What Would Dollarization Mean for Expats?

[earlyretirement]

Why has rent gone up so much? I've been planning to pay 400-500 to live in BA, but now I'm hearing a lot higher numbers on this site.

During COVID the government changed the law so that they required owners to do 3 YEAR leases and they could only raise the amount slightly each year. Many of these were signed in 2020. They are coming off these 3 year leases and NONE of them want to renew those leases again and get locked into a long term lease in pesos.

Many are just sitting empty as they would rather them sit empty than get stuck with one of these long term leases in pesos as they know the peso will keep getting more worthless.

Many have shifted to Airbnb. I think if you can find a $400 to $500 a month place to take it ASAP. That seems like a good deal to me. My in-law studying medical school here is in a shithole and she is paying $450/month but she complains all the time what a dump it is.

Someone posted that 4Rental is still in business so try them -https://www.4rentargentina.com/

By the end of this year and especially Q1 2024 there are going to be a real crunch of apartment rentals.

 

[sergio]

During COVID the government changed the law so that they required owners to do 3 YEAR leases and they could only raise the amount slightly each year. Many of these were signed in 2020. They are coming off these 3 year leases and NONE of them want to renew those leases again and get locked into a long term lease in pesos.

Many are just sitting empty as they would rather them sit empty than get stuck with one of these long term leases in pesos as they know the peso will keep getting more worthless.

Many have shifted to Airbnb. I think if you can find a $400 to $500 a month place to take it ASAP. That seems like a good deal to me. My in-law studying medical school here is in a shithole and she is paying $450/month but she complains all the time what a dump it is.

Someone posted that 4Rental is still in business so try them -https://www.4rentargentina.com/

By the end of this year and especially Q1 2024 there are going to be a real crunch of apartment rentals.

This is the sort of business-hostile policy that has crippled the economy.

 

[earlyretirement]

This is the sort of business-hostile policy that has crippled the economy.

Exactly! That's the problem with Argentina. It rushes to make laws or policies without thinking them through. And it's always more difficult and takes forever to change things back. Milei is very pro-business and he is talking about some serious reforms that will be much better for Argentina. Some of the things he is saying like "blowing up Argentina Central Bank" will never happen. It would be impossible.

But the youth are frustrated and want change. Employment law reform excites me if they can really get away with changing things. It's what is needed as well as getting rid of many governmental programs.

 

[Brian_is_here]

Eh, its impossible to do business in argentina.

The corruption/organized crime in your supply chain to pay for protection.
Your employees are unfireable if hired legally
If hired illegally, they can sue you whenever to get a big pay day
Taxes are high if you want to hire employees legally.

Leases are too strong in tenant's favor. Its safer and more profitable to simply not lease a property than to end up taking a loss.

And to add it all in, the Peso is too weak a currency to do anything meaningful with it. It affects social mobility to an insane degree. There is no amount of (legal) work you can do as someone who is underprivileged to become wealthy. If you are poor. You are designed to stay poor.

But hey, i'm keeping an eye on property i could pick up for a discount.

 

[earlyretirement]

Eh, its impossible to do business in argentina.

The corruption/organized crime in your supply chain to pay for protection.
Your employees are unfireable if hired legally
If hired illegally, they can sue you whenever to get a big pay day
Taxes are high if you want to hire employees legally.

Leases are too strong in tenant's favor. Its safer and more profitable to simply not lease a property than to end up taking a loss.

And to add it all in, the Peso is too weak a currency to do anything meaningful with it. It affects social mobility to an insane degree. There is no amount of (legal) work you can do as someone who is underprivileged to become wealthy. If you are poor. You are designed to stay poor.

But hey, i'm keeping an eye on property i could pick up for a discount.

Brian_is_here,

You sound like you too have experience dealing and living in Argentina! Hell, even if you hired them legally you can get sued. Basically as an employer you can NOT win. Even if you pay them all the legal fees you have to pay them it doesn't stop some from suing you.

I can tell you story after story from owning companies or being on the Board of Directors of companies there in Argentina. I've had friends that had employees that got drunk and crashed company vehicles and literally were wasted and they still had to pay. They were all 100% in white and doesn't stop employees from getting blood sucking lawyers. Even if you eventually win you have to pay legal fees.

I've had employees that we caught stealing on camera and we fired. Still ending up paying them some fees.

