Paraguay V Argentina, Lifestyle And Taxes

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

I know nothing about the issue, but I am curious to see if I understood right.

The pesos has been becoming stronger because Argentina is richer than thought, now that money in black have been flooding the market and the new government was - indeed - able to attract investors as it intended to?

I am genuinely asking, we always this country has a lot of potential and this explanation would mean this potential is finally put to use.
 
The country is poorer every day.
They are taking about 50 billion usd on loans per year:
https://www.google.com.ar/amp/www.infobae.com/economia/2016/11/01/el-gobierno-emitio-deuda-este-ano-por-casi-usd-50-000-millones/%3FoutputType%3Damp-type

But they are wasting them. They are not investing in infraestructure, instead, they use them to feed the financial system. We call it "bicicleta financiera". The usd are expensive but they sell them cheap. Are they stupid? Not, toooooooo smart ;).

The numbers about the usd from the blanqueo are trycky because it allowed to declare them without to bring them back.

This already happened before.

Common people lost their savings several times. Hight financial profit means high risk.
 
I'm sorry but this must be the most stupid explanation i have ever hear.

Right! Stupid me!

http://fortunaweb.com.ar/2017-03-24-188325-se-fugaron-us-4-000-del-pais-en-el-primer-bimestre-de-2017/

4 billions in 3 months...

I'm sorry, you advice about how to invest in a super risky market where the economy is crashing.

Are you going to explain also what was la tablita del dolar?
http://www.argentinahistorica.com.ar/intro_cronica.php?tema=6&titulo=47&subtitulo=214

And you also are going to explain how many times the goverment kept the deposits and gave bonds.

What about the corralito?
 
Right! Stupid me!

http://fortunaweb.co...mestre-de-2017/

4 billions in 3 months...

I'm sorry, you advice about how to invest in a super risky market where the economy is crashing.

Are you going to explain also what was la tablita del dolar?
http://www.argentina...7&subtitulo=214

And you also are going to explain how many times the goverment kept the deposits and gave bonds.

What about the corralito?
uhm sorry Bajo, is difficult to take you seriusly, i understood what you say is all a plot for macri to take all the money to panama, you are totally right lol.
 
I know nothing about the issue, but I am curious to see if I understood right.

The pesos has been becoming stronger because Argentina is richer than thought, now that money in black have been flooding the market and the new government was - indeed - able to attract investors as it intended to?

I am genuinely asking, we always this country has a lot of potential and this explanation would mean this potential is finally put to use.
No, is not because Argentina is richer than thought (every government has known that the argentinean hide around 350.000 millons dollars outside the country, is not something new), is well known that argentines hide their money from the state, that money cannot enter the legal circuit, bank, investment, shares, bonds, options, etc. Now that 100.000 millons usd from that bunch had been legalized and that for the current time there is low risk for the dollar to rise until after the soy harvest or even longer, much of this money that was in dollars is looking for new instruments to invest the money on, this new instrument need to be liquid, so lebacs, shares, companies, ON, fci, etc are good options specially after a year of rally they got more in the focus of the investor and as well of the normal person.
So traditional dollar keepers sell their dollar to get some temporal instrument that gives a better return than the dollar, and that generate a big problem that is the delay on the rise of the dollar value and the subsequent complications for the local exporters and tourism industry.
So it does has it advantages like cheaper financial cost for provincial and national government as well as for business and mortgage, you can now get a mortgage to buy a house, it gives as well a more stable market situation, but it does produce as well many complications the current situation of dollar excess, the goverment knows is a problem but they cannot just go and buy all the excess as that will push the inflation further up.
 
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.

After taxes, etc. do you make a net profit on the properties you still own in Argentina?

I would pay out of pocket for private or use public in cases where it works well, as lamarque said. Sometimes buying health insurance makes sense. Depends on how prone to sickness/accidents you are, the cost of healthcare in the country, and the reliability of the insurance companies. I've only visited one hospital in the last 10 years. It was when I was living in Mexico. I walked into a private clinic uninsured and paid 1,500 USD for an appendectomy. Procedure was done in less than an hour, perfectly, and barely a scar. My friend who was living in the US at the time, had the same problem a couple years earlier and he paid 25,000 USD for the same procedure! Certainly worthwhile to have health insurance in the US. Someone told me it has something to do with the health insurance companies in that system being able to negotiate better rates. I asked about how it work in Argentina but got no responses.

2M after house, vehicle, and some other purchases. Your assets shouldn't drastically shrink if you live within your means which is exactly the reason for this inquiry. Housing insurance like health insurance depends on the numbers and the reliability of the insurance companies. It might be worthwhile but a 10% loss in assets/income would not be catastrophic anyhow so I don't think it merits paying insurance unless the price was good.

