Trouble Ahead?

[John.St]

What kind of items are doubling in price?

A documented example of a nearly doubled price in just 15 months.

'Pantalon de combate' comfy 6 pockets trousers made by Pampero in Argentina of Argentino cotton cloth, excellent quality, by the way (I have the tickets in front of me):

2010.04.10: AR$ 65,-
2010.04.29: AR$ 69,-
2011.05.04: AR$ 105,-
2011.07.05: AR$ 116,-

 

[John.St]

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.

Of course nobody knows, but weeks after the election I would not be surprised to see the exchange rate jump to 1 U$S = 5.00 AR$ and 1 Euro = AR$ 7.15

 

[John.St]

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

great idea - to realize it, all we need to do is change the genetically inherited mentality all human beings or kill'm all except one.

They tried it in the Sovjet Union, and it failed because of greed and some being more equal than others.

 

[jb5]

Agree the devaluation starts after the election. Eventual 6 to 1 is the guess I've heard most often from people in finance.

 

[captainmcd]

Argentinians are accepting of devaluations and hyper-inflation. I remember in the early 80's when prices rose 30% a month, and people ran out to the casas de cambio and bought dollars as soon as they had some pesos. Then the government closed the casas de cambio, and the black market rate for a US$ was 4 times the official bank rate. No doubt that is once again in the cards for Argentina, and perhaps for the United States as well. It really stifles business. I remember trying to buy an air conditioner for our apartment, but the dealer could not sell it to us because he did not know his ability or price for re-stocking the item.

 

[tomdesigns]

great idea - to realize it, all we need to do is change the genetically inherited mentality all human beings or kill'm all except one.

They tried it in the Sovjet Union, and it failed because of greed and some being more equal than others.

Yeah I watched it too.. and the fact is it can not work for many reasons. The idea is great but humanity could not rise to such an ideology. Yes we would have the some are more equal than others factor and also the fact that given the opportunity a large majority of the masses will default to lazy unproductive consumers of resources without contributing fairly. Consequently the pipe dream of prosperity for all presented by the Venus Project would fail.

 

[marksoc]

I would not be surprised to see the exchange rate jump to 1 U$S = 5.00 AR$ and 1 Euro = AR$ 7.15

Sorry dudes, but we have 50 billion greens in the bank, nobody is doing a devaluation like that this year. Why some expats want to see everything go to hell? Ah yes, they want to live like kings again. Yep, we have inflation, and a growing imports problem. Or we do something about our exports, or the trade balance will suffer. We will see.

 

[John.St]

Sorry dudes, but we have 50 billion greens in the bank, nobody is doing a devaluation like that this year. Why some expats want to see everything go to hell? Ah yes, they want to live like kings again. Yep, we have inflation, and a growing imports problem. Or we do something about our exports, or the trade balance will suffer. We will see.

A few questions:

1. How have prices changed in AR$ (e.g.) the 3 whole years since July 2008?
2. How has the exchange rate U$S/AR$ and Euro/AR$ changed during that same period?
3. What does the relation between 2. and 3. above tell us about Argentina's change in position in relation to export competitors?

Argentina has imposed restrictions on import of a number of articles (hoping for an ISI solution to the import growth).
4. Can other countries impose similar restrictions on import from Argentina in retaliation?
5. What will the net result then be?

6. Re.: "we do something about our exports" - what is your proposal for Argentina's future export, when you consider the answers to 4. and 5. above and include your knowledge of the quality of Argentino industrial products and its possibility of selling know-how?

7. By "50 billion greens in the bank", do you mean that Argentina has a debt free foreign currency reserve of 50,000,000,000 U$S?
7.1. What is your source for this?

8. If Argentina has a debt free foreign currency reserve of 50 billion U$S, then why did the country recently have to go through an expensive debt swap?

The following doesn't exactly indicate that Argentina has a surplus of foreign currency.
"A hedge fund owner of defaulted Argentine debt can try to seize government assets held in Britain ... "
http://en.mercopress.com/2011/07/07...t-argentina-in-defaulted-sovereign-bonds-case

9. What makes you think we - and I assume that by "some expats" you mean e.g. me - want to see everything go to hell?

If I didn't feel comfortable in Argentina, I could live very comfortably in just about any country of my choice, including most countries in Europa, and actually do it cheaper than here.

 

[John.St]

Yeah I watched it too.. and the fact is it can not work for many reasons. The idea is great but humanity could not rise to such an ideology. Yes we would have the some are more equal than others factor and also the fact that given the opportunity a large majority of the masses will default to lazy unproductive consumers of resources without contributing fairly. Consequently the pipe dream of prosperity for all presented by the Venus Project would fail.

Yes, it is probably the most wonderful model ever imagined for a society: Everybody works her/his best for the society and community and receive what they need in return, including members in the community who are unable to support themselves for one reason or another.

Unfortunately it can only exist in a society with consensual direct democracy and the ability to expel non-compliant members to another society with different rules and unfortunately a genuinely democratic communist society is unable to withstand the genetically inherited natural impulse to hoard valuables for the purpose of future survival and soon detoriate into a dictatorship. Sad, but we've seen it happen again and again.

We humans aren't what we ought to be - but give me 200,000 years and ...

 

[jb5]

Mark, no one wants AR to go to hell. it's just that the out of control government spending, the lack of participation in the global economy, the upcoming turnaround in the trade surplus, the artificial propping of the Peso and pretty much every other objective economic indicator portends a significant devaluation.

Expats? Every Argentine with means I know has a stash of greenbacks, and not in the bank, and every top financier I know calls a devaluation inevitable.

We'd all love to always believe in Santa, but the truth eventually wins.