The coming USA currency crisis and Argentina

[HotYogaTeacher]

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

This is my opinion. I think the Argentine government has a negative impact on everything financial for Argentines and expats alike. Between taxes, IVA (another form of taxes on top of taxes), aduana fees, bribes, outdated and basically useless and unmanageable rules and regulations that help nothing and make business near impossible the Argentine government effectively hamstrings it's people from being able to compete in a global economy. It hurts everything. There are no real, meaningful protections for business people or consumers, yet every dollar or peso traded is either traded illegally or forced through a needle eye of bureaucratic inanity that brings reasonable, intelligent people to their knees. No one wants to pay taxes because they don't benefit from them and no one wants to do business on the up and up because it is so convoluted. The Argentine government needs to get out of it's people's way....

 

[objectiveous]

Personally I think there has been a problem in household debt in the U.S. but the idea that the dollar is going to collapse anytime soon is way overdone.

Folks might find this talk [1] by Elizabeth Warren interesting. BTW, this talk was given before she was appointed to the Congressional Oversight Panel. What I find most alarming about the facts she presents (minute 00:09:00), is that in the face of rising median family income, people chose consumption over saving ultimately bidding up the prices of homes.

[1] http://www.youtube.com/watch?v=akVL7QY0S8A

 

[gouchobob]

Lucas, the fact that Argentina's lack of judicial security was criticized by a representative of the Obama administration does not necessarily invalidate the statement. The Obama official was pointing out a fact that I have heard from countless Argentines: there is a general lack of judicial security which scares off potential investors, both Argentine and foreign. Just look at what happened to Argentine bank depositors as a result of the last crisis: dollar accounts were converted into peso accounts at a fraction of their value. Countless law suits began. Some people got their money back, generally only part of it, after having to pay lawyers a percentage and suffering the anxiety of losing what amounted to life savings for many people. The statement of the Obama official would be hypocritical if what he advocated were solely in the interest of the US. The fact is that his criticism is true and the present situation hurts Argentines more than US interests.

I ran across this other day and it is a concrete example of what Sergio and others are talking about. A link to the full article is below but a quote from it follows:

Here's a story I heard last week from a onetime foreign investor in Argentina. The thing that drove him out of the country was a 5 percent tax on his company. Five percent may not sound like much, but what mattered was not the amount of the tax. It was the way it was imposed. The tax was not enacted by Congress. It was not even ordered by the president.


One fine day, one of his operations received a letter from a government ministry with a sudden demand for payment. As far as he could tell, the demand was ungrounded in any law. He litigated the matter and (eventually) prevailed. But a country where the government could remake the rules at any time was no country for him.


http://www.cnn.com/2010/OPINION/01/...sons.left.right/index.html?section=cnn_latest

 

[marksoc]

From your CNN link:

David Frum writes a weekly column for CNN.com. A resident fellow at the American Enterprise Institute, he was special assistant to President George W. Bush in 2001-2.

Hardly a not-interested source. We could directly open or veins and pump our blood through tubes to the AEI, to save this guy so much trouble.

 

[gouchobob]

From your CNN link:

David Frum writes a weekly column for CNN.com. A resident fellow at the American Enterprise Institute, he was special assistant to President George W. Bush in 2001-2.

Hardly a not-interested source. We could directly open or veins and pump our blood through tubes to the AEI, to save this guy so much trouble.

Maybe, but it doesn't invalidate the point he is making.

 

[steveinbsas]

...But a country where the government could remake the rules at any time was no country for him.

That's interesting.

Don't goverments remake rules all the time?

Especially now, and particularly in the USA?

 

[gouchobob]

That's interesting.

Don't goverments remake rules all the time?

Especially now, and particularly in the USA?

Sure they do but its done in a process with reviews chances to voice opinions and is subject to judicial review, not on the whim of one guy from day to day like here.

 

[steveinbsas]

Sure they do but its done in a process with reviews chances to voice opinions and is subject to judicial review, not on the whim of one guy from day to day like here.

The "rules" have been remade overnight many times in the US.

My favorite example is Nixon's wage and price controls of the 70's.

And there are many other examples of "executive orders" eminating from the office of the president (that's in the USA) that have remade the rules without legislative action or the "consent" of the governed.

Judicial reveiw can also be a farce (even at the level of the Supreme Court).

Just ask (former) GM bondholders.

Or the 2000 supporters of Al Gore.

 

[gouchobob]

The "rules" have been remade overnight many times in the US.

My favorite example is Nixon's wage and price controls of the 70's.

And there are many other examples of "executive orders" eminating from the office of the president (that's in the USA) that have remade the rules without legislative action or the "consent" of the governed.

Judicial reveiw can also be a farce (even at the level of the Supreme Court).

Just ask (former) GM bondholders.

Or the 2000 supporters of Al Gore.

Steve its all relative no system perfect, the one here is awful. You can find some problems in any system and I could name a lot more in the states, but on the whole the system works. Here nothing works and thats why there is very little investment foreign or domestic and also why Argentina economic decline continues to this day.

 

[steveinbsas]

Steve its all relative no system perfect, the one here is awful. You can find some problems in any system and I could name a lot more in the states, but on the whole the system works. Here nothing works and thats why there is very little investment foreign or domestic and also why Argentina economic decline continues to this day.

I have previously posted that I would not start a business here, but I have no qualms about my real estate purchases here, especially my second one (the PH in Nunez). You imply (actually, I think you have clearly stated) that even real estate purchases are unsafe, but I have yet to hear of any foreigner who lost property in BA due to a seizure by the government. As you said, the victim of the tax scam actually did prevail in the court system, though I'm sure it was an agonizing process.

Nonetheless, that doesn't really support your sweeping generalization that nothing works here, does it?