Argentine Economy

[QUOTE=Sidney]Accusing him being ''the leader of a criminal association'' aimed at taking the money of AFJP.[/QUOTE]A lot of people in Argentina are amused that Nestor and Christina Kirschner, neither of which have ever had a real job in their lives, have amassed a fortune.

Nobody thinks this is unusual. Elected officials are supposed to rob their constituents blind.

It is just another example of the level of corruption, and the acceptance of that level of corruption, that exists in Argentina.

According to La Nacion newspaper, sales of apartments in Puerto Madero are down in the past few months between 30-60%. The other day the headline in the same newspaper was a story regarding the expectation that real estate prices will drop about 25%. Also, today, La Nacion reported a drop in sales of mid to expensive wines of about 40%.

[url]http://www.lanacion.com.ar/nota.asp?nota_id=1069490&pid=5363953&toi=6270[/url]

Interesting NYTimes article on the argentine economy, hoarding of dollars, and restaurant and retail sales slumping.

I think the Yogi Berra-ism is apropos: " It's deja vu all over again".

[url]http://www.nytimes.com/2008/11/13/world/americas/13argentina.html?emc=tnt&tntemail1=y[/url]

That link doesn't seem to work.

[QUOTE=David_33]That link doesn't seem to work.[/QUOTE]Try this link:

[url]http://www.nytimes.com/2008/11/13/world/americas/13argentina.html?scp=3&sq=argentina&st=cse[/url]

Poor bastard will have government investigators up his ass pronto!

Back in August of 2008 the exchange rate was AR$1.00 - BR$.52. Today the exchange rate is AR$1.00-BR$.70. The peso has strengthened or the real has fallen approximately 40% in less than 4 months. Since Brazil is one of Argentina's major trading partners, it's impossible for the peso to remain so strong without major economic implications. It appears to me, after the Argentine Senate votes in favor of taking over the retirement funds and the Central Bank stops selling dollars, the peso will lose its strength not only against the Real but also against the US$ dollar. The US$ to AR$ exchange rate will probably be around US$1.00 - AR$3.70 by February of 2009.

[url]http://finance.yahoo.com/currency/convert?amt=1&from=ARS&to=BRL&submit=Convert[/url]

I am curious if these crisis is hitting BA hard yet. People are losing massive amounts of money. Even my conservative investments are taking huge hits now. This has to effect tourism at some pt. Even if your were in gold you have lost money.

I would think this would depress prices for chicas eventually. There seems to be a wave of people selling stuff on craigs list to help raise money. I used to live in NYC and still have friends there and he said the mood is very grim. So many people are getting laid off.

My concern is the U. S. Govt is gonna start printing dollars to fight deflation and that will take away the only recent positive for travel; the favorable USD$ fx rates recently.

Bart

I am arriving in Buenos Aires (aeropuertro EZE) on Sunday, November 23.

I was wondering if anyone knows if there are ATM machines available in the terminal. I had gone to my foreign exchange place here in Seattle to pick up an order of Argentine Pesos and was told that due to the inflation issues in Argentina, the currency was not available. I would like to be able to have cash (other than dollars) with me on that Sunday.

Gracias for qualquier informacion. Chau

When you come out of the departure area either 1) make a complete u-turn to your right and you'll see it along the back wall, or 2) keep straight and go left around the Taxi Ezeiza booth, a few yards further and the machine is to your left.

Probably there are others in the airport, too. Just ask.

Nov. 21 (Bloomberg) -- Argentina's stock market is fading as the state seizure of the nation's biggest shareholders undermines investor confidence and threatens an equity sell-off.

The Argentine Senate last night approved President Cristina Fernandez de Kirchner's plan to nationalize about $24 billion in private pensions, a move opposition parties called a cash grab and the government said is a way to protect retirees from the worst financial crisis since the Great Depression.

For the Buenos Aires Stock Exchange, the government's decision underscores the growing irrelevance of a market whose listed stocks dropped to 82 from a record 669 four decades ago and is discouraging outside investment because of capital restrictions.

"It's a substantial blow to the capital markets," said Eduardo Costantini, the 62-year-old chairman of Buenos Aires- based real-estate and asset management group Consultatio, the sole Argentine company to go public this year. "The only long- term investor with characteristics of the pension fund industry disappears with this."

The funds, known by their Spanish acronym AFJPs, hold about a quarter of shares available for public trading in Argentina, data compiled by the companies show. They were net buyers of shares for a third month in September as the benchmark Merval index tumbled 10 percent and emerging-market funds pulled out.

The Merval is down 60 percent this year, compared with the 48 percent decline in Brazil's Bovespa index and 38 percent slide in the Mexican Bolsa. Argentina's economy, which slipped into a recession after the government defaulted on $95 billion of debt in 2001 before recovering, is headed for a slowdown. That may lower tax revenue and hurt its ability to meet debt payments, according to Goldman Sachs Group Inc. Economist Pablo Morra.

Possible Downgrade.

The government is taking over pension funds as MSCI Inc. Whose stock indexes are tracked by investors with $3 trillion in funds, prepares to remove the biggest stock, Tenaris SA, from its Argentine measure and considers downgrading the nation to frontier from emerging-market status.

"Put all those together and it really spells the death knell of the Argentine equity market as a place where foreigners want to invest," said Citigroup Inc. Strategist Geoffrey Dennis. Citigroup this week cut its recommendation for Argentina to "zero" from "underweight."

