What's Next With The Peso Devaluation?

[ARbound]

Yes I did. I noted that at the bottom. I said miraculously the trade deficit could improve. Although what exactly Argentina would be exporting is a mystery, aside perhaps from some wine and agricultural product.

Also, I heard that Cristina left for Cuba today without explanation. Is this true or just a rumour?

lol full rumor there's a meeting of the Latin American Community or whatever it's called in Habana

 

[camberiu]

You are seriously missinformated.

Just an example:
http://tiempo.infone...al-en-marzo.php

I for one, am very curious to see how long Argentina will be able to rely car export to Brazil as the following happens:

1) Brazilian economy slows down and demand for autos decreases.
2) Argentina's increases the "beggar thy neighbor" export policy towards Brazil while continuing to block Brazilian products (via customs and now via devaluation).
3) Increased political pressure from Brazilian Unions against Argentina auto exports as local factures lay off workers (http://goo.gl/DMryYS)

 

[Gringoboy]

Nicely written article Reneige; I like your writing style which is easy to read, especially for those of us who know next to nothing about economics.
Question: what part of your article would you amend in light of this morning's announcement by Capitanovich?
Bearing in mind you wrote it yesterday....

 

[Bajo_cero2]

I for one, am very curious to see how long Argentina will be able to rely car export to Brazil as the following happens:

1) Brazilian economy slows down and demand for autos decreases.
2) Argentina's increases the "beggar thy neighbor" export policy towards Brazil while continuing to block Brazilian products (via customs and now via devaluation).
3) Increased political pressure from Brazilian Unions against Argentina auto exports as local factures lay off workers (http://goo.gl/DMryYS)

The cheap cars are made in Brazil while the intermedium are made in Argentina (Toyota corolla, Toyota hilux, Wolkwagen Amarok, etc).

If the Brazil economy slows down (let's imagine that, as soon as they discovered a lot of oil) the Brazilean Car industry is going to be more affected. The real is too expensive, now the cars made in argentina are more competitive thanks to devaluación.

What about if there is an alíen invasión?

 

[camberiu]

The cheap cars are made in Brazil while the intermedium are made in Argentina (Toyota corolla, Toyota hilux, Wolkwagen Amarok, etc).

If the Brazil economy slows down (let's imagine that, as soon as they discovered a lot of oil) the Brazilean Car industry is going to be more affected. The real is too expensive, now the cars made in argentina are more competitive thanks to devaluación.

What about if there is an alíen invasión?

You are so misinformed that it is not even funny.

First off, your distribution of manufacturing (expensive Argentina, cheap Brazil) is completely off. That is not how the manufactures divide the distribution and never was. Actually, the Toyota Corolla, Honda Civic and many other "expensive" cars are also made in Brazil. Here is the list of the 10 most expensive car currently made in Brazil. The list will increase with the opening of the Hyundai plant this year and the Mercedes Benz plant (making the C class) in 2016. But this part of your misunderstanding is not very grave.

The grave part is your belief that Brazil is not slowing down. It is, and dramatically. In December, Brazil had the largest monthly industrial production index drop in its history. In ALL of its history. Eike Baptista, the tycoon that was supposed to explore all that oil is bankrupt. Petrobras has serious management issues and it is floundering in debt. Now with Mexico opening their lands for foreign exploration and the shale oil and gas in the US, it turned out that the Brazilian oil wealth was a mirage. If you guys are counting on Brazil to bail you out, you are in for a rude awakening. I strongly suggest you follow Brazilian economic news closer. I surely do.

Robert Shiller on the Brazilian MASSIVE housing bubble (00:50)

 

[sleslie23]

You are so misinformed that it is not even funny.

You are polite. I would have used the term "f***ing delusional."

 

[Rich One]

On the light side. Peso Worth/???

An Argentine goes to a cabaret/cat house in Montevideo. The Mama-san introduces him to a girl, the customer whispers on the girls ear what he wants to do. The girl yells ! are you kidding , Get LOST.

They call another girl, same thing happens ,, she runs away and swears at the customer... No way you crazy?

The Mama-san intervenes ....Saying we have all sort of perverts visiting here never had a problem??

What did you ask from the Girls?? He answers: "Nothing much .... just to pay in Argentinian Pesos....!!!

 

[Joe]

The video with Schiller is interesting about Bubble Psychology. There's also a housing bubble in Canada, but it is pointless - absolutely pointless - to even suggest it to someone who's enjoying the bubble ride - you'll just be written off as someone on the fringe and a buzz kill.

 

[John.St]

... Here is the list of the 10 most expensive car currently made in Brazil.

Dirt cheap soapbox cars. The prices of the three most "expensive" are lousy 470,000 resp. 453,000 resp. 393,000 Argentine pesos at the official rate, not much more than the average Arg. cartonero spends on his new car. </irony>

 

[Reneige]

Nicely written article Reneige; I like your writing style which is easy to read, especially for those of us who know next to nothing about economics.
Question: what part of your article would you amend in light of this morning's announcement by Capitanovich?
Bearing in mind you wrote it yesterday....

Thank you Gringoboy. To be honest, the policy shift took be by surprise. I do see however that dollar purchases seem to be fairly restricted, my understanding is that it is based on a percent of salary or something similar? I have been in class all day so haven't really been investigating it. My suspicion is that the government realises that chasing the blue dollar market is a losing battle. The actual spread (the difference) between the blue dollar rate and the actual rate is quite politically embarrassing. It acts as a direct measure of the failure of the governments monetary policy and capital controls. That spread effectively reflects the lack of confidence the nations citizens have in their own currency, and the extent to which the government is lying about how bad things are. That is why you often hear them talk about the blue rate as a percentage of the official rate: "Argentina's parallel market now trades at 75% of the official rate!" etc.

Devaluing the official rate, and easing restrictions on dollar purchases, both directly decrease the incentive to go to the blue market. I believe the government is trying to halt the relentless rise of the blue. But as long as the government chooses not to communicate the reasons for actions (precisely the opposite behaviour of how most developed nations manage their monetary policy), this all remains conjecture.

I'm curious to hear other people's opinions if they differ however.

Now, I better get back to work, I'm going to fail my Spanish courses if I don't study for my exam in a week! :-D

You are seriously missinformated.

Just an example:
http://tiempo.infone...al-en-marzo.php



Outside the US, there is nothing wrong about going to Cuba and there is no reasons to give explanations about that.

Thank you Bajo, I am glad you managed to find an export industry in Argentina. The problem is in fact not net exports, it's bleeding foreign reserves as a result of weak exports and capital flight. Please take a look at these articles, you seem clever enough to put the pieces together.

http://www.tradingeconomics.com/argentina/current-account

http://en.wikipedia.org/wiki/Currency_crisis

And just to clarify, I was not implying that going to Cuba is wrong, I have been there many times myself and think it's a lovely country. What is INSANE is for the head of a state to leave in the middle of a large collapse in the value of the nation's currency, particularly when it is the result in a change in government policy. That's appalling! I'm surprised you don't get this, but perhaps good governance is so elusive in this nation that a benchmark has not been set.