The Mess in Argentina

[Redpossum]

"...my social security check isn't getting me to the end of the month anymore."

And the US Social Security increase for 2025 is projected to be a pittance at 2.5% because the Bureau of Labor Statistics configures and compiles the data, such as excluding food and energy costs, to conform with the Biden regime's false narrative that inflation is under control.

There is an elderly American retired couple in my barrio subsisting on Social Security who are now depleting their savings in order to make ends meet in Buenos Aires.

That's the scenario in which I now find myself, and it's scaring the crap out of me.

 

[LuckyLuke]

No, we cannot move on from that. Forget the messenger and look at the message. For me, it makes perfect sense and I completely agree. Statistics be damned, what matters to me is what things cost, that's the reality of inflation. The reality is that prices continue to climb at a dizzying pace, and my social security check isn't getting me to the end of the month anymore.

I don't disagree with you on that. Expats are being squeezed not only by a domestic price inflation but also by FX intervention. I read recently that if you had invested in a plazo fijo in the last couple months you would have made 20% in returns compared to having kept dollars.

The scary part is according to this recent article:

"Can the zero deficit-zero monetary expansion-2% devaluation programme achieve its goals? Certainly, it can. But if Phase 2 of the plan does not work as expected and the market is not convinced that the current trajectory of the official exchange rate is sustainable, the exchange rate gap does not close by the necessary magnitude or speed needed to lift exchange rate control, country risk does not ease, the government may opt to rectify the exchange rate path flexibly by devaluing the official dollar to unify it with the parallel dollar -from the official towards the parallel-, consider simultaneously lifting exchange rate controls and ensure a unified exchange rate trajectory consistent with an increase in international reserves, to lower country risk and facilitate an economic recovery while shielding fiscal balance and monetary tightening."

Phase 2 of Argentina’s Stabilisation Plan: still time in a race against time - Elcano Royal Institute

What is the future of Argentina's Stabilisation Plan if the government succeeds in achieving its goals quickly?

www.realinstitutoelcano.org

Expats are stuck between a rock & hard place. The government is wholly focused either by market pressure or government dictum to erase the brecha. We are talking a 30% increase in costs for those earning in dollars.

 

[Jimbob]

"...my social security check isn't getting me to the end of the month anymore."

And the US Social Security increase for 2025 is projected to be a pittance at 2.5% because the Bureau of Labor Statistics configures and compiles the data, such as excluding food and energy costs, to conform with the Biden regime's false narrative that inflation is under control.

There is an elderly American retired couple in my barrio subsisting on Social Security who are now depleting their savings in order to make ends meet in Buenos Aires.

Thats the whole point of forward planning and saving for your retirement right? Or is it just piss it all away then make your children pay for it?

 

[steveinbsas]

Expats are stuck between a rock & hard place. The government is wholly focused either by markets pressure or government dictum to erase the brecha. We are talking a 30% increase in costs for those earning in dollars.

Over what period of time are you talking about a 30% increase in costs in dollars?

As I posted recently, my cost of living (what I pay for food, electricity, drinking water, coffee, Netflix, Wi-Fi, LP gas, nafta, house and car insurance, medical exams, property taxes and auto related fees averaged over 12 months, has increased from $175 USD to $350 USD per month since January. I do not pay rent.

PS: As a result of the 100% increase in my monthly COL, I am now also paying twice as much in taxes to the Argentine government than I was paying in January.

 

[LuckyLuke]

Over what period of time are you talking about a 30% increase in costs in dollars?

As I posted recently, my cost of living (what I pay for food, electricity, drinking water, coffee, Netflix, Wi-Fi, LP gas, nafta, house and car insurance, medical exams, property taxes and auto related fees averaged over 12 months, has increased from $175 USD to $350 USD per month since January. I do not pay rent.

PS: As a result of the 100% increase in my monthly COL, I am now also paying twice as much in taxes to the Argentine government than I was paying in January.

Howdy Steve,

The 30% is not a reference to previous inflation or COL increases. It's that once the existing brecha is eliminated your future COL will be another 30% higher. This is in addition to whatever domestic cost increases are occurring in peso terms.