In 1995, a year after the AFJPs were set up to help bolster capital markets, Argentina's share of emerging market equity fund investments was 4 percent, making it the third most invested Latin American market after Brazil and Mexico, according to fund flow tracker EPFR Global in Cambridge, Massachusetts. That shrank to 0.5 percent at the end of September, putting it in fifth spot among regional peers.

Stock Assets.

The pension funds' assets include 6.8 billion pesos ($2 billion) held in local stocks, according to Argentine regulators. They will be transferred to the state-run social security agency as part of the government's decision.

The funds invested about $144 million in domestic equities in September, according to Deutsche Bank AG. Foreigners have been selling at the fastest pace in eight years. Emerging-market funds sold about $340 million in Argentine stocks through September in the biggest outflow since 2000, according to EPFR.

The government forced the pension funds to sell more than $500 million in Brazilian stocks in a three-day fire sale last month, as Amado Boudou, the head of the social security agency Anses, said pension accounts shouldn't hold any foreign assets.

In an Oct. 28 speech to lawmakers, Boudou vowed to "protect the value" of the AFJPs' domestic equity holdings and said the government won't "rush out and sell at any price."

'Shallow' Market.

While Mariano Kruskevich, an analyst with Grupo SBS in Buenos Aires, said the social security agency is unlikely to begin a broad sell-off of local stocks given the "shallow" market and continuing credit crisis, some investors speculate it's possible.

Holdings in individual companies probably will be cut to a maximum of 10 percent over five years, Ambito Financiero newspaper reported Oct. 27, citing people it didn't name at Anses.

AFJPs own at least 20 percent of companies including Buenos Aires-based Telecom Argentina SA and Siderar SAIC. Anses press officials didn't return phone or e-mailed requests for comment.

"If emerging markets stabilize, I think they'll look to sell whenever they can," said Greg Lesko, who helps manage $1 billion at Deltec Asset Management in New York, including Latin American shares. "A fire sale wouldn't serve anybody's interest. They'll probably do their best to time it. A lot's going to do with what's going on in the rest of the world."

The pension nationalization also will hurt Argentina's asset management industry, which oversees the AFJPs' foreign holdings, and eliminate demand for share and debt issues, Consultatio's Costantini said. His company, which raised about $100 million in an initial public offering in May, probably will be the last IPO for "a long time," he said.

To contact the reporters on this story: James Attwood in Santiago at [email]jattwood3@bloomberg. Net[/email]

There is an old joke about 2 friends, both keen race-goers and inveterate gamblers, who would bet on 2 flies climbing a window pane. One day at the races, there is a fairly tight finish and Fernando says to his friend, "$100 on the brown horse to win". His friend takes Fernando's bet and the brown horse comes in second. Fernando pays his friend the $100. Later that night they are watching the video replay of the race. Fernando shouts out to his friend, "Did he want to bet again at double the previous wager". Naturally his friend agreed and the horse of course, once again comes in second. Fernando rather forlornly paid his friend the $200 wager and made the passing remark that he thought after the fairly good run earlier in the day, the brown horse would improve and win next time.

Sort of like Nestor / Christina Kirschner and the Argentine economy. I have seen them repeating the same mistakes of the past and in my naivity, still thought that they expected the economy to be successful. During my nineteen years of exposure here, I have seen it collapse twice and now expect it to collapse again. And for basically the same set of reasons. Rampant internal inflation, wage increases not based on increased production, manipulated exchange rates and the absolute pig-headedness of refusing to change the way they run the economy.

But I think we are missing the point. Since Peron's time, the cycle has been repeated 5 times and each time it has collapsed causing misery and chaos. One has had to wonder if there exists here a complete inability to learn from experience and to adjust policies for the future. Or, as I now believe, it is a cynical sprat to catch a very big mackerel.

Perhaps a little history would not go astray. The incumbent goverment is the remains of the party popularised by Juan Peron and based on Mussollini's Fascist theory. Now reviled and synonomous with the Black Shirt thugs, the Second World War and social upheaval, the Fascist political theory at one stage was quite an acceptable alternative to Communism and capitalism. Basically it put the various economic groups together as a bundle. Antique English used to refer to a tied bundle of sticks as faggots and this word shares the same Latin root as Fascist. (No, not the faggots of Exon circa Las Heras. I have no idea of the antecedent of that use, except that faggot also meant bundles of steel ready to be welded; ie 2 men welded together, pillow-biters and cock-suckers take note).

Following on, each of these groups, (a good example would be the car industry), contained the various trade unions, the capitalists, the bankers, the retailers, component suppliers etc. The theory was that they would come to a consensus and speak with a common voice. And all the Fascists/groups would then take part in a socially co-hesive government, led of course in Italy by il Duce himself and here in Argentina, by those prize pieces of shit, Juan Peron and his populist Evita. Well of course it didn't work, but most times and untill they lost political power, they harnessed the theory and became strong, personally very rich, populist leaders. And in Argentina, left a lasting legacy that has impoverished and will continue to impoverish, a country that has the essential physical assets to be one of the richest in the world.

