Shouldn't life get easier after this...

[jontyjago]

According to this article, will make very little difference

 

[nicoenarg]

I am hoping this isn't going to turn into a "is Argentina going down the drain or not" debate.

I was just wondering about the short term changes that we might or might not see after August 3rd.

 

[sesamosinsal]

I am hoping this isn't going to turn into a "is Argentina going down the drain or not" debate.

I was just wondering about the short term changes that we might or might not see after August 3rd.

The payment of the debt will not make things better or worse. If you want the answer to your question, you need need ask yourself precisely the question you don't want to debate. Based on the data I've seen, it's too early to tell whether the import/dollar controls that drive us nuts are here to stay, or will be lifted in the future. The Argentine economy is not in terrible shape, but it's not in great shape either. Many feel--or at least hope--that 2012 is like 2009 all-over-again, and that the economy will bounce back next year. We shall see.

If tomorrow's unemployment numbers disappoint, I'm sure we can expect Big Ben to save the day next month with round three of QE, though.

 

[genialf]

My guess is now they'll let the peso devaluate (officially). For those who are earning salaries in pesos is bad news, specially if this comes with high inflation (which I'm guessing it will do).

 

[ElQueso]

My guess is now they'll let the peso devaluate (officially). For those who are earning salaries in pesos is bad news, specially if this comes with high inflation (which I'm guessing it will do).

Which to me is the biggest reason why the economy here is not really all that good. Imports are restricted by the government, but the reality is that imports are also restricted by the falling value of the peso. The more it devalues officially, the worse it will get. Argentina does not manufacture enough to ignore the outside world.

Exporters may continue to do well - but what percentage of the population (not money produced related to the GDP) is actually employed by those who export? Most exports are of a commodities nature and do not employ large amounts of people. Even then, exporters are heavily taxed as well to help fund the government's insanity. Then that benefits the growers and the government, but not really the general population.

One of my sister-in-law's friend's parents run a real estate business. She told me the other day that business has dropped to almost nothing for many real estate businesses, specifically related to the restrictions of the dollar - very few are willing to accept pesos for their investments and people now have to justify their use of dollars, when they are even allowed to use them.

No one outside of the country wants pesos unless at a very low price to make short term profits on trades. Hell, the peso was going for 680 guarani to the peso in Paraguay two weeks ago. When I first came here in 2006, it was around 3000 to the peso. Even 680 is not so bad when compared to here, because that put the dollar in relation to the peso, through the guarani, at roughly 6.47 - I wonder how many people here can even buy dollars for that good of a rate on the blue market?

I talked to my money changer yesterday. He doesn't think the payment of the debt will make much of a difference either. He thinks there will remain a good-sized spread between the blue and the official rate until the official rate begins to reflect reality. Payment of the debt does not change the reality.

 

[nodux]

Truth is that the government is buying dollars from exporters at the official rate so it's convenient to them keep getting dollars for cheap, so they are not very interested in letting the dollar go up, it would also make inflation worse. I can see coming something like Venezuela, the official rate there is 4.5 and the blue rate like 8 or 9. They can only spend $400 USD per year on credit cards, stuff like that.
Payment of the debt brought some dollars to the market bringing prices down for a while but in the end it will go up again.

 

[Jaredberryman]

No way. It's only going to get much worse until something explodes. When will it explode? Who knows. The fact they just paid the Boden means nothing--it was all just political manuevering to put themselves in a good light. The fact is, for the money in this country is drying up and every single policy decision that this government has made is making the problem worse. When enough money has dried up, there won't be any money to do anything. Then they'll have to quit paying the "planes de trabajo." Right now, Her popularity is hovering at around %40. As soon as those planes de trabajo are gone, watch that in a month or two it will drop down to about %10. Then something will have to give.

When could this happen? It may even happen this December, who knows. Or maybe next year. But something will happen. A friend of mine that works in a government job told me that this woman has a bank account in Cuba where she is embezzling millions of dollars, then that money goes out to offshore accounts in Switzerland, Gran Cayman, etc. Everyday, my friend sees how government officials sign contracts and then just take half of the money and give the other half for the project. There's only so long that kind of thing can go on. The problem isn't foreign payments--this government has shown that when they don't have any money for that, they just refuse to pay it. The problem is internal.

