Trouble Ahead?

[tomdesigns]

I don't know what everyone is complaining about - I went to the chino ''super''market down the road tonight and they have (made here) licensed Bols Genever (52% alcohol) for less than 20 pesos a bottle - the quality is the same as in Europe but its about 9 times cheaper. I can guarantee you this - if you even *manage* to drink half a bottle of this in a night you won't be in the slightest bit worried about inflation or anything else Basically you can afford to be permanently drunk for about 100 pesos a week Works for me...

Wine has gone up about 20% to 40% here for most of the brands I prefer but still spot on the best value I have ever enjoyed in my life... that is for sure. Argentina has turned me into a 60 pesos a bottle wino.

 

[tomdesigns]

One thing I find particularly disturbing is...

example.

Poor freind earning 3500 pesos a month does the prepay monthly thing for 2 or 3 years and gets a new car. This man is by no means qualified for a new car loan. Car costs 1400 pesos a month with insurance and everything.

Inflation hits right about the same time he gets the car. Watching this poor fool do everything in his power to keep the precious car that some how makes him feel like he is more respectable for the first time in his life. Meanwhile as a result of all this he can barely afford to feed and educate his family. Then watching him max out all his 2000 pesos visa, bank and store cards.. trying to keep the oh so precous car.

Nothing short of completely pathedic to me. Now he is completely enslaved to the banks and on the edge of bankruptcy. Another year of this inflation will surely put him over the edge.

And I know more than one Arg living like this.. with their lives literally revolving around the bank. Get paid, pay the credit card, use the credit card to buy food and the cycle continues right on the edge of loosing it every month.

Considering that.. how many of these Argentinians are doing the same thing? More or less a similar senario to what occured in the US while all the Americans where buying into homes and things there was really no way they could afford in the long run.

Opppsss here we go again.. a little more inflation and all this credit extended publicly.. eat or pay the bank? Which do you do? oppsss crash and burn!

 

[Philsword]

Did you know you could change the date of your post for any date back to at least 1960 and that part of your post would still be current?

Sad but true and of course the decline of the country long term will probably continue.

 

[sesamosinsal]

One thing I find particularly disturbing is...

example.

Poor freind earning 3500 pesos a month does the prepay monthly thing for 2 or 3 years and gets a new car. This man is by no means qualified for a new car loan. Car costs 1400 pesos a month with insurance and everything.

Inflation hits right about the same time he gets the car. Watching this poor fool do everything in his power to keep the precious car that some how makes him feel like he is more respectable for the first time in his life. Meanwhile as a result of all this he can barely afford to feed and educate his family. Then watching him max out all his 2000 pesos visa, bank and store cards.. trying to keep the oh so precous car.

Nothing short of completely pathedic to me. Now he is completely enslaved to the banks and on the edge of bankruptcy. Another year of this inflation will surely put him over the edge.

And I know more than one Arg living like this.. with their lives literally revolving around the bank. Get paid, pay the credit card, use the credit card to buy food and the cycle continues right on the edge of loosing it every month.

Considering that.. how many of these Argentinians are doing the same thing? More or less a similar senario to what occured in the US while all the Americans where buying into homes and things there was really no way they could afford in the long run.

Opppsss here we go again.. a little more inflation and all this credit extended publicly.. eat or pay the bank? Which do you do? oppsss crash and burn!

Sounds like more of a pathetic system than a pathetic person.

 

[Ashley]

Very interesting article...but does anyone know what usually happens next?
I've heard expats and locals speculating about imminent "devaluation" or "hyper inflation" for the past two years now but nothing seems to be happening.
I earn in pesos but have always lived within my means here. There's no way I'd buy a hideously overpriced flat-screen or car and spend the next 5 years paying it off. One thing I would like to do within the next couple of years, however, is purchase a home but after reading things like this, it seems a stupid move with everything going on especially as I'd be paying for it, at least partially, with an Argentine mortgage.

 

[Philsword]

Very interesting article...but does anyone know what usually happens next?

Usually major economic problems, when and what is hard to specify, depends on a lot of variables, actions or in-actions by the government. Booms are usually followed by busts. Obviously there are some big problems looming here, mostly created by the current government policy of growth at any cost to insure their re-election. My opinion is the chickens will come home to roost next year. My personal opinion its to late for the government to really avoid the problems but they may take actions to mitigate the depth of the problems. However, I am not very optimistic given their past record of not facing up to problems. I fear the problems will be attributed to rich oligarchies and selfish business interests rather than the truth that the problems are of their own manufacture.

 

[perry]

I see big problems ahead for the world in general . It has overspent its capital and put most of its citizens in debt of which most cannot pay as seen in the USA and Europe . A larger crash is definetly on the way that will make 2008 seems like a hiccup .

Be prepared for currency devaluations and a rapid increase in food prices. Do not keep all your eggs in one basket and diversify your assets . And most importantly do not keep your savings in Fiat currencies as they will crash sending many to the poor farm.

 

[PhilipDT]

....trouble behind, and you know that notion, just crossed my mind

 

[jp]

I've had this in my head since reading this thread:

http://www.youtube.com/watch?v=mox5nOP2KW0

 

[steveinbsas]

Living there now in a furnished rental before we leave...we have use of 2 bedrooms but same otherwise..1800USD per month.

OMG!

NowI'm happier than ever I didn't wait for the real estate "price correction" that some naysayers have been prediciting for the past three or four years. It doesn't look like rents have decreased as predicted, either.

If I hadn't bought my first apartment in 2006 I would have paid somewhere between $60,000 and $80,000 USD in rent between now and then...and I certainly would not have been able to buy my present home!

Someone recently posted that they suggested waiting for the next crisis to buy property and that was based on the decline in prices following the devaluation of the peso in 2002. That price decline did not last very long. Many of those selling real estate in a "panic" were business owners who had just had their savings wiped out by the governemnt and they needed capital to stay afloat.

I don't think a major devaluation of the peso will reesult in a siginficant change in the dollar prices of real estate. If the dollar declines in value as well (as it is doing so now), prices will probably not decline. High levels of inflation rarely lead to a decline in prices...of anything.