Argentine Economy

[QUOTE=Tres3;447133]I guess all of the sleepless nights endured by Singer's minions are going to finally pay off--if the Argentina Congress does not fuck it up.

[URL]http://finance.yahoo.com/news/hedge-funds-poised-massive-gains-144957191.html[/URL]

Tres3.[/QUOTE]Jax, good post. I know one of the holdouts in Singer's group. He's Turan Group out of Boston. I wouldn't call him a "minion" but he has been down here for conferences on the defaults a number of times. He's brilliant and says he was small potatoes having invested only a half a million. These guys have so much dough that they don't lose sleep over bonds they know are eventually going to be retired. The only question was how much? With accumulated interest, I would guess the offer of 75% of face is going to pay much more than a hundred percent of face value. Good deal for the bond holders and a great day for Argentina. It's not a done deal yet, but I think Congress will approve. Enjoying my visit here. Thanks. Bobby Doerr.

[QUOTE=BobbyDoerr;447134]Jax, good post. I know one of the holdouts in Singer's group. He's Turan Group out of Boston. I wouldn't call him a "minion" but he has been down here for conferences on the defaults a number of times. He's brilliant and says he was small potatoes having invested only a half a million. These guys have so much dough that they don't lose sleep over bonds they know are eventually going to be retired. The only question was how much? With accumulated interest, I would guess the offer of 75% of face is going to pay much more than a hundred percent of face value. Good deal for the bond holders and a great day for Argentina. It's not a done deal yet, but I think Congress will approve. Enjoying my visit here. Thanks. Bobby Doerr.[/QUOTE]I realize this is a very complicated issue but I'm confused about something.

I always through that Singers group had bought up the default bonds for pennies on the dollar. I assumed that for years until I was directed to some information that said they paid around 70 cents on the dollar. If that is true, how could the original debt have been 80 billion, Argentina will be paying I think the article said around 10 billion and Singers group will see nearly 400% on the original investment?

Not disputing, just curious.

[QUOTE=DaddyRulz;447135]I realize this is a very complicated issue but I'm confused about something.

I always through that Singers group had bought up the default bonds for pennies on the dollar. I assumed that for years until I was directed to some information that said they paid around 70 cents on the dollar. If that is true, how could the original debt have been 80 billion, Argentina will be paying I think the article said around 10 billion and Singers group will see nearly 400% on the original investment?

Not disputing, just curious.[/QUOTE]Singer's group bought mostly "floating rate" bonds. See my earlier post on Feb. 9 for more details.

Tres3.

If I have read the below linked article correctly, it looks as if the Argentina Government is robbing Peter to pay Paul.

[URL]http://finance.yahoo.com/news/argentina-creditors-agree-155-million-more-default-settlement-021942345--finance.html[/URL]

Tres3.

It looks as if Argentina has once again proven that one cannot change the stripes on a zebra.

[URL]http://www.bloomberg.com/news/articles/2016-03-24/argentina-settlement-surprise-leaves-some-investors-in-the-cold?cmpid=yhoo.headline[/URL]

Tres3.

The below article shows a surprising amount of common sense on the part of the Argentine Congress and a repudiation of CFK. The big question now is who will buy the new debt that Argentina plans to sell so that they can pay the old debt. I guess that Argentina believes that P.T. Barnum is alive and well.

[URL]http://news.yahoo.com/argentine-senate-debates-deal-end-210725713.html[/URL]

Tres3.

The attached link names not only Macri, but a whole laundry list of worldwide politicians who set up offshore accounts using the Panama law firm. I speculate that this list is only the tip of the iceberg.

[URL]http://finance.yahoo.com/news/latest-australia-probe-possible-tax-062350554.html[/URL]

Tres3.

The below link is to an article about the proposed Argentine bond issuance. Personally, I would not touch the bonds with a ten foot pole.

[URL]http://blogs.barrons.com/emergingmarketsdaily/2016/04/07/argentina-why-invest-in-largest-emerging-debtor-of-2016/?mod=yahoobarrons&ru=yahoo[/URL]

Tres3.

The guys in the Barron's Roundtable are not always right but they have been around the block a few times. Does anyone know how you actually do the following trade?

Have you other investment picks?

In the next year, there will be an investment opportunity in Argentina, where there has been a fundamental political change after 70 years of a combination of socialism, conservatism, nationalism, and corruption. This change could be as important as the Reagan presidency was to the U.S.

Mauricio Macri, Argentinas new president, is open-minded, with an international view. He has a great team of experts in place in finance and economics, and at the central bank. He lifted export sanctions and currency controls. Thats why the dollar/peso ratio shot up to almost 16 from nine. It pushed inflation rates up, but inflation is expected to decline next year as the impact of the one-time devaluation disappears. Argentina also has settled its problems with foreign creditors, and has come back to the capital markets. In addition, Macri has announced a tax amnesty that will bring in more tax revenue.

What is the best way to invest in Argentinas progress?