And essentially the Peronist Party here keeps that Fascist torch burning, only of course to appease the working and poverty-stricken classes of Argentina, who have the insane belief that the party is acting in their interest. The shrinking middle-class are not fooled, but since they don't count politically, the Peronists don't even factor them into their equation. The farmer's revolt is about the only time the Peronists played a ordinary hand, badly. They certainly didn't make the same mistakes grabbing the middle-classes superannuation funds. This hand they played masterfully. And since the media here are government sycophants in the main, they toe the Peronist Party line and any other opposing voices are lost in the background.

The real object of the leaders of the Peronist Party is maintaining raw power so that they can continue to rape and pillage the economy and enrich themselves. Menen came to the Presidency as a millionaire due soley to the corrupt income received when he was governor of La Rioja. When his presidency finished after 2 terms, he acknowledged he was a billionaire. Due of course, as he says, to generous friends who appreciated him. I am quite certain the Chilean Miss Universe who he married and is now divorced from, reamed his bank account out well and truly, but that is another story. Nestor and Christina pinched half a billion dollars from the coffers of the Province of Santa Cruz when he was the governor, as well as strong-arming their way into property deals that have made them millions. Who would know how much they have pinched during their respective Presidencies. If the orgy of public roadworks is any indication, (it is generally reckoned that a minimum of a third of the contract price for public works is allowed for coimas or bribes) they are continuing to rake the money in. Almost certainly by now, well in front of Carlos Menem.

So don't fall for the Peronist 3 card trick. They repeat the mistakes of the past because that is the way to political power and obscene wealth in this country. And they have been particularly successful. Everybody that is interested enough to observe, thinks they are stupid for their economic policies. But that is not the aim. They couldn't give a damm what you think, they are in it for the money and their economic policies work very well, thank you very much! Don't be deceived by the sound and light show. Follow the dough.

Argento

Great post, Argento. Chavez is doing much the same thing in Venezuela. He uses slightly different rhetoric, but he undoubtedly will be a wealthy man once he is ushered out of office. I would venture that the same is true of most of the Senators in the U. S. Senate, although perhaps on a smaller and less gaudy scale. Most come to office as millionaires and leave as multi-millionaires despite agreeing to do the public's bidding at $200K or so per year. It's amazing how they all manage to pick up a few extra multiple millions in their spare time.

I think the frustration with Argentina's economic policies is more directed to the fact that they are allowed to exist -- with virtual apathy from the public. Populism explains some of that. A complacent (or cooperative) media explains some of that. Still, one would think that the old adage "fool me once, shame on you; fool me twice, shame on me" would come into play at some point. Or, to put it another way, when does the voting public decide to "throw the bums out" -- populism and the co-opted media be damned?

Eventually, the economy collapses and someone has to pick up the pieces and start over again, even if its not totally from scratch. That would seem to be a logical inflection point. If so, Argentina probably has a two-year window or less until they get another shot at throwing the bums out. Will there be anything other than new bums to fill the void?

[QUOTE=Stan Da Man]Will there be anything other than new bums to fill the void?[/QUOTE]No!

Argento

[QUOTE=Argento]There is an old joke about 2 friends, both keen race-goers and inveterate gamblers, who would bet on 2 flies climbing a window pane. One day at the races, there is a fairly tight finish and Fernando says to his friend, "$100 on the brown horse to win". His friend takes Fernando's bet and the brown horse comes in second. Fernando pays his friend the $100. Later that night they are watching the video replay of the race. Fernando shouts out to his friend, "Did he want to bet again at double the previous wager". Naturally his friend agreed and the horse of course, once again comes in second. Fernando rather forlornly paid his friend the $200 wager and made the passing remark that he thought after the fairly good run earlier in the day, the brown horse would improve and win next time.

Sort of like Nestor / Christina Kirschner and the Argentine economy. I have seen them repeating the same mistakes of the past and in my naivity, still thought that they expected the economy to be successful. During my nineteen years of exposure here, I have seen it collapse twice and now expect it to collapse again. And for basically the same set of reasons. Rampant internal inflation, wage increases not based on increased production, manipulated exchange rates and the absolute pig-headedness of refusing to change the way they run the economy.

But I think we are missing the point. Since Peron's time, the cycle has been repeated 5 times and each time it has collapsed causing misery and chaos. One has had to wonder if there exists here a complete inability to learn from experience and to adjust policies for the future. Or, as I now believe, it is a cynical sprat to catch a very big mackerel.

Perhaps a little history would not go astray. The incumbent goverment is the remains of the party popularised by Juan Peron and based on Mussollini's Fascist theory. Now reviled and synonomous with the Black Shirt thugs, the Second World War and social upheaval, the Fascist political theory at one stage was quite an acceptable alternative to Communism and capitalism. Basically it put the various economic groups together as a bundle. Antique English used to refer to a tied bundle of sticks as faggots and this word shares the same Latin root as Fascist. (No, not the faggots of Exon circa Las Heras. I have no idea of the antecedent of that use, except that faggot also meant bundles of steel ready to be welded; ie 2 men welded together, pillow-biters and cock-suckers take note)

Following on, each of these groups, (a good example would be the car industry) contained the various trade unions, the capitalists, the bankers, the retailers, component suppliers etc. The theory was that they would come to a consensus and speak with a common voice. And all the Fascists / groups would then take part in a socially co-hesive government, led of course in Italy by il Duce himself and here in Argentina, by those prize pieces of shit, Juan Peron and his populist Evita. Well of course it didn't work, but most times and untill they lost political power, they harnessed the theory and became strong, personally very rich, populist leaders. And in Argentina, left a lasting legacy that has impoverished and will continue to impoverish, a country that has the essential physical assets to be one of the richest in the world.

