Sad But True.

[HMSBeagle]

Thanks HMSBeagle. One other question if you don't mind: how do you come up with an estimate of 30 to 40 - 1 for the currency to be at equilibrium? I see people saying all the time this currency is over/undervalued but what metrics are they using to arrive to that conclusion? Also how do we know that the real estate market is overvalued? Just trying to get a handle on this myself, if it's too complicated of an explanation, is there any articles you can point me to?

I have not done any analysis on paper, I say the peso is overvalued bc the prices are far too expensive in dollars and the plazo fijo interest rates are less than inflation, as usual, so there is no incentive to keep pesos if they are to be spent in Argentina. If the peso can remain at say 16, or any number really, and you can get say 20% to 30% returns and convert back in to dollars, thats a great carry trade and a reason for dollars to chase pesos. But the bought currency always devalues, leaving you with losses unless you get out in time.

As for real estate, again it is my personal opinion. Apartments here selling for 250K, 500K dollars...its insane. There is no financing and its financing that makes high prices possible in the US and elsewhere. Here they sell crappy obsolete unmodernized dwellings in buildings that are not maintained in a country where people earn peanuts and cant get a loan. Sure, in puerto madero and other places there are beautiful modern apartments that are comparable to something in the US, but these are the exception. The only reason an apartments sells is bc either the buyer is foreign or the buyer just sold another overpriced property here and therefore has cash to spend.

Dr. Hanke was the American economist who advised the argie government when they did the 1 to 1 under menem with approval of GHW Bush. he told them what they could and could not do and of course they ignored the donts, sold dollar bonds backed with pesos that were not backed by dollars and the country blew up in 2001. Hanke was very naive in that he did not understand the Argentine. No way Argentines could ever maintain the discipline required to do a 1 to 1. http://www.swiftcointalk.org/politics-society/argentina-currency-board-hanke-imf-uruguay-economy/msg3619/#msg3619

http://www.swiftcointalk.org/swiftcoin-discussion/bitcoin-argentina-malvinas-mas-por-daniel-bruno/msg3625/#msg3625

 

[rickulivi]

Stevied:

Wonderful to read your writings. Unfortunately, too many of this forum's pessimists participated in this topic. No wonder Buenos Aires has so many therapists!

One day I was walking with my wife in a mall in the US and a lady friend of hers came up to chit chat for a few moments. As she left, and we continued our stroll, I asked my wife "Did you see her boobs?" to which she replied with am icy calm, "No". She then asked me, with enthusiasm, "Did you see her diamond RING?", to which I replied: "No, I didn't even realize she had hands!"

You tend to see what you focus on. If you are in Argentina, and you focus on the negatives--and there are lots of them--you most likely will see the future in a negative way. But if you focus on the changes taken place, and their probable impact in the near future, you might see a light at the end of the tunnel.

There are some major structural changes taking place in Argentina right now, and they will have profound impact on its future. For example, the new 30 year mortgages tied to the UVA. They are very expensive, but if you don't have a place to live, they offer you a great opportunity to finance your home. The huge plus of these mortgages, which I am sure will turn out to be very popular, is that whoever takes them will have a stake in making sure inflation keeps dropping, and stays low. That's a monumental change in inflationary expectations. These new homeowners will NOT vote for people they suspect may trigger higher inflation, because it will make their own monthly mortgage payments go up. For first time in decades, homeowners will have a "skin" in making sure inflation stays low. This is an inflation rate tsunami. This new found self interest will destroy inflation.

Stevied, hope to hear about you again, positively.

 

[Stevied]

Stevied, hope to hear about you again, positively.

Yes, actually, the comments on the prices and inflation are more about expressing surprise and concern for my friends and family in Argentina. But you make a good point - so here, in no particular order, are things I love about Argentina:

1. I love how people stop and chat on the street - this is becoming less and less common in the US; people here want to make time for friends and family.

2. I love how people greet you with kisses - there is a closeness here that I don't see or feel in the US, and I love that about Argentina;

3. I love how I can go to movies and have an enjoyable experience - people are still ehaved and civilized here. I stopped going to the movies in NYC because of how disruptive the audiences had become.

4. I love how Argentina doesn't have a "tipping" culture;

5. I love how salespeople in stores generally leave you alone unless you want help;

6. I love the gelato, asado, achuras, medialunas, titas, alfajores, choripan, milanesa a caballo, ensalada mixta con zanahorias, etc

7. I love my family - and since they are Argentinians, I will always love Argentina.

For me, it's not about whether this is a cheap place to live - Heck, I think I would pay more to live here - but it's about enjoying this wonderful culture, where I have been made to feel welcome and family even though I'm the Yanqui from NYC!

What about others? What are your positive thoughts about Argentina?

 

[Girino]

Nice weather.

 

[Somewhereinba]

Nice ladies

 

[Macanudo]

Military spending is not a top priority. Affordable healthcare, higher education and housing.
Great milongas.

 

[TomAtAlki]

Yesterday we went to the opera, we are a group of 6, (but yesterday a group of 9 ) we have season tickets. We saw the opera and went to dinner. We spent the whole day together. Nobody looked at their phone or their watch, we talked a lot, laughed a lot, didn't worry about time. The waiters didn't try to rush us out. Stayed till we were done, divided the bill and took taxis home. I love living in Argentina.
Nancy

 

[gracielle]

Borrowing from Nancy's comments....[background=rgb(252, 252, 252)]spending the whole day together with friends. Nobody looked at their phone or their watch, we talked a lot, laughed a lot, didn't worry about time. The waiters didn't try to rush us out. Stayed till we were done, divided the bill and took taxis home (in my case, taking public transportation home). I love living in Argentina. I don't love living in ARG. I enjoy living in CABA.[/background]

 

[chris]

I agree that waiters don't rush you out as they do in the US - and they aren't looking for 20% or higher tips. I really get tired of wait staff in the US coming around all the time to ask how things are and then leaving the check stating "no rush, whenever you're ready". I always get the feeling that there IS a rush. They want you out ASAP so that the table is freed up for the next tip.

I DON'T agree with the post about leaving you alone in shops. I find quite the opposite. The minute you walk in someone is hovering over you, carefully watching the limited stock. In this sense I feel a lot more freedom shopping in the US.

As for being positive or negative, a lot depends on your financial situation. If inflation is eroding your buying power you may not have enough money to go to the opera, have a leisurely dinner and take a taxi home. Expats are generally in a better financial situation than a lot of Argentines. Life for most people here is a struggle to get by.

 

[MikeB12]

If the peso can remain at say 16, or any number really, and you can get say 20% to 30% returns and convert back in to dollars, thats a great carry trade and a reason for dollars to chase pesos. But the bought currency always devalues, leaving you with losses unless you get out in time.

​Is this why the Merval has been going crazy lately? Stable currency, money coming into the country? From reading the other posts the main drivers are black money being introduced into the financial system and agricultural exports.

I just wonder how much longer the current situation holds. Future contracts have the peso at 17.75 for Dec 17, which is only around a 15% devaluation against the dollar and inflation is estimated to be 20% this year. For people with dollars, Argentina will be more expensive at year end!