What Would Dollarization Mean for Expats?

[Redpossum]

Good data points.

Fuel is sold all over the world at whatever price is determined by governments, I think in Europe something like 80% of the price you pay at the pump is tax. Argentina produces its fuel, so it can sell for whatever price it wants.

Medicine I don't knw much about, other than that it's generally subsidized. I don't know how important that sector is.

Auto and parts exports apparently make up about 10% of the total. Argentina exports mainly agri products, at least 30-40% of the total, and sold for semi free-market prices.

For imports we pay the Blue rate on everything already. If not directly, once you add on taxes it's close.

My point is that a lot, if not most, of the heavy lifting to bring Argentina close to a free market exchange rate has already been done.

You're ignoring all the cheating going on.

Companies routinely under-invoice exports and over-invoice imports; the difference is their hidden profit. I have posted about this in past, with regard to the Vicentin fiasco.

My point here is that we have no idea what the real numbers are.

 

[ArgentinaVet]

Good data points.

Fuel is sold all over the world at whatever price is determined by governments, I think in Europe something like 80% of the price you pay at the pump is tax. Argentina produces its fuel, so it can sell for whatever price it wants.



For imports we pay the Blue rate on everything already. If not directly, once you add on taxes it's close.

My point is that a lot, if not most, of the heavy lifting to bring Argentina close to a free market exchange rate has already been done.

Argentina does NOT produce enough refined Diesel fuel to meet domestic consumption and thus is importing large amounts of Diesel (both low and high sulfur varieties ) at the OFFICIAL rate. Almost all Argentine freight is moved by Diesel-fueled trucks and thus pricing the fuel at the true market rate would result in a significant inflation shock.

 

[FrankPintor]

You're ignoring all the cheating going on.

Companies routinely under-invoice exports and over-invoice imports; the difference is their hidden profit. I have posted about this in past, with regard to the Vicentin fiasco.

My point here is that we have no idea what the real numbers are.

Not so much ignoring as asking. You make a good point.

 

[Quilombo]

Who said change is a smooth process?

Certainly not me, but every interaction I have with a Milei voter/supporter is them earnestly believing that on December 10th at noon the minimum wage will go from $112.500 ARS to $154.11 USD and the subte from $74.21 ARS to 10¢ USD, and this multiplied over the entire economy, except electronics, which will magically come down to US prices or minimal markups related to shipping costs.

As earlyretirement points out in his comment, this is a problem. If your voters/supporters believe something, even if you're not saying it, they will be disappointed and pissed at you when you don't deliver because you let them believe it in order to get elected.

For those who really care, this wiki page on the Argentine Peso is worth looking at, more specifically the History section. The current Peso convertible (ARS) is the 4th currency Argentina has had since 1970

Peso ley, 1970–1983
Peso argentino, 1983–1985
Austral, 1985–1991
Peso convertible, since 1992

Ozymandias, eh?

This particular post is meant as a historical note only. I am not, in this one post, arguing either side, just offering a bit of data. In case you are wondering, "WTF is that damn marsupial trying to say here?!?"

Don't forget the fun money

If I were him, I'd go more the approach of I'm going to do X, Y, Z over the next 12,24,36 months. Make a roadmap of REALISTIC things he wants to do. Then he can say I laid out my plan and the other party didn't let me. Give me a chance and then if this works I want to do X.

Yes, I get he wants to get people fired up to get elected but I'd argue. Then what? He has to have some realistic plan in place instead of threatening to blow everything up. Give objective and targeted goals and measures and appeal to work with the other side as well as IMF, other countries, etc. Be logical and methodical. That's the best route.

I don't support Milei nor do I want him to win, but this is what he should be doing, it's what a responsible person who wants their country to stabilize would do, but he won't because he's driven by Id and probably believes his own bullshit, and it's not sexy, but it is the proper way to sell a plan as comprehensive as reinventing the economy. The only thing markets hate more than regulation is uncertainty, and Milei is it in concentrated form.

Remember Alberto's "Economic plans? I don't believe in economic plans." interview with the Financial Times? This is Milei's version every day he gets closer to being president without doing anything but campaigning on hyperbole. Perhaps we're reliving 2016 with Trump scrambling because he didn't believe he'd ever win, and all of sudden he had to start taking things seriously. Milei is no Mario Draghi, but I was expecting something concrete by now, not Anarco-Capitalist Alberto.

 

[Bajo_cero2]

I don't see any sense in debating the strengths and weaknesses of the Menem government. The point I was making was that Menem made some fundamental changes that were clearly in opposition to Peronist philosophy. Argentina is at a crossroads and I would not rule out the possibility that Milei could effect some change.

The policies Milei propose are not new. The dictatorship started with them and costed 90 billions in debt. Menem insisted and costed another 90 billion. Macri again and costed over 50 billion.

 

[ArgentinaVet]

This is what I mentioned would be necessary for Milei's dollarization plan to have a reasonable chance of success:

“Perdón Popular de Mercado”: el blanqueo que Milei analiza para los USD 300.000 millones que están fuera del sistema financiero

Fue propuesto por su jefe de asesores, Carlos Rodríguez, y funcionaría como un vehículo hacia la dolarización. Incluye un sistema de “bonos ” que se podrían comprar y vender en el mercado

www.infobae.com

 

[Agribotics]

The only thing government can do to create a prosperous society is to create an hospitable environment for creating goods and service. Engaging in endless, repetitive fiscal gimmicks instead is fool’s gold.

 

[Quilombo]

This is what I mentioned would be necessary for Milei's dollarization plan to have a reasonable chance of success:

“Perdón Popular de Mercado”: el blanqueo que Milei analiza para los USD 300.000 millones que están fuera del sistema financiero

Fue propuesto por su jefe de asesores, Carlos Rodríguez, y funcionaría como un vehículo hacia la dolarización. Incluye un sistema de “bonos ” que se podrían comprar y vender en el mercado

www.infobae.com

Lol I'm surprised by how quickly he's waking up to reality. Question is whether his base will become "Pero Alberto..."s or not when things don't go as planned.

 

[earlyretirement]

The policies Milei propose are not new. The dictatorship started with them and costed 90 billions in debt. Menem insisted and costed another 90 billion. Macri again and costed over 50 billion.

But do you really think things would have turned out much different with anyone else? I agree ALL past presidents have been horrible but I don't think Argentina can change much without systemic change. Which I'm not sure legally how you will really get that. Too many locals used to things and even though they say they want change... when it comes to sacrifices they have to work with all facets of their lives (especially labor laws), I doubt they would agree to them.

 

[earlyretirement]

This is what I mentioned would be necessary for Milei's dollarization plan to have a reasonable chance of success:

“Perdón Popular de Mercado”: el blanqueo que Milei analiza para los USD 300.000 millones que están fuera del sistema financiero

Fue propuesto por su jefe de asesores, Carlos Rodríguez, y funcionaría como un vehículo hacia la dolarización. Incluye un sistema de “bonos ” que se podrían comprar y vender en el mercado

www.infobae.com

Yep, I outlined the amnesty in previous posts. It's the only way. I've been saying this for a while and said you would see it coming.