And essentially the Peronist Party here keeps that Fascist torch burning, only of course to appease the working and poverty-stricken classes of Argentina, who have the insane belief that the party is acting in their interest. The shrinking middle-class are not fooled, but since they don't count politically, the Peronists don't even factor them into their equation. The farmer's revolt is about the only time the Peronists played a ordinary hand, badly. They certainly didn't make the same mistakes grabbing the middle-classes superannuation funds. This hand they played masterfully. And since the media here are government sycophants in the main, they toe the Peronist Party line and any other opposing voices are lost in the background.

The real object of the leaders of the Peronist Party is maintaining raw power so that they can continue to rape and pillage the economy and enrich themselves. Menen came to the Presidency as a millionaire due soley to the corrupt income received when he was governor of La Rioja. When his presidency finished after 2 terms, he acknowledged he was a billionaire. Due of course, as he says, to generous friends who appreciated him. I am quite certain the Chilean Miss Universe who he married and is now divorced from, reamed his bank account out well and truly, but that is another story. Nestor and Christina pinched half a billion dollars from the coffers of the Province of Santa Cruz when he was the governor, as well as strong-arming their way into property deals that have made them millions. Who would know how much they have pinched during their respective Presidencies. If the orgy of public roadworks is any indication, (it is generally reckoned that a minimum of a third of the contract price for public works is allowed for coimas or bribes) they are continuing to rake the money in. Almost certainly by now, well in front of Carlos Menem.

So don't fall for the Peronist 3 card trick. They repeat the mistakes of the past because that is the way to political power and obscene wealth in this country. And they have been particularly successful. Everybody that is interested enough to observe, thinks they are stupid for their economic policies. But that is not the aim. They couldn't give a damm what you think, they are in it for the money and their economic policies work very well, thank you very much! Don't be deceived by the sound and light show. Follow the dough.

Argento[/QUOTE]The above explains the situation in Argentina pretty well.

However, I have always thought there is another, possibly more sinister, explanation for the actions of the government.

About 100 years ago 50 or 100 families controlled the wealth of Argentina. With massive immigration and the growth of the labour movement these families developed a plan to keep the wealth of Argentina in their hands.

A part of the plan seems to be.

1) prevent the development of competition. If your family owns the condom factory the last thing you want is a price war with more efficient competitors.

A good way to eliminate competition and keep your condom monopoly is to.

1) place outrageous taxes on imported goods. Consequently, the condoms manufactured more efficiently elsewhere cost more than the inefficiently manufactured condoms in Argentina.

2) discourage foreign investment. Having foreign companies build condom factories in Argentina is not a good idea if you want to keep your condom monopoly. Therefore, ridiculous labor laws, worthless unions, a predatory tax structure, rampant corruption and a government that interferes with private business all serve a purpose. They discourage foreign investment.

3) destroy the capital markets. Letting your competitors have access to investment capital is the last thing you want. Following this plan the Argentina stock market, which had some 700 listed companies 40 years ago now has about 80 listed companies.

If you follow these steps you will continue your condom monopoly.

The fact that these steps inhibit economic growth, promote one economic crisis after another, prevent the creation of new wealth, prevent the creation of a middle class, ensure the population is unemployed or underemployed and sends the misery index is to the moon is of no concern if you want to keep your condom monopoly.

How do politicians fit into this? Often politicians are connected with the original wealthy famililies and are in complete agreement with the above policies. Politicians bent on reform usually succumb to stealing public funds and lose interest in meaningful reform or these politicians promote populist policies which have the unintended effect of concentrating the wealth of Argentina in a few hands.

P.S. I am not implying that labor unions or populist politicians supporting the ridiculous labor laws of Argentina want Argentina's wealth to remain in the hands of only a few Argentinean famililies. Rather, labor unions and populists are unwitting pawns in this game.

Another possibility is that the wealthy families of Argentina never orchestrated the above policies. Rather, the wealthy families of Argentina were merely the recipients of half-baked policies that had the unintended effect of concentrating the wealth of Argentina in their hands.

In any event I am in complete agreement with Argento. The economic trainwreck known as Argentina is no accident. There is a method behind the madness. Entities in Argentina are benefiting from bizarre economic policies that have caused untold misery and choas for the vast majority of the citizens.

Front page story in today's La Nación, Industrial Chiefs plead for an exchange rate of AR$ 4 Pesos to US$ 1 dollar.

I think we are going see more stories like this one. The current exchange rate of AR$ 3.35 to US$1 can't be maintained economically while Argentinas neighbors like Chile and Brazil have seen the value of their currency drop about 50% against the U. S. Dollar. The Argentine peso in comparison has only lost about 10% of it's value in the same period. Argentinas neighbors are not buying it's products.

[url]http://www.lanacion.com.ar/nota.asp?nota_id=1073917&pid=5424904&toi=6256[/url]

[QUOTE=Facundo]Front page story in today's La Nación, Industrial Chiefs plead for an exchange rate of AR$ 4 Pesos to US$ 1 dollar.

