These prices are killing me

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MPDC

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TatanBsAs are you complaining about our complaining? That's good. We all need a place where we can gather and discuss the things that we enjoy, that annoy, or simply a place where we can go to ask for help or support. This is our place. Open to anyone.
I like my adoptive home of Argentina and I dare say most here do. In my experiance anything that hits you in the wallet is painful. So for whatever reasons people have flocked to this great part of the world they are beginning to feel the growing pains of a changing country.
We're all feeling it, expats and Argentines alike. My Argentine friends complain about the prices as well. I am certainly no economic expert but, as a few of us have pointed, the experts are on the lookout and there are concerns for the future.
I think we all love this country and only want the best for it. Yea, high prices hurt but understand we're not the only ones talking about it. It sucks...but don't playa hate.
On a lighter note, I respect the fact you came on here to let us know how you feel as an Argentine and did not hide as a silent citizen behind your screen name.
 

twin

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Panama was mentioned in this thread . This is a link to a soure (newspaper) full of info re that country. If the FAQ link is used you'll be brought to a page with links to various blogs and a few other newspapers.(admin. might want to move this elsewhere). A recent change in tourist visa laws has lots of campers very unhappy.
http://www.noriegaville.com/
 

TatanBsAs

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Ramon, Don’t take it personal. I said "a lot" not "all" of the expatriates came to Argentina with that purpose in mind. Take a look at all the blogs and newspaper articles. Second, I did not tell anyone to leave. All I said that if Argentina was not as inexpensive as before, then you should look some place else to live. I was not being condescending, I was just explaining my perspective. Last but not least I am entitled -I have a right- to express my mind as long as I am not disrespectful. And I wasn’t.

Syngirl. "....actually, this was all to be expected, and it's just surprising that it's only taken 5 years to happen".

There is an argentine saying that says "it’s easy to predict Sunday’s news with Monday’s newspaper". Nobody predicted Argentina´s current economic situation. In fact, in 2001 some of the most prominent Argentine financial consultants were predicting an exchange rate of 10: 1. Something that never took place. Nobody predicted Argentina’s economy to grow as fast. I do not deny that there is inflation and that if it is not properly dealt with, it will become a huge problem, all I am saying is that people here are concerned about their pocket then the situation of society in general. People have raised questions regarding why there is such a high inflation rate. One of the reasons is because Argentines have more money but the amount of goods has not grown –this is something that needs to be corrected. I am not an economist, but seeing that you quote the The Economist, I suggest you read what Stiglitz –Nobel Prize winner- has said regarding the Argentine economy

Also, the post crisis reform was not Kirchner´s but rather Lavagna´s who was designated as Minister of Economy by Duhalde. Regarding the exchange rate, let’s suppose that the exchange rate is 2,10 per dollar. My question is what will happen with all of the workers who during the 90´s were unemployed and are currently working in factories reopened (reopened because it no longer made sense to import products, but instead manufacture them). At the same time, the current exchange rate is a barrier similar to the ones used by other foreign countries to protect their local industries. As with regards to the IMF, during the 90´s Argentina was its best student and look where it got us.

MPDC, you are right. And you along with other people here are complaining that I am complaining that they are complaining. Most of the posts are complaints, not may positive things are said. My point is not that there is no inflation, because there is and affects me as it affects all Argentines. My point was that many expatriates took advantage of the situation of Argentina post 2001 crisis and now that there is inflation, they complain. It seems to me that some people are more worried about how the increase in prices affects their pocket, more so than the situation of most argentines.



Sebastian
 

realba

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"syngirl" said:
In my opinion for longterm growth this country really has got to start investing in mining & exploration. It's ridiculous -- education here still seems to favour arts, law, and accounting, when really they have got to get into engineering -- particularly in oil, gas, and mining.
That's a really good point that i completely agree with. Over here in Chile, around 60% of the country's exports are based on the extraction of copper, other metals and minerals. It's highly lucrative. Argentina has vast metal and mineral reserves, especially in the north west but a complete lack of investment in this area (both in brains and physical machinery) has left Argentina way behind in this market. Chile has major business advantages over Argentina (low corruption, open market, low import-export tariffs, respected and reliable financial systems to name a few) but the fact is that sucessive Argentine governments has ignored this industry. That's both incompetent and irresponsible.

Argentina has the resources to be successful. It has the resources to be far more successful than Chile could ever dream of. But it needs to make some big changes. The structural changes that were made to the Chilean economy and that have allowed the country to succeed in recent years were made during a brutal 17 year dictatorship when the people couldn't complain. God forbid that should ever happen again. But that's the type of environment in which these changes need to be made-when economic experimentation by the government won't be revolted against. That's not an option in Argentina (and hopefully nowhere else) so it's unlikely the changes required will be able to be pushed through without major social upheaval. The government won't ever risk it.