Also, don't even talk about the crazy labor laws. I once had an employee that got pregnant and we had to pay various salaries while she was out. Then she claimed to get sick and we had to keep paying. Then she got pregnant again. Then she got sick again (she claimed) then had another baby. It went on for years in an endless loop. Crazy!

I think this is the sort of thing Milei acknowledges and wants to change. Without changing these underlying laws/policies it doesn't matter what you do... Things won't function.

The rich get richer and the poor get poorer in Argentina and the middle class has disappeared.

 

[Maikito]

My expectation is that if the Argentine economy is dollarized, prices will become more like Uruguay, except wages will be lower. Argentina may then not be a cheap country for expats anymore, but it could still be a nice place to live if you like the country. If prices become more like Uruguay, Uruguay could gain in attractiveness as well, because the complaint that Uruguay is too expensive compared to Argentina will become less of an argument.

If wages will be lower and prices will increase, how will they help the working class citizen? How much would rent be for a citizen?

 

[sergio]

Brian_is_here,

You sound like you too have experience dealing and living in Argentina! Hell, even if you hired them legally you can get sued. Basically as an employer you can NOT win. Even if you pay them all the legal fees you have to pay them it doesn't stop some from suing you.

I can tell you story after story from owning companies or being on the Board of Directors of companies there in Argentina. I've had friends that had employees that got drunk and crashed company vehicles and literally were wasted and they still had to pay. They were all 100% in white and doesn't stop employees from getting blood sucking lawyers. Even if you eventually win you have to pay legal fees.

I've had employees that we caught stealing on camera and we fired. Still ending up paying them some fees.

Also, don't even talk about the crazy labor laws. I once had an employee that got pregnant and we had to pay various salaries while she was out. Then she claimed to get sick and we had to keep paying. Then she got pregnant again. Then she got sick again (she claimed) then had another baby. It went on for years in an endless loop. Crazy!

I think this is the sort of thing Milei acknowledges and wants to change. Without changing these underlying laws/policies it doesn't matter what you do... Things won't function.

The rich get richer and the poor get poorer in Argentina and the middle class has disappeared.

Yes, all this is true. It's a vicious circle. Most people don't earn enough so they look for ways to take advantage of the system when they can. They know that there is not much room for advancement and in the end they will wind up with U$S 100 a month pension. Labour law needs to change but it's also true that a lot of employers would be ruthless if there were a US type system here where employees have few rights. Employers resent endless taxes, a government hostile to business and the lack of credit to start or expand a business. Everything is so unstable and unpredictable that you can't make any long term plans. Regulations can change at any time and taxes can even be raised retroactively.

 

[QuilmesSlo]

The problem is that the system is so profoundly contorted, so twisted into and about not like a pretzel even but a box full of old computer cables all balled up.....

It needs to be un-tangled but how does the society survive the untangling?

 

[sergio]

Exactly! That's the problem with Argentina. It rushes to make laws or policies without thinking them through. And it's always more difficult and takes forever to change things back. Milei is very pro-business and he is talking about some serious reforms that will be much better for Argentina. Some of the things he is saying like "blowing up Argentina Central Bank" will never happen. It would be impossible.

But the youth are frustrated and want change. Employment law reform excites me if they can really get away with changing things. It's what is needed as well as getting rid of many governmental programs.

Milei is an eccentric but what matters is not what he says about selling body parts (which was apparently taken out of context anyway) or other trivia that makes amusing headlines but how he would actually govern on important matters. If elected he'd have to deal with Congress, unions, piqueteros and many others. Dollarization seems to be his core idea. I am not clear about how he could put the Central Bank out of business but maybe what he is really saying is that he wants to end currency manipulation. Wall Street and international bankers are wary of Milei (see the Wells Fargo reports someone posted in this thread) which strikes me as a good thing -- since when are these people interested in the welfare of Argentina and not just maintaining a status quo convenient for investors? I very much doubt that Milei could be elected but the fact that he got so many votes reveals the extent of anger at the current government, especially among youth who see little future.

 

[sergio]

The problem is that the system is so profoundly contorted, so twisted into and about not like a pretzel even but a box full of old computer cables all balled up.....

It needs to be un-tangled but how does the society survive the untangling?

Yes that's the question. During the 2001 crisis when politicians were so hated that some were actually attacked on the street, a socialist leaning friend said to me that this was the moment for Argentines to demand change, to vote for anything other than the governing party but he added that he did not believe it would happen. It didn't happen. The system survived.