I think we are going see more stories like this one. The current exchange rate of AR$ 3.35 to US$1 can't be maintained economically while Argentinas neighbors like Chile and Brazil have seen the value of their currency drop about 50% against the U. S. Dollar. The Argentine peso in comparison has only lost about 10% of it's value in the same period. Argentinas neighbors are not buying it's products.

[url]http://www.lanacion.com.ar/nota.asp?nota_id=1073917&pid=5424904&toi=6256[/url][/QUOTE]I think the government is kinda between a rock and a hard place. It makes sense to let the peso devalue some, but at the same time, if they allow it to happen, they run the risk of a run by the populace. The idea of a controlled devaluation is probably the way to go to avoid a "run" risk. You also have to wonder how much "vanity" is getting in the way of allowing the peso to approach 4 to 1.

I agree. Brazil has devalued by 40% in the past 3 months. How long can they support the Peso here. That would be great for U. S. Travelers;) It appears the govt is trying more desperate measures like the pension grab to keep afloat. This will only delay the inevitable. If ag price come back some that should buy them more time but the fall in Soybean and other ag prices has really hurt them right now.

Argentina unveils 21 billion USD in infrastructure megaplan.

Nov. 25 08:32 PM US / Eastern.

[quote]President Cristina Kirchner on Tuesday unveiled a massive public spending plan to pump more than 21 billion dollars into Argentina's infrastructure and counter effects of the global cash crunch.

"On December 15 we will launch the most ambitious public works programs in memory," said Kirchner, making the announcement at the closing ceremony of the trade association representing builders.

Argentina expects economic growth to slow to four percent in 2009, down from 6.5 percent expected for 2008. This follows years of growth nearing nine percent following the 2002 crisis.

"There are public works that call for (intensive) manual labor. Works that will mean hiring more than the 362,000 workers currently in the building sector, increasing the number to nearly 770,000 jobs," Kirchner said.

Construction has been one of the engines of Argentina's economic growth.

Argentina's Gross Domestic Product (GDP) increased 8.8 percent in 2003; 9 percent in 2004; 9.2 percent in 2005; 8.5 percent in 2006, and 8.7 percent in 2007.

Earlier in the day Kirchner announced proposed tax and investment incentives aimed at encouraging the repatriation of capital.

The measure would allow Argentines who bring back their funds stashed abroad and pay taxes of between one and eight percent, depending on where the funds are directed.

The bill also includes tax incentives and debt relief for small businesses and for firms that encourage employment.

The Kirchner administration has been moving aggressively to counter the effects of the global crisis.

On November 20 it nationalized 26 billion dollars worth of private pension funds run by 10 banks, a move opponents believe is really aimed at preventing a loan default on Argentina's national debt of some 150 billion dollars.

The next day it took steps toward nationalizing Aerolineas Argentinas (AA) and Austral, the country's largest airlines both owned by the Spanish group Marsans.

The government is seen as pursuing the nationalization trend begun under Kirchner's predecessor and husband, Nestor Kirchner, who in his 2003-2007 mandate nationalized the railroads, waterworks and communications companies.[/quote]

[QUOTE=Bartonsky]I agree. Brazil has devalued by 40% in the past 3 months. How long can they support the Peso here. That would be great for U. S. Travelers;) It appears the govt is trying more desperate measures like the pension grab to keep afloat. This will only delay the inevitable. If ag price come back some that should buy them more time but the fall in Soybean and other ag prices has really hurt them right now.[/QUOTE]Apparently the peso started falling just after you said that! Quick, predict my horse will win the Kentucky derby, won't you?

Well, I'll give the Argie Central Bank credit. If you wanted to slowly walk the peso down, you couldn't do a much better job than this. I'll be curious to see how much of their billions they've spent doing it:

"Latin America Currencies: Argentina's Peso Falls for 15th Day.

By Drew Benson and Andrea Jaramillo.

Dec. 2 (Bloomberg) -- Argentina's peso fell for a 15th day, its longest losing streak since the government abandoned a one- to-one peg with the dollar in 2002, as the central bank seeks to smooth out a slide sparked by a tumble in commodity exports.

The peso dropped 0.4 percent to 3.3950 per dollar at 1:28 P. M. In New York, from 3.3825 yesterday. The currency is down 2.9 percent since it began to drop on Nov. 12 and has dropped no more than 0.7 percent in a day over that time. The central bank aims to avoid "sharp fluctuations" in the peso without setting target rates, bank spokesman Fernando Meanos said Nov. 28.

"The central bank is letting the peso devalue in a gradual and controlled manner," said Daniel Bou Kahir, a currency trader with Buenos Aires-based Banco de la Pampa. The central bank is managing the slide in an effort to avoid further eroding investor confidence in the peso, he said. The extent of the slide "leads us to believe that this plan is here to stay," he said.

Commodities such as soybeans and wheat account for more than half of Argentina's exports. Commodities have slumped 49 percent since July 2 as the global financial crisis has throttled economic growth, according to the UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials.

The yield on the country's inflation-linked peso bonds due in December 2033 fell 1 percentage point to 19.77 percent, according to Citigroup Inc.'s local unit.

Latin American currencies will outperform other developing- nation currencies in 2009 as "economic fundamentals" in countries such as Brazil and Chile remain strong, Merrill Lynch & Co. Currency strategists led by Daniel Tenengauzer said in a research note today.

