The coming USA currency crisis and Argentina

[steveinbsas]

You can go back through this site and find predictions of an imminent collapse of the dollar from years ago.

I don't think the value of the dollar is a major factor in real estate here. The big negative in Argentina for real estate or any other investment is the Argentine government.

Could you please explain why you think the Argentine government has a negative impact on owning real estate in Argentina?

 

[Cangurito]

The people here are reaponsible for the governments they choose to elect and without a responsive judicial system investment will continue to be thin.

The dollar collapse is not imminent and will happen over several years.

Interestingly, argentina is being protected from the credit crunch through it's own internal financial mismanagement.and corruption. Investors, frightened of government policy steered clear of argentina, invested in the usa and were burned.

 

[fifilafiloche]

Smirkypants, the sky began falling economically speaking in 2007. The financial cyclone has not passed and we are in the eye of the storm. Don't be fooled into thinking the worst is over.

Next: commercial real estate defaults, more money printing, less money lent by chinese, higher interest rates, lower dollar.

The us spends more than it makes and debt per family is around 18,000.

Total debt per household in the US is exceeds 2,000,000 USD : http://en.wikipedia.org/wiki/US_total_cumulative_debt_per_person

There are some suggestions that the total cumulative debt, the sum of: all governmental debt plus corporate debt plus personal debt divide by the total US resident population (around 305 million), in the US may be around 700,000 USD per person or about 2.17 Million per US census household (of 2.28 people per household)

 

[notebook.fix]

Very interesting thread, thanks for starting it Cangurito.
My question is around the subject of 'D E R I V A T I V E S'.
This is supposed to be the real ticking time bomb.
Anyone have any thoughts to share on this?

 

[gouchobob]

Could you please explain why you think the Argentine government has a negative impact on owning real estate in Argentina?

With a decent government you would have more economic activity, more people with more money, investing in and buying real estate. The current government is continuing the policies which have led to Argentina's decline in the last 100 years. Poor policies have greatly retarded Argentina's economic potential and negatively impacts real estate along with the rest of the economy.

 

[ULDB65]

There are some suggestions that the total cumulative debt, the sum of: all governmental debt plus corporate debt plus personal debt divide by the total US resident population (around 305 million), in the US may be around 700,000 USD per person or about 2.17 Million per US census household (of 2.28 people per household)

Statistics are fun like that- you can make them say whatever you want. The calculations you list here add all the debt, but forget to count it as assets to someone else.

Mortgage Company A owes $1 to Investment Company B, who owes $1 in taxes to the Government, who owes $1 to a citizen bondholder, who owes a $1 mortgage back to Company A. Your statistics count it as $4 of debt, but its really the same one dollar being passed around. If everyone paid off everyone else, there wouldn't be so much actual debt left. But all that money passing around makes the economy go and keeps people working.

 

[sergio]

I can't check right now but I don't recall the dollar amount being stated on post devaluation deeds. Maybe someone in the real estate industry can clarify this. Even if it is, it makes no difference as sellers will just adjust their prices to reflect what they want in real terms. There's no doubt that the US economy is in a crisis however a real collapse of the dollar will affect the entire world and Argentine will not be spared. I agree with the poster who said that the real determiner of what will happen to real estate is the Argentine government. Decisions in Argentina are made in an autocratic way with constantly changing rules and laws. The unpredictability of the country and the lack of judicial security (a little reality brought into the open by a US diplomat who was greeted with absolute rancor by the current Argentine government) are the principle factors in stunting international or even domestic investment.

 

[thomashobbs]

The dollar has actually strengthened a bit in the last month. It can't go to zero. If the euro keeps rising it will choke off their export industries. Spain already has 20% unemployment and looks a lot like Argentina just before the crisis. All the world's major economies can't simultaneously devalue their currencies. Against what? Martian Pesos? Venutian Dinars? Just when everyone is saying the sky is gonna fall is exactly the time to buy.

 

[gouchobob]

Statistics are fun like that- you can make them say whatever you want. The calculations you list here add all the debt, but forget to count it as assets to someone else.

Mortgage Company A owes $1 to Investment Company B, who owes $1 in taxes to the Government, who owes $1 to a citizen bondholder, who owes a $1 mortgage back to Company A. Your statistics count it as $4 of debt, but its really the same one dollar being passed around. If everyone paid off everyone else, there wouldn't be so much actual debt left. But all that money passing around makes the economy go and keeps people working.

I agree and I think a lot of this stuff that the dollar will collapse is overdone, although there are still big problems in the USA and the economic recovery is going to be very slow and anemic due to necessary de-leveraging that's needed and occurring in the economy.

To get a better perspective I think you should look at public debt and what percent it is of GDP(a measure of how well the economy can service the debt). If you look at it this way the US doesn't look great but a lot better than many countries including most in Western Europe and nobody is talking about the collapse of the Euro.

http://en.wikipedia.org/wiki/List_of_countries_by_public_debt

The primary reason for the weak dollar today is very low interest rates in the U.S. which will probably end in the next year or so. After that it's anybody's guess, exchange rates are notoriously hard to predict.

 

[Lucas]

Decisions in Argentina are made in an autocratic way with constantly changing rules and laws. The unpredictability of the country and the lack of judicial security (a little reality brought into the open by a US diplomat who was greeted with absolute rancor by the current Argentine government) are the principle factors in stunting international or even domestic investment.

This is one of the most hypocritical statement I've read, sometimes I can not believe what is written without a clue about the history of this country, intervention and foreign interference which was very embarrassing and continues to be in this nation. It's easier to blame the government with a subjective statement of paternalism and authoritarianism discharged by an emissary of a foreign power. All they want is the same situation that prevailed with the governments of the 90s, the current government will never allow this to happen again "free for all" to do whatever them wish, the party is over like it or not.