Paraguay V Argentina, Lifestyle And Taxes

[Bajo_cero2]

When the economy crashs, then it is going to be cheap again.

 

[Ceviche]

When the economy crashs, then it is going to be cheap again.

 

[Tres Picos]

Tres Picos,

"As I posted in reply to Morgan, the ARS devalued about 23% in 2016 so I do not understand why people are saying it didn't budge."

ARS to USD: 23% fall during 2016.
Peso-denominated Inflation in the real-life cost of living for people living in Argentina for something, based on things you actually spend money on: rent, electricity, water, food, public transportation, etc: something like 50% (debated what the actual number is, but definitely within the 35% - 65% range.) (Note: it's important to calculate the numbers based on what we spend money on; if you exclude something like "well, the manipulates controls the price of X, and it changed how it manipulates it to get a different price, so we won't count that number", like the change of subsidies for electricity -- then you will clearly get a fictional number, since you're excluding expenses that have zoomed up in price, that people we are paying.

So, that is discrepancy of about 30% -- inflation was something like 30% more than the corresponding devaluation during the course of 2016.

Not to mention, the 13-to-16 fall happened in January, and it was more closely around the 15/16 rate for most of the year after January.

And also, not to mention, that just brought the official peso into line with the blue rate, which most of us were using anyway, so we mostly didn't notice the effects of the devaluation: the blue rate remained mostly unchanged.

During Cristina's years, inflation was about 25-35% annually, though government did not want to admit it, so they replaced the people at the national statistics office with political friends who published figures that said annual inflation was lower than 10%. Everyone knew inflation was 25-30%. In the political denial of the economic problems, the official exchange rate was fixed, but in practice this exchange rate was only in 1 direction: USD could be converted to pesos at an artificial low USD rate, but you could not exchange pesos to USD. To exchange pesos to USD, you had to trade on the black market against the blue rate, which was continuously devaluing in line with inflation.

Macri ended the fixed exchange rate. I exchanged 1 USD for about 16 pesos in December 2015. The exchange rate fluctuated a bit since then, but it is about the same now. The yearly inflation in pesos in 2016 was around 40%. That is why you hear people complain now more than before that Argentina is too expensive. Before, the exchange rate followed the inflation. This relationship seems to have been temporarily suspended, which makes the current situation in Argentina more explosive than usual. It looks like Argentina is repeating its own history and heading for another crash.

If you do not understand the economic policies during Cristina's time as explained above, no one does. The economy and how it is handled in Argentina does not make sense. It is trapped in cycles of busts and recovery that follow each other. Argentina seems to be heading for another bust.

It looks like more like 50/60% with the USD at the same price so, we had 50/60% inflation in USD.

I'd like to see consumer price index, core inflation index, deflator numbers put together by reliable experts. Where can I get those? I've heard all kinds of numbers.

USD : ARS
Jan 1, 2016: 12.9399
Jan 1, 2017: 15.8907

Morgan, change in price due to removal of subsidies should not affect currency exchange rates because the value of the currency has not changed. It's just a matter of shifting costs from one party to another. Though, in some indices of inflation it might be counted. Core inflation is hard to measure.

You raise a good point about the majority of the devaluation occurring early in the year. Exchange rate adjustments precede inflation!

Toon, why do you think the exchange rate has not adjusted as much as you would expect since Macri took office? Do you think he is manipulating the rate to keep ARS strong?

 

[Girino]

I'd like to see consumer price index, core inflation index, deflator numbers put together by reliable experts. Where can I get those? I've heard all kinds of numbers.

The voice of the people said: there is no such number for Argentina as the previous government manipulated these numbers (INDEC, the statistics [background=rgb(243, 168, 163)]institute[/background], gave random number in order to give the illusion that everything was going great).
Mind you... do you know the BigMac Index? Well, they covered also that - they has an agreement with McDonald's so that they could sell in Argentina only if the BigMac price was kept very low.

 

[MorganF]

Tres Picos,

You seem to have a strong commitment to not believing the 100% of users is BAExpats are telling you, in our constant asserting that inflation is substantially higher than the USD:ARS ratio shows. I don't understand why you just don't want to believe people in the ground? Are we all in some mass delusion to believe there is worse inflation than the currency rates (controlled by the government btw) show? With millions of Argies and foreigners living here, changing money to dollars and seeing their peso costs increase, all suffer from this delusion until Tres Picos comes around to tell us that the manipulated currency rate has to be equal to inflation, so the greater inflation rate we all perceive really doesn't exist? Really?

Uncontroversially, the statistics bureau publishes fake numbers; no one takes them seriously.