The current administration's stop-gap economic solutions are coming undone. I've been saying that this would happen for a year. Fundamental structural changes are needed in Argentina's economy for the country to leave behind its boom-bust cycle.

And it's not just in mining that Argentina's policies have left the country behind. Due to fixed energy prices there's been virtually no investment in in electrical plants and gas exploration. This has lead to energy shortages that impinge on the country's economic growth. This article in the FT is quite interesting.

http://www.ft.com/cms/s/505ba3c8-1883-11dc-b736-000b5df10621.html

What's needed is a good cultural exchange program...Argentines come to Chile and teach them how to be happy and Chileans go to Argentina to teach them how to run decent financial and economic systems. It's a win-win situation :)
 

realba

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"TatanBsAs" said:
MPDC, you are right. And you along with other people here are complaining that I am complaining that they are complaining. Most of the posts are complaints, not may positive things are said. My point is not that there is no inflation, because there is and affects me as it affects all Argentines. My point was that many expatriates took advantage of the situation of Argentina post 2001 crisis and now that there is inflation, they complain. It seems to me that some people are more worried about how the increase in prices affects their pocket, more so than the situation of most argentines.




Sebastian
What attracted many expats to Argentina in the first place was the price. After all, when BA was as expensive as most European cities in the 90s, no one went to Argentina. I would expect the same to happen again if inflation and/or the exchange rate make BA that expensive again. Flights are cheaper to Europe from the States than to Argentina and i think if you gave the average tourist the choice between Paris and BA at the same price, most would pick Paris. Of course one of the major attractions of BA is that you can find the most incredible apartment for the price of a London doorbell. And despite my belief that property is overvalued in Argentina, there's no denying that compared to Europe these beautiful properties are 'good value'. Maybe no in terms of the local market but you simply can't find such attractive properties for so cheap in Paris, Madrid or London.

So yes, many expats are worried about inflation because they've been living to a level way above what they could afford in their own countries. That standard of living is coming to an end and they're understandably right royally pissed off. Pretty soon, they'll have to re-join the real world. And the real world generally sucks!
 

nikad

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Prices are going higher and higher, and for the everybody ( wether they make pesos or dollars ) it means adjusting... For the people that came to BA just because it was cheap, it is getting less and less attractive. I earn dollars and I can buy less and less. However, apart from the Menem era, the dollar was never cheaper than the peso. I have also read that it was benefitial for the US during this past and current year to have a ¨weaker¨ dollar worldwide, since they were paying off debts. I am no economy expert though.
Regarding properties, there is no doubt that there is a RE bubble here, according to most experts, prices should reaccomodate at 20-25% less than what they are now at. Buying right now is not good business, and for God´s sake, I don´t understand people that keep comparing Bs. As to NY, Paris, London, etc, are they blind??? I love my country and was born here, but you have to be objective South America is not Europe and Europe is not the US...nik
 

