2001 and will not be quite as profound.

The real question then is if the Ks will try to seize power again and we will have a de facto dictatorship like in Venezuela.

 

[Gringoboy]

Colin Docherty believes that rumours of economic collapse are greatly exaggerated.
I found his article very hard work and still couldn't understand it.
Anyone agree with him?
http://bubblear.com/argentinas-currency-devaluation-the-hidden-strategic-genius-everyone-missed/

 

[Jaredberryman]

Some things in the article made a good point, but look at this line 'The caveat is that Argentina is fueling its industry with discount energy prices. If those costs are raised, the competitiveness of its industries could be put in jeopardy. This is the most rational doomsday case against Argentina, although I’ve yet to see a good number-based analysis of the economic trade-offs in play.'

Another words, if YPF doesn't manage to get its act together, explore, and start making the energy in Argentina available at a cheap price, then Argentina will have to import its energy at an extremely expensive cost. If they have to import, everything will begin to cost a LOT of money due to this. When the government blames its problem on energy crises, it is in part true. But if YPF can somehow pull off a miracle, find tons of oil and gas, and start extracting it and satisfying Argentina's needs, then inflation will continue in its current path, which is bad, but since people have employment, can be somewhat manageable.

However, if YPF fails, Argentina is in trouble. Here's the problem: YPF is full of crooks. I know this because I have friends that work in the oil industry here, and they know all the executives that YPF put in charge. Most of them were fired from American and Canadian oil/gas companies for stealing. Why oh why did they put people like this in charge? I guess so that the politicians can also collect favors and a cut of the stolen money. I think the odds that YPF will somehow provide Argentina's energy needs are about like the odds that aerolineas will return to profitability.

The smart thing to do would be to let multiple smaller and more honest foreign oil companies (instead of Shell) come in and do r&d and extract the oil and gas, all while being up front with them that they will have to sell X amounts of their finds in this country at cost and let them export 20 or 30 percent at the price they wish, and charge them low taxes on their returns. YPF would then just be a front man that for the companies that really do the heavy lifting. But of course, that's considered non-patriotic. And the honest energy companies might not be so pliable when the time comes to collect a bribe.

 

[Dublin2BuenosAires]

Argentina has oil / gas reserves I understood? You are talking about having to find them.

Also, "smaller and more honest foreign oil companies" - I'd be interested in your thoughts on who!?

Isn't the truth that the extraction process is very difficult, will take 10 yrs to start production. To get private involvement you have to give away a much greater % of extraction rights? In keeping this "in house" with YPF the potential profit for Argentina is much greater, although I am not familiar with the chevron deal? I wonder what the terms are and whether a significant portion of future income has been ceded or retained?