Tres Picos, you've managed to do something great: unite this forum!!! Usually, everyone disagrees deeply, arguing over which policies are good or bad etc.... but you've managed to find the issue in which we have 100% agreement: there is substantially more inflation than is represented in the government-manipulated currency exchange rates! Thank you for helping unify us

Morgan

 

[Rich One]

Tres Picos,

You seem to have a strong commitment to not believing the 100% of users is BAExpats are telling you, in our constant asserting that inflation is substantially higher than the USD:ARS ratio shows. I don't understand why you just don't want to believe people in the ground? Are we all in some mass delusion to believe there is worse inflation than the currency rates (controlled by the government btw) show? With millions of Argies and foreigners living here, changing money to dollars and seeing their peso costs increase, all suffer from this delusion until Tres Picos comes around to tell us that the manipulated currency rate has to be equal to inflation, so the greater inflation rate we all perceive really doesn't exist? Really?

Uncontroversially, the statistics bureau publishes fake numbers; no one takes them seriously.

Tres Picos, you've managed to do something great: unite this forum!!! Usually, everyone disagrees deeply, arguing over which policies are good or bad etc.... but you've managed to find the issue in which we have 100% agreement: there is substantially more inflation than is represented in the government-manipulated currency exchange rates! Thank you for helping unify us

Morgan

If" Sombrero deTres Picos" (From Manuel De Faya), a musical production by a famous Spanish Composer is a Troll or not its a good exercise to review the current and future economic prospects. I wonder what TP has incorporated for the Value of the US$ WHEN he gets here..?? As well as the Projected inflation.

It's a unique case; some one that does not NEED Home Owners and Medical Insurance .

 

[lamarque]

Simple. The usd is artificially cheap. So, the President rise the price of electricity, gas, water, tall and many other goods he and people close to him owns. So, they receive a lot more pesos that exchange to artificially cheap usd and they send them abroad (Panama papers). However, the USD they are buying so cheap are expensive and the other 40.000.000 people is going to be paying the real pesada herencia for 3 generations because they come from international loans. This fraud was done before during the last dictatorship.

I'm sorry but this must be the most stupid explanation i have ever hear.

 

[lamarque]

I don't actually think the OP is a troll. There are a LOT of people that are ignorant to what the realistic costs are in Argentina. I lived there for 8 years before finally moving back to the USA in 2011. It was once I had a few kids did I realize that I didn't want to raise them in Buenos Aires. Don't get me wrong. I really love Argentina. Beautiful country. But I could see back then that inflation was going to continue.

I had a few companies and it was shocking to see salaries doubling every 3 years. I did everything in white so it was especially painful.

I still own some properties in Buenos Aires and it's shocking the cost of condo fees and expenses. I have some apartments where the HOA fees are more than my big house in California in one of the most exclusive and upscale communities in California.

I don't think it's realistic to say you don't care about your kids education. The public schools in Argentina are horrible. You can't compare it to education in other places where there is a good public education system. That part of your post did come off as a bit trollish. But I have met some people with that mindset. And you know what? Their kids have pretty much ended up losers with no real job prospects in the foreseeable future.

Also, your post about not caring about health insurance doesn't make sense to me. The public health system in Argentina isn't good and I doubt you'd want to take your chances without having coverage. Especially with children. And good quality health insurance isn't cheap now. Good plans are not cheap.

Cost of food I've found is even more expensive than the USA now in Argentina. Cost of clothes (very inferior quality compared to the USA or Europe) are expensive. Electronics are expensive.

Also, although insurance to insure a house isn't expensive, I'd still recommend it. After all, taking a loss on a $200,000 property when you're net worth is only $2M and will drastically shrink doesn't sound like a good risk/reward scenario.

I don't find your estimates of how cheap Argentina is to be realistic. Good luck.

Well i think i had read enough, first of all i went to a public school, did any of you big mouth went to one in argentina? i don't think so, please just shout your mouth close if you don't know what you are talking about. There are impressive public schools as well as terrible ones, depend a lot from the neighborhood, city, etc. Even in the average public school is not that the system is necessarily bad. The biggest problem is that depending on where you are taking your education the composition of the students on the school does make a difference, the average depend mostly from the student situation, if he is from a poor family that just drop him there without any expectations he will most likely perform poorly, while kids from middle class families perform much better. The bigger problem that the public school are facing right now in Argentina is the migration from high and middle class students to private schools or to specialized public schools, this migration cause that more and more student with social problems that where the ones that perform poorly stays in the public making that the level of it get lower, even then the people that goes to the school and studies will perform well in the university. And the original reason of why this migration started is the 2001 crisis, when the teachers start striking for better salaries around there where months without class almost every year that made most of the people including my father to sent their children's to private institutions. I didn't fell any difference in the level between one and the other neither most of my friends from other middle or high class families that followed the same patch, but we had class and the kids in the other school didn't and that made a big difference. I did my kindergarten, primary school and 3 of the 5 years of my secondary school in the public school and seen people that talk about it without having even step a foot in one of them just make me get mad. Of course the public school level has going south since 2004 that was the year i finish the secondary but this has mostly happen for the migration process, still there are a lot of kids that comes from the public school that perform really well, and there are public schools that are really good as well.

