Argentine Economy

Of DOW JONES NEWSWIRES.

BUENOS AIRES (Dow Jones)--The Argentine central bank apparently intervened once again in local markets Wednesday to buy bonds and sell dollars in a bid to firm up debt prices and the peso, which reached its strongest point against the dollar since July of last year, traders said.

The monetary authority flexed its muscles as markets were relatively calm, a day after farm leaders launched their third strike since March to protest a soy export tax hike.

The central bank, by selling an estimated $70 million in the local spot foreign exchange market, helped firm the peso a full centavo on the day to ARS3.1175. The monetary authority had less influence on the local benchmark Discount bond in pesos, however, with its price ending just 0.46% higher at ARS98.75, with a yield of 10.74%.

"It looks like the central bank was again buying Discounts since the volume was very heavy for a second straight day," said local analyst Javier Salvucci of Silver Cloud Advisors. "But it barely moved, so that means there are also a lot of people selling Discounts," he added.

In the local foreign exchange market, cereal exporters also helped firm the peso as they repatriated overseas dollar earnings, one currency trader said. Steady central bank intervention has helped the peso gain seven centavos against the dollar since the currency hit a five-year low amid farm-crisis worry on April 22.

At this point, "the only explanation for continued (dollar) selling is a show of power" on the part of the central bank, the currency trader said. "There are some operators in the market who think the government is trying to show the farm sector what it can do - that it can take away the weak peso" that has favored cereal exporters since the 2002 devaluation, he said. "Of course, that goes against its model," he added.

On the Buenos Aires Stock Exchange, the benchmark Merval Index edged 0.84% higher to 2,233.41 points. Volumes were low, as most investors stuck to the sidelines awaiting a clear signal as to where the farm crisis is headed, Salvucci said.

Merval heavyweight Tenaris (TS) a maker of steel tubes used in the oil industry, rose 1.75% to ARS98.50 in thin trading, while energy fund Pampa Holding (PAMP. BA) slid 0.51% to ARS1.92.

The farm crisis has undermined confidence in the Fernandez government, sparking a sell-off of Argentine debt and leading many Argentines to cash out peso bank accounts to buy dollars.

-By Drew Benson, Dow Jones Newswires; 5411-4311-3127; [email]andrew. Benson@dowjones. Com[/email]

(END) Dow Jones Newswires.

May 28, 2008 17:09 ET (21:09 GMT)

Argentina restricts gas supplies to industry.

[url]http://in.reuters.com/article/oilRpt/idINN2937849320080529[/url]

Argentina Caps Grain-Export Tax to End Farm Dispute (Update1)

``We hope this announcement puts an end to the conflict with farmers,'' said Fernandez in a press conference in Buenos Aires. ``We want farmers to keep producing.''

``The announcement is more of the same we had,'' said Luciano Miguens, president of the Rural Society, the country's biggest farm group. ``It's surprising that they didn't ask us for an opinion.''
[url]http://www.bloomberg.com/apps/news?pid=20601086&sid=a.ObYUyt8l_I&refer=latin_america[/url]

This month the central bank has spent $1.4 billion to defend the peso, according to La Nación, a newspaper, and some money has left the banks. behind Ms Fernández stands her notoriously obstinate, and still popular, husband. In Rosario they seemed equally determined.

[url]http://www.economist.com/world/la/displaystory.cfm?story_id=11465492[/url]

The Argentine central bank continued to intervene in local markets Thursday, firming the peso and local bonds as investors largely stuck to the sidelines to await a new direction in the almost three-month-old farm crisis.

[url]http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=4c0d07cc-6886-48a8-899b-5abfdb9483eb[/url]

In a report Friday, Barclays Capital said it expects that the Argentina government's offer Thursday night to rework grain export taxes will weaken and splinter farm protests, despite initial farm leader rejection of the new measures.

That's because subsidies for small and medium farmers will make them less likely to protest as time goes on, while the planting season represents a time constraint.

"We find these arguments convincing enough to believe that, after the announcement of the government's proposal, the farmers' conflict will gradually dilute into non-disruptive demonstrations and media rhetoric," Barclays wrote.

May 30 (Bloomberg) -- Argentina's Vice President Julio Cobos said the government needs to reschedule payments on about $6 billion of defaulted Paris Club debt in order to attract foreign investment and extend the country's economic recovery.

'We have to resolve the debt with the Paris Club,'' Cobos, 53, said in an interview in Buenos Aires. 'A resolution would help the country draw more investments.''

[url]http://www.bloomberg.com/apps/news?pid=20601086&sid=aRlEnvB95fhY&refer=news[/url]

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I will be surprised if people start jumping back into Argentina even if they do pay back some defaulted dept. There is a lot of dept that is in default that does not belong to the Paris Club. Plus there will still be a big lack of trust, the gov. can change it mind again.

I loaded a container yesterday that needed to be delivered by a set date. The Customs Service here, spent 2 weeks finding fault with all the documentation, which there was little to find and what there was of no consequence. Yesterday was the cut-off date to finalise the loading and during our previous discussions with Custom's Verification section, they became aware of the finite timing involved. Yesterday morning they demanded a cash payment of U$10,000 or else they would continue to delay the authorisation. Exactly the same amount as the value of the goods. No discussion. Pay or else! I paid the money and the money went into a cash box in their open office, the other 3 agents fully aware of what was going on. Papers signed as a matter of course and every thing was straight forward from then on. Normally such a payment would be at the most, ARG$1000 or at the most $2000. Now ARG$30,000. So it is almost becoming impossible to do business here. The twin bogies of inflation and corruption prevent it.