 

[Stephano]

Oh the irony…
I did not come here in Buenos Aires just because it is was cheap and the blue dollar, but when I did I thought that it was so affordable that even if prices had doubled overnight I would still have made it quite comfortably. Fast forward one year and this is pretty much reality, as pointed out by Steve.
In many places in the city I now see European prices, maybe not Northern Europe, but similar to those in Italy, Spain or Greece, while there the average wage is much higher than here. I am wondering how this is sustainable in the long run, not just for the expats, but for the Argentinians as well.

 

[Redpossum]

Thats the whole point of forward planning and saving for your retirement right? Or is it just piss it all away then make your children pay for it?

Certainly I can understand how this would seem entirely reasonable from a young man's point of view. About all I can say is, it was never that easy. How exactly do you prepare for retirement while working for minimum wage plus tips?

I lost 90% of the value of my 401K when the Dot Com Bubble burst in 2001. And then in 2007 when Lehman Brothers went tits-up and set off the whole subprime mortgage meltdown, I lost almost all of what I had subsequently rebuilt. I also lost my job, and never again had a decent job after that. My point being that while I should have diversified my portfolio more, it's not like we all ignored the issue of retirement. There were major financial shocks along the way that made things much tougher and more complex than you might think.

Instead of blaming your fellow working men & women, (and thus falling prey to the whole divide & conquer strategy), I would respectfully suggest that you should look at the princes of Silicon Valley, the wolves of Wall Street, and of course the politicians most of all. Once upon a time back in the mid-90's, I had a career in IS. Then Bill Clinton massively expanded the 401K visa program (in truth just a modernised system of indentured servitude). A flood of foreign IS/IT workers entered the USA, and American tech workers lost their careers by the tens of thousands. And all this was done so the lords of Silicon Valley could maximize their profits with cheap labor, rather than paying a decent wage to their fellow Americans.

 

[LuckyLuke]

Certainly I can understand how this would seem entirely reasonable from a young man's point of view. About all I can say is, it was never that easy. How exactly do you prepare for retirement while working for minimum wage plus tips?

I lost 90% of the value of my 401K when the Dot Com Bubble burst in 2001. And then in 2007 when Lehman Brothers went tits-up and set off the whole subprime mortgage meltdown, I lost almost all of what I had subsequently rebuilt. I also lost my job, and never again had a decent job after that. My point being that while I should have diversified my portfolio more, it's not like we all ignored the issue of retirement. There were major financial shocks along the way that made things much tougher and more complex than you might think.

Instead of blaming your fellow working men & women, (and thus falling prey to the whole divide & conquer strategy), I would respectfully suggest that you should look at the princes of Silicon Valley, the wolves of Wall Street, and of course the politicians most of all. Once upon a time back in the mid-90's, I had a career in IS. Then Bill Clinton massively expanded the 401K visa program (in truth just a modernised system of indentured servitude). A flood of foreign IS/IT workers entered the USA, and American tech workers lost their careers by the tens of thousands. And all this was done so the lords of Silicon Valley could maximize their profits with cheap labor, rather than paying a decent wage to their fellow Americans.

This is exactly how entire generations become forgotten and impoverished, which subsequent or previous generations don't understand. All it takes is 1 or 2 crises to occur during important wealth transitional periods (such as buying a house, getting a degree, opening a business, etc.) to cripple the momentum necessary to retire well.

 

[LuckyLuke]

Oh the irony…
I did not come here in Buenos Aires just because it is was cheap and the blue dollar, but when I did I thought that it was so affordable that even if prices had doubled overnight I would still have made it quite comfortably. Fast forward one year and this is pretty much reality, as pointed out by Steve.
In many places in the city I now see European prices, maybe not Northern Europe, but similar to those in Italy, Spain or Greece, while there the average wage is much higher than here. I am wondering how this is sustainable in the long run, not just for the expats, but for the Argentinians as well.

I have wondered this myself. I have come to realize that Argentinians, having weathered many crises, are incredibly resilient. There are many more layers of the economic strata (before you fall through the cracks) in Argentina than in the US and they are quite adept at living on very little when needed.

 

[Redpossum]

This is exactly how entire generations become forgotten and impoverished, which subsequent or previous generations don't understand. All it takes is 1 or 2 crises to occur during important wealth transitional periods (such as buying a house, getting a degree, opening a business, etc.) to cripple the momentum necessary to retire well.

I thank you for your kind words. They are much appreciated.