'Gradual Recovery'

Chile's peso will post a "gradual recovery" next year, ending at 580 per dollar, while Colombia's peso will underperform other Latin American currencies and the Argentine peso will weaken, according to the report.

The Chilean currency dropped 0.7 percent to 670.77 per U. S. Dollar, from 666.05 yesterday. The peso has plunged 26 percent this year.

The yield for a basket of five-year peso bonds in inflation- linked currency units, known as unidades de fomento, fell four basis points, or 0.04 percentage point, to 3.47 percent, according to Bloomberg composite prices.

Colombia's peso declined 0.1 percent to 2,318.1 per dollar from 2,316 yesterday. The yield on the nation's benchmark 11 percent bonds due in July 2020 fell the most in more than a week, dropping 22 basis points to 12.10 percent, according to Colombia's stock exchange.

In Peru, the sol fell 0.2 percent to 3.1115 per dollar, from 3.1040 yesterday. The yield on Peru's 8.6 percent sol-denominated bond due in August 2017 was little changed at 8 percent, according to the local unit of Citigroup Inc.

Venezuela's bolivar was little changed at 5.1 per dollar in the unregulated market, traders said. Venezuela pegs the currency at an official exchange rate of 2.15 per dollar under restrictions imposed in 2003. People turn to the unregulated market when they can't get dollars at the official rate. "

Source: [url]http://www.bloomberg.com/apps/news?pid=20602096&sid=anbqpunI6EdA&refer=world_currencies[/url]

[QUOTE=Stan Da Man]Well, I'll give the Argie Central Bank credit. If you wanted to slowly walk the peso down, you couldn't do a much better job than this. I'll be curious to see how much of their billions they've spent doing it:[/QUOTE]It appears the Central Bank is spending little in letting the peso float up (down against the dollar and other Latin American currencies) Yesterday the Central Bank spent only US$25 million and the peso floated up 2 centavos. It appears, according to the pundits, the plan is to get to an exchange rate by the end of this year of AR$3.70 (+-10 centavos) to US$1.00.

The problem for the Central Bank and the Argentine Government is if the Brazilian Real and Chilean peso (Argentina's trading partners) continue to weaken against the dollar, then the Central Bank will have to continue letting the Argentine peso float upwards and we can easily see an exchange rate of AR$4+ to US$1 early next year.

[QUOTE=Facundo]It appears the Central Bank is spending little in letting the peso float up (down against the dollar and other Latin American currencies) Yesterday the Central Bank spent only US$25 million and the peso floated up 2 centavos. It appears, according to the pundits, the plan is to get to an exchange rate by the end of this year of AR$3.70 (+-10 centavos) to US$1.00.

The problem for the Central Bank and the Argentine Government is if the Brazilian Real and Chilean peso (Argentina's trading partners) continue to weaken against the dollar, then the Central Bank will have to continue letting the Argentine peso float upwards and we can easily see an exchange rate of AR$4+ to US$1 early next year.[/QUOTE]A slide to $4 or so seems inevitable, doesn't it? So many things seem to be pointing in that direction: (a) the country's primary trading partners have devalued more; (be) the economies of the country's primary trading partners appear to be in better shape than Argentina; (c) The Central Bank will slowly exhaust its dollar reserves over the coming years; (d) commodities prices are still low while government commitments / subsidies remain high; and (e) there has been a general flight to the dollar across all of Latin America. I'm sure Sid could come up with many more reasons, but in income statement terms, it seems pretty self-evident. I don't see Christina Kirchner doing anything to mollify the international investing community. If that doesn't happen, the only thing that can save this government is a rebound of commodities prices, and she even managed to shoot the country in the foot on that score the last couple of years.

Today, the AR$ Peso is at $3.46:1 in after hours trading and this is the 15th or 16th consecutive daily decline? At some point, we're going to see a larger move, but it's already declined 15% since this summer. If it only declines by another 50 cents vs. The dollar over the next six months, I'll be mildly surprised. Then again, if I was that good at predicting these sorts of things, I'd be sipping umbrella drinks on my own island instead of taking ten minutes out of work to post this.

[QUOTE=Stan Da Man]A slide to $4 or so seems inevitable, doesn't it? So many things seem to be pointing in that direction: (a) the country's primary trading partners have devalued more; (be) the economies of the country's primary trading partners appear to be in better shape than Argentina; (c) The Central Bank will slowly exhaust its dollar reserves over the coming years; (d) commodities prices are still low while government commitments / subsidies remain high; and (e) there has been a general flight to the dollar across all of Latin America. I'm sure Sid could come up with many more reasons, but in income statement terms, it seems pretty self-evident. I don't see Christina Kirchner doing anything to mollify the international investing community. If that doesn't happen, the only thing that can save this government is a rebound of commodities prices, and she even managed to shoot the country in the foot on that score the last couple of years.

Today, the AR$ Peso is at $3.46:1 in after hours trading and this is the 15th or 16th consecutive daily decline? At some point, we're going to see a larger move, but it's already declined 15% since this summer. If it only declines by another 50 cents vs. The dollar over the next six months, I'll be mildly surprised. Then again, if I was that good at predicting these sorts of things, I'd be sipping umbrella drinks on my own island instead of taking ten minutes out of work to post this.[/QUOTE]Today the AR$ peso is at 3.47:1 and the Brazilian Real is 2.61:1. If we pick the first week of July of this year we will see the Real was devaluaded 50% and the AR$ peso 16% to date. It appears to me, to compete on an equal economic footing with Brazil, Argentina will have to devalue the peso around 4.40:1.