Same with other type of insurance policies such as term life insurance. I got a great one from a reputable Australian bank and was unable to find anything nearly as good in several other less developed countries that I searched. The difference was something like a factor of 10! I've found insurance policies in poor countries to be total garbage, essentially scams. Not sure about Argentina.

My current numbers in USD per year are 40k base, 66k including childcare, 85k including income taxes but not bienes. How much do you think they should be?

I'm curious as to why you did not want your kids raised in Argentina. Was it due to issues of heritage, i.e. you wanted them to grow up in the same culture that you did, or something else? Thanks.
 
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.
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.

Great posts. It's very nice to hear from someone who knows Argentina.

You said the impetus for the desertion of public schools by the middle class was the teacher strikes. That sounds true but the same phenomenon is occurring in many Western countries. I wonder if there might not be more fundamental causes, e.g. the increasing economic disparity between classes, increasing diversity of identity, the greater emphasis on social signalling via education, and a culture which makes it impossible to meaningfully punish unruly kids making it difficult for schools to maintain order.
Has the phenomenon been restricted to CABA or is it all throughout Argentina?

To be fair, only one poster claimed Macri was manipulating rates.

Your explanation for the exchange rates is clear. Thank you.

Has there been a lot of foreign money coming into the country to buy shares and bonds in Argentina or is the source mainly the "liberated" Blanqueo money? What were the basic terms of the Blanqueo deal?

What do you think the inflation rate for 2016 was? Here it was predicted to be 21.5%: https://www.focus-ec...ntina/inflation
Was their estimate way off?

Do you think Macri represents a turning point for Argentina or is it a temporary pause from Kirchner type government? What do the demographics say, i.e. who did the young vote for?

Lastly, what will happen with bienes personales?

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

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?

The rate at Jan 1 2016 was not 12,94 pesos for 1 USD, however it was not 16 pesos for 1 USD either. It was about 14,2 pesos for 1 USD. See https://www.valordolarblue.com.ar/ and look to the dolar blue rates. People used the dolar blue rate, not the official rate.

As for why the peso remains strong, I do not know, but it could be that Argentina is experiencing https://en.wikipedia...i/Dutch_disease
The agricultural sector in Argentina is currently booming. This sector may keep the peso strong. Most Argentinians do not profit from a strong agricultural sector. Control of the sector is concentrated among a few rich persons, who saw their wealth increase during the last year.

I think Cristina put more restrictions on the agricultural sector. Also the difference between the dolar soja (is it still used?) and the dolar blue has decreased. During Cristina, the dolar soja was less than half the dolar blue: http://www.thebubble...he-blue-dollar/
Now it seems trading around 10,94 pesos per USD: http://www.ambito.co...fo/?ric=ARSIB=S . The dolar soja can rise 40% before it matches the dolar blue.
 
The fact that the central bank sets rates rather than the market means they are in effect manipulating the money supply, and therefore the currency or am I mistaken? Agree that the drivers could be trade + blanqueo, but government does have a role in the currency xe right?
 
The rate at Jan 1 2016 was not 12,94 pesos for 1 USD, however it was not 16 pesos for 1 USD either. It was about 14,2 pesos for 1 USD. See https://www.valordolarblue.com.ar/ and look to the dolar blue rates. People used the dolar blue rate, not the official rate.

As for why the peso remains strong, I do not know, but it could be that Argentina is experiencing https://en.wikipedia...i/Dutch_disease
The agricultural sector in Argentina is currently booming. This sector may keep the peso strong. Most Argentinians do not profit from a strong agricultural sector. Control of the sector is concentrated among a few rich persons, who saw their wealth increase during the last year.

I think Cristina put more restrictions on the agricultural sector. Also the difference between the dolar soja (is it still used?) and the dolar blue has decreased. During Cristina, the dolar soja was less than half the dolar blue: http://www.thebubble...he-blue-dollar/
Now it seems trading around 10,94 pesos per USD: http://www.ambito.co...fo/?ric=ARSIB=S . The dolar soja can rise 40% before it matches the dolar blue.

From that graph, I can only get the rate for Jan 4 2016.

Official rates:
https://www.valordolarblue.com.ar/
13.510

https://www.oanda.com/currency/converter/
12.9096

http://www.xe.com/currencycharts/?from=USD&to=ARS&view=2Y
13.18594

Large difference. Not sure which is right.

I assumed that by the start of 2016 there was no longer any difference between the official and the blue rate. Apparently there was! Thanks for correcting. Do you still exchange your currency at cuevas?
 
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