Now passing to public health, i used the service a couple of times lately specially when i had some problem and i was uninsured, the true is that the public health system is not bad, mostly people that say so is people that has never used it (i will not be and hypocrite i was one of the persons that always say bad things about it before i actually used it), sometimes i prefer it over the private ones, granted the infrastructure (buildings) in this hospitals are somehow rundown, but they have all the machines and they don't tell you come back in a couple of months, and there are top notch medics in all the fields i went to the hospital Italiano 2 weeks ago and the medic there when he saw that i was uninsured and paying in cash told me to go to the public hospital and ask a turn with him there as he worked half turn in the Italian hospital and half turn in the public hospital fernandez so i don't have to pay for all the expensive studies i'm currently doing. First time i used the public hospital was on an emergency, i have to wait for 1 hour as it wasn't really serious i was just feeling dizzy on my head, they did all the studies on the place including a tomografia computada that in a private hospital would take forever to get a turn. Now the bad things about public hospitals are that to get turns for things that are not urgency, you have to go in person to the hospital a Monday and do a huge queue to finally get your turn for a programmed visit at least here in capital, in the interior of the country is quite easy to get a turn, here in the high complexities centers there are always a lot of people looking for a turn so is not all pink color. The best friend from my father just got a very complex hearth operation in a public hospital not because he didn't has the money to pay for a private one, but because the best medic on the field was in a public hospital.

I had to print my personal experiences with public school and hospitals to make some justice to it, because i see here a lot of talking from people that has no clue about anything of what they are saying, i know is normal to just repeat what some locals that haven't use the public system in their life say about it, i did as well in the past because i was one of this big mouth guys that never has to use the public hospitals in his life and pay the taxes every month to sustain it. Is not perfect for sure but it does his job quite decently and in many areas even surpass the private hospital. In any case is totally doable to pay everything in cash in this country if you want to use a private hospital is not ridiculously expensive, sometimes unless you have some problem that requires you to constantly go to the hospital or if you are old enought to require constant care then the medic plans make total sense but if not you can do it on cash and is not like the us where they will kill you with the price.

Sorry for the long text, i was not even thinking on writing all this. And sorry if my English is not so good anymore my German has really made my English become poorer.

 

[lamarque]

Btw it makes me wonder if the people of this forum read some financial newspaper or has formation on it, you do realize that the exchange rate is not been manipulated by the government right? at least in no active way

The exchange rate is currently been influenced by dollars getting in to buy local shares or bonds that are quite atractive, and this make that the dollar stay put, that generates a even more strong desire to change dollars to pesos to buy more bonds/shares as the dollar don't move so the dollar become an even less atractive investment for argentineans causing even more people to change dollars to pesos and invest them in the local market, this behavior is fueled by the BLANQUEO that has made 100.000 usd that where in black and out of the system get into the system pushing even further down road the dollar value as they can now invest that money on the market, something that was not possible when they where all in black (there are shares that has rize over 300% in a year in dollars and on average the argentinean stock market, "merval", has duplicate it volume and prices over a 1 year period mostly pushed by a new president and lower market risk for argentinean linked papers).

I do financial advising and help people without so much knowledge of the market that want to buy shares or bonds get on with it, the amount of people that has sell their dollars to buy shares or bond is incredible this year, and the more the dollar stay put the more people look for alternatives to get some return over their spare money.

There is a second phenomenon that is the provinces and big companies getting external debt, this phenomenon is not as big as the first one described but does add a push down effect into the dollar value.

Third is that for the following months there will be a lot of dollars incoming for the export of the soy, this year there is a new historic record in production so there will be a lot of dollars getting in by this way.

I Hope this was of some help to put light on an apparently misunderstood situation of why the dollar stays put.

 

[Bajo_cero2]

I'm sorry but this must be the most stupid explanation i have ever hear.

Enlight me! Because the tall belong to the Macri familly and they rised it 100%. And the list is long.