About three weeks ago I purchased a new automobile in Buenos Aires for US$32,121 (AR$106,000) However, if I had waited until today I would have paid US$30,547.

Stan Da Man, I think it's inevitable we will see a AR$4:1 exchange rate.

Suerte

I would never buy a car or a house or apt. In argentina as I have stated time and time again, one day you will wake up and the "state now own your property" it is only a matter of time.

The country is getting worst fianacially each day.

It is only a matter of time before there is another meltdown.

If the USA sneezes these third world country catch severe pneumonia.

I predict a meltdown much worse than 2000. By late 2009, early 2010

[QUOTE=Geo Eye]I would never buy a car or a house or apt. In argentina.

As I have stated time and time again, one day you will wake up and.

The "state now own your property" it is only a matter of time.

The country is getting worst fianacially each day.

It is only a matter of time before there is another meltdown.

If the USA sneezes these third world country catch severe pneumonia.

I predict a meltdown much worse than 2000. By late 2009, early 2010[/QUOTE]Geo, I agree with you, the inevitable will happen; there will be a crisis in Argentina. I bought a car so I can live the life style I want. At the beginning of the new year I will be embarking on a one year (plus) tour of South America. If after a year or two I don't need the car I'll sell it. I have all the paperwork, incluiding the paperwork done at the AFIP office, so I can sell the auto without questions or hassles. Geo, you gotta spend a little money to have some fun.

[QUOTE=Geo Eye]I would never buy a car or a house or apt. In argentina as I have stated time and time again, one day you will wake up and the "state now own your property" it is only a matter of time.

The country is getting worst fianacially each day.

It is only a matter of time before there is another meltdown.

If the USA sneezes these third world country catch severe pneumonia.

I predict a meltdown much worse than 2000. By late 2009, early 2010[/QUOTE]Ohhh! You are given 'em too much time. I predict the meltdown before the end of the summer. Today no gas station sold any gas for the cars. Yesterday a big fight started between two Unions fractions, one dead man, many injured. This country is fucked.

[QUOTE=Facundo]According to La Nacion newspaper, sales of apartments in Puerto Madero are down in the past few months between 30-60%. The other day the headline in the same newspaper was a story regarding the expectation that real estate prices will drop about 25%. Also, today, La Nacion reported a drop in sales of mid to expensive wines of about 40%.

[url]http://www.lanacion.com.ar/nota.asp?nota_id=1069490&pid=5363953&toi=6270[/url][/QUOTE]So nows the time to buy Facundo! But don't wait too long because real state even in its worst time in Argentine don't got much more low that that.

[QUOTE=Julio]The premise from wich I'll start is this: "INTELLIGENCE IS NOT EQUAL TO MONEY".

Anyone not accepting this (because he considers that yes, intelligence IT IS equivalent to money) don't waste his time in going on. The ones that don't know what the word premise, or equivalent, means can consult Aristotle's Logic, where it is spoken largerly about the theme, or in the Wikipedia, where it is spoken briefly (it's a pity Wikipedia, that great north american invention, didn't exist in Plato's or Aristotle's times. The "Metaphysics" would have been summarized in 100 or 150 lines, perhaps. And Plato's "Phaedro" in 2 or 3. Imagine all the time this two man would have gained for their's families, or for eating hamburguers)

If anyone don't know the meaning of intelligence, well, now we would be in deepest waters.

Then, accepting that intelligence would not be equivalent to money, we can infer that having intelligence would not be the same as having money. One can be rich for having born in a rich country, or simply for having born from a wealthy father and be a perfect asshole believing himself the smartest guy in the world. And not only that, believing himself he can teach other guys, even other countries, even the whole humanity how to be. Or how to "make" money, at least.

Oops! How near we are now to the reversing of the subject in the famous statement "stupids that don't know they're stupid". We're not sure of whom we are speaking about, now.

But let's continue.

So, if having money doesn't mean necessary you have the brains to create it, it's very probably that people who had brains had dedicated, his time and his skilfulness, all along history, to create other kind of things more important than money. In the Middle Ages the richest man of the community usually was a prestamist. Who never do nothing except work with other people's money. The constructors of cathedrals, the philosophers, the great discoverers usually were poor. Cristobal Colon was broken when he convinced Queen Isabel de Castilla to pawn all his jewells (to a prestamist, of course) to finance a trip nobody was very sure where.

Being in the possession of a lot of money, has been largerly prooved all along history, and by history itself, differs more and more from the concept of intelligence. From what intelligence really is. If not, in wich other way we can explain the Industrial Revolution? Was that a product of intelligence (in the greek, pure, clear meaning of the term: the highest faculty of the human being, the one that distinguish us from beasts) with his 12 year old kids dying in the coal mines of England, the cruel explotation of Africa, only for the purpose of providing slaves to the plantations of the Antillas but most of all of North America? If someone considers that intelligence, I'm sorry but there's some important part of his brain that doesn't work well. Though things didn't end there. They continue. Getting worse each time. In the name of capitalism and his wrongly called intelligence the Rich Guys, the Big Fishes of Society devastated the globe, ransacked the forests, polluted the air and the rivers, extinguished 80% of the animal species that existed until the last century. Only for money. So that the Megacorporatives that nowadays rule the world gets richer and richer.

