Argentine Economy

Argentina May Devalue Peso 16 Percent, JPMorgan Says (Correct)

By Drew Benson.

(Corrects record reserve level in fourth paragraph.

Oct. 17 (Bloomberg) -- Argentina may ease its defense of the peso, allowing for a 16 percent slide by year-end, to stem the loss of foreign reserves amid the worst global financial crisis since the Great Depression, JPMorgan Chase & Co. Said.

The central bank may opt for a one-time devaluation this year to 3.8 per dollar from 3.2086 today, JPMorgan economist Vladimir Werning wrote in a report. Werning had been forecasting the bank would let it reach 3.8 under a gradual depreciation, known as a 'crawling peg,'' by the end of next year.

The central bank's 'balance sheet is more strained than gross reserves show,'' Werning wrote. 'Policy makers may end up acknowledging that reserve losses are excessive and opt for the lesser of the two evils --- a gap devaluation.''

The central bank said yesterday that reserves totaled $46.9 billion, down from a record $50.5 billion in late March.

The peso has declined 5 percent from 3.0443 on Aug. 1.

To contact the reporter on this story: Drew Benson in Buenos Aires at [email]Abenson9@bloomberg. Net[/email]

Last Updated: October 17, 2008 12:06 EDT.

[url]http://www.bloomberg.com/apps/news?pid=20601086&sid=aIl8mn0weC2w&refer=news[/url]

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That is before they pay $6.4 billion debts with the Paris Club group of 19 creditor nations, so that will leave Ar with $40.5 Billion, form 50.5 in March.

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Although Argentina defaulted on its debt in 2002 and effectively wiped much of the slate clean, the country’s IOUs have begun to build up once again. With 25 percent of Argentina’s gross domestic product owed in the form of foreign-currency-denominated bonds, any devaluation of the Argentine peso in international markets could balloon the peso value of Argentina’s debt. And with little ability to borrow more because of a dismal credit rating, Argentina cannot afford to have its debt skyrocket on top of other (rising) fiscal pressures.

[url]http://www.stratfor.com/analysis/20081017_argentina_brazil_threat_bad_luck_spreading[/url]

I knew Sidney. Sidney is an intelligent person with experience in the capital markets I. E. Think Warren Buffet.

When Sidney says the economy of Argentina is fucked the economy of Argentina is fucked.

I am not as intelligent as Sidney but it is not necessary to be a genius, like Sidney, to realize that the economy of Argentina is fucked

I apologize if my previous post sounds pesimestic. The problem with the Argentine economy is not a reflection on the citizens of Argentina. It is a reflection on the policies of the Argentine government.

Likewise, if Obama is elected President we, in the United States, may have a situation similar i.e. those who refuse to work will be supported by those who are willing to work.

It impacts the price for Chicas. That's why we are here and that's how it matters.

Because K's policies drive the peso down; we fly down there to spread the wealth. You are welcome, but thanks are unneccesary.

And trust me, I do appreciate the generosity of the women who receive me. But not as a tourist.

"Here endeth the lesson" - Sean Connery

[url]http://www.bloomberg.com/apps/news?pid=20601087&sid=azOy.DdB_f5Q[/url]

Wow.

Oct. 21 (Bloomberg) -- Argentine bonds soared above 24 percent and stocks sank the most in a decade on speculation the government will seize private pension funds and use the assets to stave off the second default this decade.

President Cristina Fernandez de Kirchner will unveil a new pension fund plan at 4 P. M. New York time today, the country's social security administration said in a statement. Fernandez will nationalize the system, giving the government control of $29 billion in retirement accounts, La Nacion reported, citing government officials it didn't identify.

[snip]

'It's horrible,'' said Jaime Valdivia, who manages $1 billion of assets for Emerging Sovereign Group in New York. 'We're going back to the dark ages. Not even in times of the worst financial stress did the government ever think about taking over the private pension system.''

Fernandez has struggled to raise cash to cover growing financing needs as the global financial crisis drives down prices on the country's commodity exports and erodes demand for higher-yielding, developing-nation debt. The government's borrowing needs will swell to as much as $14 billion next year from $7 billion in 2007, RBC Capital Markets, a Toronto-based unit of Canada's largest bank, said today.

Argentina created the private accounts in 1994 with the aim of phasing out the government-run system. A government takeover of the accounts would probably require congressional approval, Tavelli said.

Argentina's private pension fund administrators managed 94.4 billion pesos ($29 billion) in savings at the end of September. About 55 percent of the investments are in government debt, according to the pension fund regulator's Web site.

Nationalization would allow the Fernandez administration to write off the government bonds held by the funds, said Javier Salvucci, an analyst with Buenos Aires-based Silver Cloud Advisors.

'The government is explicitly saying that it has problems meeting debt maturities and this is a last-ditch measure to do so,'' Salvucci said. 'For accounting purposes, this debt will no longer exist.''

[url]http://www.bloomberg.com/apps/news?pid=20601087&sid=azOy.DdB_f5Q&refer=home[/url]

[QUOTE=Camilo]Losing residents and tourists from other places of the world, maybe. But surely not the negative kind of mongers you personified.

I don't know people so complainant of other countries as american people.

No wonder nobody wants them, and "yankis go home" is one of the slogans most painted all around the globe, in walls from here to the Turkistan.[/QUOTE]Right.

And that's why folks are still clamoring to get into our country any way they can. That's why the dollar is still welcomed everywhere. (Though it may have declined in some places, one of those places is not Argentina. That's why, when there is world economic trauma, our treasuries approach a negative yield curve. What currency is Argentine real estate bought and sold in?

Democracy, flawed as it is, is still the best form of government, and ours is the strongest brand, warts and all.

Capitalism, despite its excesses, is still the best commercial structure (and, in my opinion, a good argument can be made that the current socialist interferences in the economy will do more harm than good, but that remains to be seen)

The USA certainly has its problems. Its current President ran out of ideas a day after he was re-elected. (Before I draw fire for that, let me 'fess up: I voted for him. His predecessor, Bill Clinton, was probably the biggest and best liar the Oval Office has ever seen, and I mean that in the best possible way. My hunch is that the Kirchners have studied the Clinton playbook quite extensively and, with word that James Carville makes frequent trips there, they may have retained the same tutor. If the Kirchners were smart, they would take notes not only on what Bill Clinton did, but on what he did not do and say: He kept his nose out of the economy, which was his chief virtue.

Most of the folks you're now criticizing -- expat mongers in your country -- are living off the fat of our land, in your country. If local economic conditions there were better, then there wouldn't be the constant supply of working girls, at least not at the prices that prevail today.

In the U. S. A. We definitely have our problems. But, we don't gloss over our problems quite the way some other countries do. Bring on the criticism. There is virtually nothing you can say that hasn't made headlines in one of our daily papers somewhere, and if it hasn't attained that currency, then it's likely the political plank of some crank or firebrand somewhere here. We make our messes; we engage in self-flagellation over them; we clean them up; then we move on.

If Argentina was half as candid about its problems, it could start to clean them up, as well. When it really doesn't want American tourists and their American dollars, then it will start to retract the welcome mat. Perhaps the entry visa fee is the start of that, but somehow I doubt it. It's good that folks can write "Yanqui go home" down there. But not so long ago, what happened to them when they leveled similar criticisms at their own government? How many went missing?