syngirl

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Sorry Sebastian, by my "this was all to be expected" referred to the eventual rise in inflation due to Kirchner's bandaid tactics -- holding the 3:1 when it should be around 2.10:1, using bullying tactics to force the farmers etc to sell their meat for low prices.
Financial consultants will tell you that the current rise in costs seen by the consumers in Argentina was expected to happen -- it was just surprising that K's managed to hold it off as long as he did.
From Economist December 2006:
The durability of economic recovery has surprised many. But is the government mortgaging the country's future?
IN DECEMBER five years ago, crowds of Argentines angry at years of deflation and recession took to the streets of Buenos Aires and ousted the president, Fernando de la Rúa. Amid chaotic scenes, three further presidents came and went in ten days, one of them declaring the biggest-ever sovereign debt default. In what a century ago was the world's seventh-richest country, the economy shrank by 15% in the year to March 2002, poverty rose from 38% to 56% and unemployment climbed to 21%.
To the surprise of many, recovery from this national catastrophe has been swift. Since the nadir in March 2002, Argentina's GDP has grown by 45%, an average of 8.6% a year. “You have to look back to the Argentine golden age to see this [rate of growth],” says Ricardo Delgado of Ecolatina, a consultancy. “No one was expecting it.”
The question, as it has been for the past four years, is how long the growth can continue. The debate has an ideological edge. Supporters of the fixed exchange-rate that brought growth and then collapse in the 1990s have poured scorn on the sustainability of the recovery. Fans of Néstor Kirchner, the president since 2003, like to claim that Argentina will continue to grow apace because it shrugged off the IMF's advice and is following “heterodox” policies.
Many economists in Argentina are now coming round to the view that the country can continue growing at a reasonable rate—partly because some of the policies are less “heterodox” than is claimed.
At a brutal cost, the collapse rebalanced the economy. A steep devaluation and the debt default turned deficits in the public finances and the current account into surpluses. Roberto Lavagna, the finance minister from 2002 to 2005, kept spending under control. The government relied mainly on monetary policy to boost demand. The central bank stopped the peso from appreciating, issuing pesos to buy up exporters' dollars. The government meets its fiscal targets partly by taxing farm exports, which are unusually profitable because of the artificially cheap peso and high world prices.
These policies have had the effect of supercharging growth. Their obvious drawback is inflation, which began to rise again in 2004 as spare capacity was used up (see chart). Mr Kirchner's response was to bully producers with “voluntary” price-freezes, outright price controls and export bans. Similar tactics caused several foreign investors, such as France's Suez and EDF, in privatised utilities to pack up and go.
Mr Kirchner's critics said these measures would halt investment. Anyway, they said, investment was of the wrong kind, in housing rather than factories. So far they have been wrong. Argentina does lack foreign investment. But its own smaller companies have moved quickly to expand capacity in response to demand. The boom in construction and tourism has created many new jobs. Overall, investment has almost doubled as a percentage of GDP since 2002, from 11% to 21.4%, enough to sustain growth of 4% a year. “Most people thought that security, credibility and structural reform were the key to attracting investment,” says Javier Alvaredo of MVAS Macroeconomía, a consultancy. “But it's actually profits.”
Some serious doubts remain. The biggest worry is energy. Because of the price controls Argentines pay less than half as much for energy as their neighbours in South America's southern cone, according to Daniel Montamat, a former energy secretary. In this industry, the arguments of Mr Kirchner's critics ring true. Consumption has risen but investment has collapsed. Argentina has depleted its gas reserves, from 15 years' worth of production to fewer than ten. Industry sources warn of blackouts in 2007 if weather conditions are unfavourable. Fear of blackouts has suppressed investment in energy-intensive businesses, such as steel, aluminium and petrochemicals.
Other bottlenecks will make it harder to sustain growth even at a more modest pace. The economy is still benefiting from private investment in infrastructure under Carlos Menem in the 1990s. Now roads are again becoming congested. There are some shortages of skilled workers, too.
After Mr Lavagna's sacking, fiscal policy has become looser. Provincial governments are already running a deficit. On the other hand, the central bank is quietly tightening monetary policy. Many assume that Mr Kirchner will relax price controls and allow the peso to appreciate after an election next October at which he is likely to seek a second term.
The risk is that inflation might then take off, unless the authorities act to slow the economy. But officials remain bullish. “What do we have beyond two more good years?” the foreign minister, Jorge Taiana, asks. “We have higher investment than ever before. We have an extended commodity boom. We have cancelled our debt. We have a favourable exchange rate. We have trade and budget surpluses. This growth can be sustained.” At what pace remains to be seen, but it has become harder to doubt the overall argument.

From Economist Feb 2006:
A history of hyperinflationary spirals makes price rises particularly sensitive in Argentina. Mr Kirchner has declared inflation control to be his priority for 2006. (Ms Miceli, who before taking over as economy minister dismissed concerns over inflation as “an argument to maintain low salaries”, has now recast herself as an inflation hawk.) So far, however, his strategy has consisted largely of a host of short-term price-freezing pacts with retailers and some suppliers. Typically, these have been extracted either by the carrot of implied government support in forthcoming labour negotiations or by the stick of threatened tax increases. But their primary role appears to be to contain short-term inflationary expectations while awaiting a promised return to fiscal austerity. “Kirchner seems to think that businesses raise prices just because they can unless someone tells them no, so he tells them no,” says Javier Alvaredo, an economic consultant.
Mr Kirchner has failed to use his sway over the central bank to support a meaningful increase in interest rates, which remain at a negative 7% in real terms. And he has turned the highly inflationary 3:1 peso-dollar exchange rate into a virtual trademark of his presidency. But until Argentina accepts positive real interest rates, prices will continue to rise.

By the way there's an interesting article from 2005 that talks about the worrisome future for energy here.

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RealBA -- I completely and utterly agree with you that Argentina has got to take some lesons from the Chileans -- a very hard task that none of them will want to undertake, but it would come with benefits. Argentina has huge natural resource potential, and the way this country is going right now it looks like the only way any of it's coming out of the ground is by selling off exploration contracts to foreign countries -- delivering a nice short term gain but giving up longterm investment potentials... Oh but we are in Argentina, where the attitude is take the easy quick pay off rather than the longterm investment that would have enduring value. It's the get rich while you can because who knows what will happen attitude that seems to impede any longterm growth in this country.
 

nikad

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"syngirl" said:
It's the get rich while you can because who knows what will happen attitude that seems to impede any longterm growth in this country.
Unfortunately this is true, and I wish I live enough to see it changing one day
 

Elpanada

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TatanBsAs Hello there, reading your comments was a breath of fresh air. It is not often that one reads a good opinion here backed that's backed up by hard facts like yours was and that has that extra little spice to it. There is something however obvious from your post and that is your xenophobia but then you attempt to deny it in later replies. Do the honorable thing here and admit to the truth, that you do not like foreigners, immigrants or expatriates coming to Argentina and that you want them gone.
 
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