The Next Currency Crisis-Any predictions?

[NikBaires]

I used to play a game in Argentina in which I would actively see if I could spend $100 pesos in a night (6 years ago). My new game is trying to leave the house without spending $100 pesos.


An average white collar Argentine position pays $2,500 pesos per month minus rent and other fixed expenses. The math doesn't add up!


Argentina on average experiences a currency or other crisis related to money every 10 years. The last one was Dec 2001. It's now 2011.


Any predictions on what will happen and when?

 

[gouchobob]

The next crisis is on its way takes to the current governments policies. Bad things happen eventually when bad decisions are made. The government has been lucky that there has been a boom in Brazil and in commodities. This won't last forever, my guess sometime in the next 1 to 2 years the worm will turn.

 

[mini]

I enjoyed playing the 4peso per person per day meal program... It was fun. Not sure I'd want to do it for real though.

Can't help with the predictions. Anyone know any psychics?

 

[Napoleon]

I don't think that there will be a crisis any time soon.

Yes, there will be inflation.
Yes, there is some instability in the world.

But as long as Argentina can grow food (and with the rich soil and the abundance of water in the country, it's virtually assured that they will always have good harvests) and the country continues to run on cash vs. credit, I don't see a "crisis" any time soon.

Subtle changes? Yes.

Crisis? No.

PS- The exchange is OVER 4:1 for Pesosollar.

Sell: 4.015
Buy: 4.055

 

[dr__dawggy]

I don't think that there will be a crisis any time soon.

Yes, there will be inflation.
Yes, there is some instability in the world.

But as long as Argentina can grow food (and with the rich soil and the abundance of water in the country, it's virtually assured that they will always have good harvests) and the country continues to run on cash vs. credit, I don't see a "crisis" any time soon.

Subtle changes? Yes.

Crisis? No.

PS- The exchange is OVER 4:1 for Pesosollar.

Sell: 4.015
Buy: 4.055

Well, if the past is prologue.....there will be another crisis sooner rather than later. The chart on the economy in Argentina looks like a roller coaster with glorious highs followed by steep drops every 7 to 10 years for the past 50 years or so. This despite its agricultural prowess.

 

[perry]

I don't think that there will be a crisis any time soon.

Yes, there will be inflation.
Yes, there is some instability in the world.

But as long as Argentina can grow food (and with the rich soil and the abundance of water in the country, it's virtually assured that they will always have good harvests) and the country continues to run on cash vs. credit, I don't see a "crisis" any time soon.

Subtle changes? Yes.

Crisis? No.

PS- The exchange is OVER 4:1 for Pesosollar.

Sell: 4.015
Buy: 4.055

I agree with you on this one Napoleon . As Argentina is one of the breadbaskets of the world with just 40 million people I cannot for the life of me see any crisis soon . The cost of food , grains, and other commodities are predicted to rise incredibly the next years bringing billions to Argentinas coffers.

The peso will not devalue to 5 pesos per dollar but the dollar will devalue against the peso first leaving people like Gouchobob and his cohorts with eggs on their faces .

 

[bsas]

The peso will not devalue to 5 pesos per dollar but the dollar will devalue against the peso first leaving people like Gouchobob and his cohorts with eggs on their faces .

I'll risk the egg on my face, and go out on a pretty thick limb and say that this just won't happen, but its nice to think that a perfect storm will help Argentina rise permanently above the consequences of the absolute idiocy of its governing class (all political parties).

Argentina will go into crisis after commodity prices drop. The government has not changed its M.O., and is expecting to get different results from previous economic cycles. Its pretty much always the same in Argentina.... the infamous 10-year cycle.

1. Crisis, peso falls, poverty increases.

2. Drop in peso's value on international market brings down costs for businesses around the country. Leads to more jobs, more exports, more tax income. Standard of living rises.

3. Exporters bring in more dollars, which would strengthen value of peso (as has been seen in Brasil) However, Argentina responds by printing pesos to buy these dollars (Central Bank purchases on the open market are over U$800 million this year) Peso/dollar value remains stable, inflation increases in both Peso and Dollar terms.

4. Government places heavy taxes on most lucrative industries to pay for its constantly rising expenditures, but is still forced to issue bonds to cover the deficit. Serves to cover immediate needs but dissuades much long term investment. Argentine businesses aren't able to compete internationally as a result of rising costs.

5. Drop in commodity prices lead to a decrease in government revenues, drop in the demand for pesos (exporters must buy pesos with the dollars they get) Value of peso starts to fall, government faces temptation to print more pesos to cover the rising deficit.

6. Snowball effect that has been seen over and over as private citizens rush to get rid of their pesos. Value of peso continues to drop.

7. Crisis, return to #1.

I wish it wasn't this way as I love Argentina. I've spent countless hours questioning why a country as rich as this can't seem to get it right. So it brings me no satisfaction to see it in crisis.

 

[citygirl]

bsas - I wouldn't disagree with anything you wrote.

I've heard a lot of argentines saying it will rise after the election, eventually going to 5:1. But that may be wishful thinking since most of them have dollars

Argentina is historically a 10 year boom/bust cycle. 2011/12 don't look rosy from where I'm sitting. Certainly nothing like 2001 but honestly, I'm not hopeful. Which again, depresses me to no end since this is home. But hey, what's 30% inflation a year - it's Argentina, it's all good.

Sigh....

 

[Tangerine]

I agree with you on this one Napoleon . As Argentina is one of the breadbaskets of the world with just 40 million people I cannot for the life of me see any crisis soon . The cost of food , grains, and other commodities are predicted to rise incredibly the next years bringing billions to Argentinas coffers.

The peso will not devalue to 5 pesos per dollar but the dollar will devalue against the peso first leaving people like Gouchobob and his cohorts with eggs on their faces .

Give me 4000 A$R or 1000 U$D that I can not spend until Feb. 2013. I’ll take the U$D, thanks.
BTW the US economy will go deeper into the toilet ahead of the Nov. 2012 elections in order to affect the elections.

 

[bsas]

bsas - I wouldn't disagree with anything you wrote.

I've heard a lot of "connected" argentines saying it will rise after the election, eventually going to 5:1. But that may be wishful thinking since most of them have dollars

Argentina is historically a 10 year boom/bust cycle. 2011/12 don't look rosy from where I'm sitting. Certainly nothing like 2001 but honestly, I'm not hopeful. Which again, depresses me to no end since this is home. But hey, what's 30% inflation a year - it's Argentina, it's all good.

Sigh....

Yeah, its a sad thing for me too because I consider Buenos Aires to be home. I've been doing business the past couple of years in other South American countries and spending less and less time in Argentina because I don't trust putting any money in the country. I also know many people that love Argentina, but are unwilling to take any risk in the country and are keeping their money on the sidelines or investing elsewhere. The government isn't hurt by it, they just keep stuffing the money they can get into their swiss accounts. Its the people that face the consequences, and some of those people are very good friends of mine. I just wish that I could see a light at the end of this very, very long tunnel.