Tough Times Ahead?

[TatanBsAs]

The current government economic policies could never work over the long term and their shortcomings are becoming more evident daily. In my opinion major economic problems or a meltdown are just a matter of time. I am just curious what economic policies are you referring to? On what do you base your conclusion?

 

[steveinbsas]

Here are some of the articles I found before I moved to Argentina two years ago:
http://findarticles.com/p/articles/mi_qa3715/is_200404/ai_n9394895?tag=rel.res1http://www.cepr.net/columns/weisbrot/2005_11_30_argentina_transcript.htmhttp://www.marginalrevolution.com/marginalrevolution/2004/05/what_is_driving.htmlhttp://findarticles.com/p/articles/mi_qa3715/is_200404/ai_n9394895?tag=rel.res1 http://fas.org/sgp/crs/row/RS21113.pdfThings have changed dramatically since then, to say the least, and not so much for the better. I do, however, agree that "sensational" journalism can create a distorted picture of reality.
If the article "Tough Times Ahead" was sensational, it isn't alone.
In early June the "Daily URL" on this site linked to the following article from the International Herald Tribune ("The Global Edition of the New York Times"): http://www.iht.com/articles/ap/2008/06/17/business/LA-FIN-Argentina-Farmers-Strike.phpThe article began with the following sentence:"Thousands of Argentines poured into the streets Monday, banging pots
and honking car horns to demand the government resume talks to end a
100-day farmers strike that has blocked grain exports and emptied
supermarket shelves of food." At no time during the strike was there anything close to a serious shortage of food in the supermarkets, and only the shelves which usually contained supplies of cooking oil and milk were even close to empty....and only for a short time. Fresh meat was a bit scarce on occasion. If I had read this without having been shopping here on a daily basis during that time, I would have concluded the situation was much worse than it actually was.

Fortunately, there was never a shortage of salt.

 

[MrBart]

Thanks for the links, they make interesting reading. At this stage, I'm confused about where to go - Chile, Uruguay or Argentina...

 

[Stanexpat]

"I am just curious what economic policies are you referring to? On what do you base your conclusion?"Go back and read the article referenced in the original post in this thread, it gives a pretty good summary of the problems. The economic policies I am referring are things like controlling prices
and wages, subsidies for all manner of purposes. This has led to an
explosive growth in government spending to keep all the balls in the
air. The ability of the government to continue this seems increasingly
unlikely. These measures over time have only served to stoke
inflation, discourage investment, and create shortages. The big fight
with the farmers was over these issues. The government needed more tax
revenues to keep this shell game going. The government has tried to
hide the problems by falsifying inflation data and discontinuing the
publishing statistics on growing poverty.

Add to this are things like very expensive public works programs
of dubious value like the bullet trains and like the billion dollar
proposed takeover of Aerolinas Argentina. No one seems to know
how the government intends to pay for all these increasingly expensive
programs and projects. Hence the widespread belief by many in the
financial and economic press that the current path they are following
is unsustainable and if unchecked will lead to another economic
collapse. Perhaps the government will change it policies and
advert disaster. However, this government seems exceptionally rigid and
unwilling to admit mistakes or alter course. The longer this goes on
the more likely the problems will spin out of control.

 

[allcraz]

Thanks for the links, they make interesting reading. At this stage, I'm confused about where to go - Chile, Uruguay or Argentina...

You're welcome, MrBart. Being well-informed never hurts, but it also doesn't mean you can control everything that comes your way. Make the best decision with your available information and go for it. I haven't lived in Chile or Uruguay, but I'm still in Argentina for reasons that have apparently been enough to help me deal with and look beyond the economic situation (for now).

 

[CABJ]

I am in agreement with that tough times are ahead. I have read many "sensationlist" articles in the "imperalist" press. Perhaps those that don't believe this could provide some sources that indicate Argentina is on the right path economically, I haven't found any.
The current government economic policies could never work over the long term and their shortcomings are becoming more evident daily. In my opinion major economic problems or a meltdown are just a matter of time.
Many people believe that Argentina will default on their debt for second time within the next year or two. Many people believe they are in fact in default now. What I mean by that is the "cooked" inflation figures have greatly reduced the governments interest payments on their debt (payments tied to inflation).
What impact the next economic crisis will have on asset prices and the cost of living is open to debate. However, I'm not aware of any instance where an imploding economy supported asset prices (incomes reduced, savings ravished by inflation, etc.). You would expect the general cost of living to reduce as demand falls, but not necessarily.
Right now I wouldn't be a purchasing or holder of any Argentine assets including stocks, bonds, or real estate. The current risk is just too high. What assets would be worth in a post crash environment is unknowable.

Nobody has savings in Argentina

 

[bigbadwolf]

The economic policies I am referring are things like controlling prices and wages, subsidies for all manner of purposes. This has led to an explosive growth in government spending to keep all the balls in the air. The ability of the government to continue this seems increasingly unlikely. These measures over time have only served to stoke inflation, discourage investment, and create shortages.

I'm not sure this is the problem per se. Other countries have had wage and price policies (e.g., the USA under the Nixon administration). And subsidies are ubiquitous in both Europe and the USA (for mass transit, farmers and industry). It's either the way Argentina goes about these things, endemic corruption, or the inherent weakness of the economy vis-a-vis the demands of various constituencies that's to blame. Also, as you say, not enough taxes, partly because those who can afford to pay, don't (throughout Latin America). As for explosive spending, just look at the magnitude of US fiscal deficits.

 

[soulskier]

There are so many expats on this site that think Argentina is doomed. I don't understand why you guys continue to live here and bitch about it. If I wasn't reallly happy in my new country, I would back home or find another country that worked for me. I think many of you would not be happy anywhere you live. Life, and to some extent, opportunities are what you make it.

 

[MrBart]

I agree with you Soulskier. A significant number of posters on this forum do nothing but complain about Argentina, and the high levels of pollution, corruption and the cost of living etc. If so many people are unhappy in Argentina, why don't you just leave??

 

[allcraz]

I truly believe there is a significant number of expats who stick around for the "excitement", the "drama", the sheer distinction from where he or she may be from... There are people who enjoy living in a published crisis. Being a part of it all, writing home about it... I agree there are some members that come off as downright unhappy, but then I also think there are those who try to reveal some facts, and in doing so can give off a negative vibe.