The atmosphere on the streets right now is just like it was in 2001. Expect something crazy to happen, and expect something soon. Maybe this December, and if not, then at least in the next couple of years.

 

[ElQueso]

A friend of mine that works in a government job told me that this woman has a bank account in Cuba where she is embezzling millions of dollars, then that money goes out to offshore accounts in Switzerland, Gran Cayman, etc. Everyday, my friend sees how government officials sign contracts and then just take half of the money and give the other half for the project. There's only so long that kind of thing can go on. The problem isn't foreign payments--this government has shown that when they don't have any money for that, they just refuse to pay it. The problem is internal.

I've seen estimates that Cristina has money measured in the hundreds of millions in accounts out of the country. That may be an exaggeration, but still...No one really knows what happened to the money from petroleum in Patagonia that Nestor put into an offshore bank account to "keep it safe", as I understand it. Not to mention a lot of other smaller deals and all the corruption he was involved in while he was still alive.

As far as the "coima" that the government workers take from projects, that's been going on for a long, long time.

When I first came here, Siemens had a contract to revamp the immigrations system and upgrade it to more modern capabilities. I talked to one of the guys who was involved on the Siemens side at the time. I don't remember the numbers after so long, but he'd mentioned the cost that had been incurred by siemens (and of course, not covered by the government) was something like twice what was agreed to after all of the corruption and built-in inefficiencies that they were dealing with. They were, at the time, thinking of withdrawing and cutting their losses.

I don't know what ended up happening, whether they ended up finishing the contract or not - someone did, obviously, because immigrations has been modernized. I only knew the guy from Siemens through the guy who was running our development center at the time and only saw him a couple of times. Never kept up with what ended up happening even in the news.

 

[scotttswan]

I've seen estimates that Cristina has money measured in the hundreds of millions in accounts out of the country. That may be an exaggeration, but still...No one really knows what happened to the money from petroleum in Patagonia that Nestor put into an offshore bank account to "keep it safe", as I understand it. Not to mention a lot of other smaller deals and all the corruption he was involved in while he was still alive.

That money was just resting in my account

 

[Dipoots]

protectionism, or rather extreme ones breed inefficiencies... just that you have to pay more for inferior products. wouldn't money be better spent on areas where there is comparative advantage... same amount of money, more activities, more of it to go around.

free trade is not the primary cause of the europe crisis, cheap credit is... cheap credit to allows the Irish to build more homes than the entire demand of Ireland or future generations, cheap credit that allowed the greeks to borrow at rates which befits the german.... cheap credit which allowed the spanish to build useless, unproductive monuments... cheap credit which expose or allowed the irresponsible behaviors in the politicians and businessmen... countries could have used cheap credit to develop productive infrastructure, raise education, technical know how and so on... but no they gorged on real estate and raise salaries without any productive gains... A greek railway worker earned about 80K Euros (??) and the railway was bankrupted.....

Brazil has about five times more foreign reserves than Argentina. Argentina embraces protectionism because it doesn't want the foreign debt. If you run a trade deficit too long, you end up like many of the European countries up-to-their-eyeballs in debt. Free trade is a fantasy.

Everyone agrees that things in Argentina are slowing down, but it's no where near a crisis. It's really quite too early to say. Soybean prices are high; Moreno has successfully managed to bring down the trade deficit with Brazil; and this past week they've been busy, busy, busy meeting with the Venezuelans, the Brazilians, the Chinese, etc. about investments, industrial cooperation, etc., etc. Companies are investing too. Telefonica just announced an investment for 4.5 billion pesos. Small businesses are apparently all over these new 15% APR/3-year term loans. With that said, many things are down: real estate sales, employment, new car sales... But marginally.

I read an opinion column earlier this year, and the author said something to the effect that there's a small fire in one area of the house. They have the resources this year to control it. Next year we'll see if it spreads.