I was told nearly 20 years ago that Argentina would never change and I didn't believe it. I guess I was wrong.

In those 20 odd years, the infrastructure has deteriorated, education standards collapsed and the amount of Argentinos living in poverty doubled. Crime is just rampant and law enforcement a joke.

So what is the future?

Argento

You should bring a lawyer down there tommorrow and demand your money back or you will go to customs jeffe and then to the newspapers. If you had a witness with you at the time of the payoff, that should help.

Or go to your embassy and file a complaint.

Bring your cell phone and take pics of the thieves

[QUOTE=Argento]So what is the future?

Argento[/QUOTE]Sadly the answer is: more of the same!

Argentina's immigration history is heavily weighted in numbers and influence by Europeans. Apparently these immigrants (particularly the Italian component) have not chosen to leave one of their less flattering traits in the motherland - which is a real shame. Many immigrants to other countries have taken the opportunity to break with the past, leaving some of the impediments of their previous society behind. Don't believe it has happened this time.

I don't have any assets or liabilities here (balance sheet accounts) I only have revenue and expenses here (income statement accounts) I don't invest or borrow; I only earn and spend. Think about it.

Another way to state this is, I don't buy or borrow. I only earn and burn.

[QUOTE=Dickhead]I don't have any assets or liabilities here (balance sheet accounts) I only have revenue and expenses here (income statement accounts) I don't invest or borrow; I only earn and spend. Think about it.

Another way to state this is, I don't buy or borrow. I only earn and burn.[/QUOTE]That sounds like the financial strategy employed by a lot of chicas I know.

That is true, for my income statement. But I have a healthy balance sheet in the US. But not all the chicas are totally bad with money. Dickhead's María has a paid-for house (she earned all the money herself); Romina from Catto's owns her own, paid for apartment, and another chica I know just sold her orchard and bought an apartment with a four-year mortgage and has it rented out at positive cash flow. But, she also got a pretty good sized gift for the down payment from some wealthy Danish diplomat she met hooking.

Of course these are the exceptions and not the rule. The general rule of chica financial management can be summed up with the popular phrase: "No tengo crédito."

[QUOTE=Thomaso276]You should bring a lawyer down there tommorrow and demand your money back or you will go to customs jeffe and then to the newspapers. If you had a witness with you at the time of the payoff, that should help.

Or go to your embassy and file a complaint.

Bring your cell phone and take pics of the thieves[/QUOTE]The point that is not understood by people not involved in business here is that the money paid in coimas is distributed from the initial receivers all the way up the chain of command. Beginning of course with the direct boss and so on upwards to the political head of the department. And ultimately to the President. The only principle involved is "What is in it for me?" Each person gets their cut and there is no way out of the quandary. Any complaint would and is shrugged-off by the boss because he is a part of the distribution chain. Reform can only come down from the top and that has not changed in 200 years. Argentina became a city based on smuggling goods at its very beginning, with the customs service corrupt from that beginning.

The papers know the truth, print it, but it is water off a duck's back.

Politics here is only a way to stick your snout in the trough and get money. You never see or hear any of them wanting to enter politics to improve the morality and better the lives of the community at large. It is still class war stuff here as a diversion to the real game which is getting the money from the bribes. And all branches of government are involved. The executive, the administration, the military and law enforcement. Argentina is not so much a nation but a football team; and only if they are winning.

Argento

[QUOTE=Argento]I loaded a container yesterday that needed to be delivered by a set date. The Customs Service here, spent 2 weeks finding fault with all the documentation, which there was little to find and what there was of no consequence. Yesterday was the cut-off date to finalise the loading and during our previous discussions with Custom's Verification section, they became aware of the finite timing involved. Yesterday morning they demanded a cash payment of U$10,000 or else they would continue to delay the authorisation. Exactly the same amount as the value of the goods. No discussion. Pay or else! I paid the money and the money went into a cash box in their open office, the other 3 agents fully aware of what was going on. Papers signed as a matter of course and every thing was straight forward from then on. Normally such a payment would be at the most, ARG$1000 or at the most $2000. Now ARG$30,000. So it is almost becoming impossible to do business here. The twin bogies of inflation and corruption prevent it.

Argento[/QUOTE]It sucks that you have to pay a bribe, to get passed the customs people. Now that you paid them 30000P to get your stuff shipped, they're going to remember it, and hit you up again with a similar amount of money.

Usually in these situations you have to stay polite, even though they are robbing you. And tell them nicely, that you can't pay that much, because you making less money then that, on the sale of the items. They will usually find a lower number, if you let them know you ship X time a year, and they will get more money in the future. But it hard to talk very friendly with someone who is robbing you.

30k seems high for 1 container. If it is rare for them to get that much, they will remember you next time as the big money man, and hit you up again.

The only thing I can think of, is next time give yourself the maximum about of time you can, to get through customs. Don't let them know of any time constraints, and fight them, until the come down on the bribe to the more normal level. Let them know you can't pay that much and stay in business. And always stay polite. It's hard doing business in a corrupt society.