O. K. That's power.

But don't tell me it's intelligence.

I rather called it stupidity. The same kind of stupidity that has people who considers the invasion of Irak an act of pure love for the humanity, not a megamillionar affair. Or that Cuba needed to be commercially punished along decades only because they have to be protected from comunism. Or that each South American president the White House didn't like they had the right to be moved or changed by the C. I. A. As it were a puppet. Usually it's the same kind of people that moves around the globe wherever the fluctuation of the dollar calls them. But moving like inside a bubble, a big bubble never mixing with the people of the country they are in, indiferent and waterproof to any other culture or any other way of living but his own. Though critizising, yes, everything and everybody because they believe they have the right to do so, because they are intelligent. They are The Smartest Guys in the world.

We Argentines know very well wich are our faults. Wich are not, very probably, the ones the Smartest Guys think they are. But we know when and from whom accept the critics. A critic must be humble, if it really want to be a critic. A critic with arrogance is not a critic, is a declaration of superiority. A critic that looks to submit for his own profit. That kind of critic is not accepted. And I particulary don't think would be accepted any place in the world. What is the value of a critic like that? Is there anything else you can do but laugh in the very face of the criticizer?

Since I entered this forum for the very first time, that was more or less two years ago, I've been reading predictions announcing the proximity or the Apocalypse, banks confiscating deposits, a dollar at 5, 6, or even 10 pesos, even a blood bath that would cover the Nation. Nothing of that has happened. Nothing of that has much probabilities to happen, at least in the near future. Perhaps the dollar will get a little higher. But not too higher. The situation of the country is not the same as in the 2001, internal and external, and not even then have been "a blod bath" anywhere. What could happen, anyway, would only be the side effect of what already happened in the north, where the real landslide occur. And, I'm affraid, will continue to "occur" for a long time. There, there were banks confiscating deposits, yes, people who lose all that they had. There, the State had to take up, not to save the poor but to save the rich ones, as usual. The Smart Guys. The BIg Fishes that knew how to rule the world. The intelligents.

So, my friends, next time you hear the famous statement "stupids that don't know they're stupid", ask yourselves of who are we really talking about?[/QUOTE]And who is this moron? Subcomander Marcos? Go back to your mammy and Daddy, buddy. The'll teach you some respect about WHO THE RULERS OF THE WORLD ARE. I don't need to know by your mouth what inteligenze is. I know it very well something you looks like not.

[QUOTE=Tatshea Travel]Ohhh! You are given 'em too much time. I predict the meltdown before the end of the summer. Today no gas station sold any gas for the cars. Yesterday a big fight started between two Unions fractions, one dead man, many injured. This country is fucked.[/QUOTE]The problem with these people I think is that they are so proud, they think.

They are better than everyone else.

I think that is where the problem lies, they cannot wake up and look around.

Them and realize thier country is in complete disorder and it is a free for all.

With only a matter of time before a meltdown that will have many people.

In soup lines much worse than the 30's in the US.

IN the end, I really feel sorry for the Arges, they just would rather starve.

Than admit they are WRONG.

It really is that pride that has destroyed their country.

In real, they do not know how to channel the energy.

[QUOTE=Geo Eye]The problem with these people I think is that they are so proud, they think.

They are better than everyone else.[/QUOTE]Geo, I think you hit on the correct phrase, "they are so proud", to describe why Argentines are condemned to repeat their mistakes.

While studying at the University of Buenos Aires, one of my professors gave a series of lectures on the word "soberbia"* (arrogance, haughtiness, excessive pride, superb) to describe the reason Argentines get hit on the head over and over again with crisis every ten to 15 years. They are so proud they believe nothing can happen to them. By the way, I think below the veneer of this excessive pride Argentines suffer from insecurities like the rest of us.

*soberbia sustantivo femenino (orgullo) pride;

(altivez) arrogance, haughtiness, superb,.

Soberbio,-a adjetivo.

1 (altivo) haughty.

2 (espléndido, insuperable) superb, splendid

The author of this article states that there is widespread hoarding of monedas going on in BA. I wasn't watching for this on my last trip and I didn't notice it. I did notice that small bills were harder to come by. In fact, the exchange house just outside EZE woudl not give me $1,000 in tens and twenties. The most they would give is AR$200, and the rest in hundreds.

Anyone else notice the coin shortage? If so, why hoard coins?

[url]http://www.slate.com/id/2205635/[/url]

It was a PITA finding peso coins to use on the bus in October. I got an unwanted 20 or 30 centavo bonus from places on several occasions because they wanted to give me a 2 peso bill instead of coins. Lots of sighs and rolling of the eyes when they had to cough up coins because I didn't have exact change.

I didn't have much of a problem with small bills. I always withdraw an odd number from the ATM to get some small bills, e. G. 290 pesos rather than 300. 100 peso bills were not horrible as long as they were spent in high-volume places like supermarkets and busy restaurants.

My guess is that like most shortages, hoarding is now the biggest part of the problem. The one theory the author didn't mention that I heard several times is that peso coins are being shipped to Chile and melted down because the metal is worth more than a peso. Seems unlikely but it wouldn't be the first time that a coin needed to be reformulated to lower the cost.