Milei’s quest to defuse Argentina’s currency control bomb

[MilHojas]

Client Challenge

Archived version

 

[Caribbean Cool]

Client Challenge

Archived version

Great post ....thank you.

 

[Ries]

milei's idea of economics is macro, austrian, and libertarian.
it doesnt account for employment or industry.

 

[Che1990]

Every bit of economic coverage in the press right now talks about the overvalued pesos, not just the local media but the international too. And the only ones denying the exchange rate are those in the government .

 

[chris]

milei's idea of economics is macro, austrian, and libertarian.
it doesnt account for employment or industry.

Is the CEPO libertarian?

 

[LuckyLuke]

"A restriction that prevents multinational companies from transferring profits overseas, for example, is keeping some $10bn worth of pesos in Argentina that would be probably converted to dollars if the rule was scrapped..."

Wow...that's a hell of a timebomb.

 

[FrankPintor]

"A restriction that prevents multinational companies from transferring profits overseas, for example, is keeping some $10bn worth of pesos in Argentina that would be probably converted to dollars if the rule was scrapped..."

Wow...that's a hell of a timebomb.

Well, that's interesting. I hadn't seen that aspect in relation to Argentina, but it has been the case in Venezuela for many years, so, what the major companies with profits sequestered there did was to invest in real estate. The same would be true here in Argentina, I guess... so remove the CEPO and tank the real estate market, sounds great...

 

[LuckyLuke]

Well, that's interesting. I hadn't seen that aspect in relation to Argentina, but it has been the case in Venezuela for many years, so, what the major companies with profits sequestered there did was to invest in real estate. The same would be true here in Argentina, I guess... so remove the CEPO and tank the real estate market, sounds great...

Doesn't sound logical to me. Why put it in real estate (which is highly illiquid) if you can keep it in a dollar account? I would be curious to know exactly what the cepo limitations on capital flight is.

 

[Ries]

Is the CEPO libertarian?

did milei invent the CEPO? It dates back to 2011 as a name for the policy.
I was under the impression that Milei wants the CEPO gone, and he is in favor of a free and unregulated flow of capital.

So, to answer your question, no, the CEPO is not libertarian.
The CEPO, to Milei, is an inconvenient reminder that the adults in the room, the oligarchs, and the congress, will not let him have his way, will not let him sign executive orders, like Trump, that instantly abolish everything he hates.

 

[Ries]

Doesn't sound logical to me. Why put it in real estate (which is highly illiquid) if you can keep it in a dollar account? I would be curious to know exactly what the cepo limitations on capital flight is.

dollar accounts are traceable by the government.
most of the liquid assets in Argentina are in the form of the estimated $400 billion in paper US hundred dollar bills held by individuals.
But real estate is permanent, its sentimental, and under Argentine law and custom, its almost never repossessed, or seized by the government for back taxes.
So wealthy Argentines dont mind owning real estate, as they never plan on selling it anyway.
The truly wealthy here own estancias that the family has held for, in some cases, literally centuries.
Their dollars are in cash,or in Uruguay and Miami, or in investments we only find out about in the Panama Papers.
Bank accounts are for the lower middle class.
This is true globally.
The wealthy do not keep their money in the bank.