New official exchange rate: 800 pesos per dollar

[Ries]

The Elasticity of Demand doesn't seem to apply here..? Merchants believe they can raise prices with no limits and demand will always be there..? Competition doesn't seem to exist..?

Argentine laws are written, and economic history as well, so that its virtually impossible to lose real estate. You cannot have a bank repossess because there are no loans. You cannot evict tenants in practicality, even if there some legal years long routes that kind of sort of say you could.
Argentina in general has a much larger percentage of small family owned businesses than most western countries.
Rite Aid Drugs, or Sears, can go bankrupt in a month- but there are several storefronts I know of, including one in a very high rent stretch of Santa Fe, that have been vacant for years and years, because the owners have closed the family store, but have no interest in renting or selling.
Make me.
Argentine business people think very differently than other nationalities.
If you own the stock and the store outright, and nobody is buying, you wait. Sometimes years. Its why you can find stores here with stock decades old.
I was in a store in Once a couple of years ago with mens woolen suiting fabrics, from Germany and Japan and Italy, that was ten to 30 years old, and was basically unavailable anywhere else on earth. But here, there is confidence that, no matter how bad things get, it will still be saleable at some time in the future, so you sit, sip your mate, and wait.
Thats the way its been since 1929, and nobody expects that to change.
Walmart and Carrefour may close and pack up and leave, if their beancounters and shareholders demand it.
Local stores will still be here.

 

[sts7049]

Everyone has forgotten about la dolarización already... what even happened to that idea? That was Milei's entire campaign lol. la libertad no avanza.
What is he even going to end up doing with the peso?

Government says it still plans to privatize railroad network, dollarize economy - Buenos Aires Herald

Two ministers reiterated that two of Milei’s flagship proposals are still the administration’s goals

buenosairesherald.com

 

[Ange]

My guess is companies will see non-essentials tank and have to comeback to reality at some point. Aerolineas

Isn’t this precisely part of the strategy to cap inflation? That market demand sets the ceiling? As to whether that’d work in Argentina is a different story. But genuine question

 

[Ronnie Hotdogs]

Pretty sure empanadas we’re a dollar when I arrived here 12 years ago amd they’re still a dollar now

 

[retiredbanker]

Pretty sure empanadas we’re a dollar when I arrived here 12 years ago amd they’re still a dollar now

I'm not an authority on empanadas but believe today you can get one for 500 pesos. 50 cents. As I've posted before, my NAMPE wine inflation level still has it priced at about a $1.30 figure, US.

 

[aloevera]

I trust Milei because there's no one else to trust at this point.

He lied just like every other politician. Why would you trust a politician?

 

[aloevera]

He's only been in a few days

Dollarization isn't happening. Milei is going to destroy the economy. ¡¡¡CÁRCEL!!!

 

[sts7049]

Dollarization isn't happening. Milei is going to destroy the economy. ¡¡¡CÁRCEL!!!

instead of wasting your time trolling, you should probably be out on the campaign trail for Cristina to come back and "save" your country, no?

 

[Ries]

A typical Argentine business story- maybe 5 years ago, when the peso dropped against the dollar more than normal, and sales slowed down, a mid size argentine motorscooter company, instead of cutting purchases, just spent all their cash pesos on parts, rather than waiting and letting the pesos become worth less and less. I remember reading they bought thousands of engines, which were imported, to install in future argentine made frames. Then they just warehoused em- because they knew they could sell em in the future, and they would cost more in the future.
This is the way a lot of companies here think- instead of dropping prices, they hang on to inventory, knowing it will be worth a lot more pesos in the future. Its how all cash businesses survive, and its the opposite of how US companies, which are all about loans, cash flow, and share prices think.
Most of the companies here, even larger ones, are controlled by families with inherited wealth. I keep meeting people whose families have always made pipeline pipe, or textiles, or even fridges.
When things slow down, the dragons dont liquidate- they sit on their gold till the market comes back.

 

[sergio]

The Elasticity of Demand doesn't seem to apply here..? Merchants believe they can raise prices with no limits and demand will always be there..? Competition doesn't seem to exist..?

Actually in Argentina this peculiar notion exists. It probably stems from a poor understanding of capitalism which is in large part due to government policies that complicate doing business. Pricing is often capricious, little-to-no attention is given to repeat business or consumer satisfaction.