Im bullish on the Argentine peso. You can buy it against the dollar on a one-year forward basis. The interbank forward rate is 17.31 pesos to the dollar, versus the spot rate of 13.95 pesos. This gives you a carry of 19.4% for 12 months if the spot price stays unchanged.

Argentina has recently issued $16 billion of dollar-denominated bonds with maturities of three, five, 10, and 30 years. I bought the three-year, which carried a coupon of 6.25%. The yield has already fallen to 4.5%. If you are more adventurous, you can buy five-year debt.

In the near term, things arent easy in Argentina. The economy is in recession. The inflation rate is 40%. There are demonstrations and strikes. The next nine to 12 months is critical, until people see that inflation is normalizing. But Argentina has little government debt. It couldnt tap the capital markets for a long time.

I agree that Macri is a breath of fresh air, BUT the country is run by civil servants, and the majority of them are Peronistas. Since 1900 the country has defaulted on its foreign debt nine (9) times. They seem to always find another sucker to loan them more money. 6.5% is not much of a risk premium. A person might make some money on this ponzi scheme, if he cashes out early, and leaves someone else holding the bag. There is a reason that real estate in this country is traded in USD, and smart Argentines have most of their money in USD.

Tres3.

Saw BBC news report that there was a 24 hour general strike yesterday in BA? They showed some pictures of deserted main streets, Constitution and 9 de Julio. Says security forces had to use water cannon and tear gas to control protesters who blocked the main highway leading from the north to the capital. Report says inflation 40% last year and expected to be about 20 % this year and protesters were calling for increased wages.

[QUOTE=Ponelover;448858]Saw BBC news report that there was a 24 hour general strike yesterday in BA? They showed some pictures of deserted main streets, Constitution and 9 de Julio. Says security forces had to use water cannon and tear gas to control protesters who blocked the main highway leading from the north to the capital. Report says inflation 40% last year and expected to be about 20 % this year and protesters were calling for increased wages.[/QUOTE]That's terrible news. Well, 'sadly' bad times bring more chicas into the business.

There have been a lot of strikes lately. And why not? Under the world famous Argie system of nonsense, employees collect their wages while on strike! After all, where else in the world to people work for ten months a year (or less) and collect for thirteen months???? But only those employees in "blanco" of course.

[QUOTE=Gandolf50;448861] where else in the world to people work for ten months a year (or less) and collect for thirteen months???? [/QUOTE]If you are referring to the [I]aguinaldo[/I], it's the norm in many other Latin countries. México, Chile, Brazil, Nicaragua, Colombia, and even the Philippines have this system. It's also common in France, although not mandatory.

[QUOTE=Dickhead;448862]If you are referring to the [I]aguinaldo[/I], it's the norm in many other Latin countries. Mxico, Chile, Brazil, Nicaragua, Colombia, and even the Philippines have this system. It's also common in France, although not mandatory.[/QUOTE]In the Latin countries that I have been to, Aguinaldo is only one month. For the other two months are you referring to vacations and holidays???? The Philippines is really a Latin country that happens to be located in Asia. Spain ruled for over 400 years, and until Mexican Independence, the Philippines were controlled by the Viceroy of Mexico. The strange thing is that even though the Filipinos love rice, beans never became a part of their diet, like in Hispanoamerica.

Tres3.

[QUOTE=Tres3;448863]In the Latin countries that I have been to, Aguinaldo is only one month. For the other two months are you referring to vacations and holidays???? The Philippines is really a Latin country that happens to be located in Asia. Spain ruled for over 400 years, and until Mexican Independence, the Philippines were controlled by the Viceroy of Mexico. The strange thing is that even though the Filipinos love rice, beans never became a part of their diet, like in Hispanoamerica.

Tres3.[/QUOTE]Right, the aguinaldo is only one month, or fifteen days in the case of México. I do believe the other poster was referring to vacation time, sick leave, and the plethora of holidays in Argentina, when saying they work for ten months.

My guess would be that rice grows much better than beans in The Philippines. Of course, the original diet of the indigenous people in much of what is now Latin America was beans and corn, not beans and rice. And unfortunately for filipinos, beans are significantly more nutritious than rice. Sitting here in my apartment in the world's leading olive-producing country, I'm sure glad I don't have to live on rice and beans, but I could sure live on olives for a while.

[QUOTE=Dickhead;448864]Right, the aguinaldo is only one month, or fifteen days in the case of Mxico. I do believe the other poster was referring to vacation time, sick leave, and the plethora of holidays in Argentina, when saying they work for ten months.

My guess would be that rice grows much better than beans in The Philippines. Of course, the original diet of the indigenous people in much of what is now Latin America was beans and corn, not beans and rice. And unfortunately for filipinos, beans are significantly more nutritious than rice. Sitting here in my apartment in the world's leading olive-producing country, I'm sure glad I don't have to live on rice and beans, but I could sure live on olives for a while.[/QUOTE]You are very correct when you say that beans are far more nutritious than rice. I think that the scarcity of corn caused by slash and burn agricultural practices in Latin America combined with the discovery that rice and beans made a "super food" led to rice supplementing, but not completely replacing, corn in the Latin American diet. Dry land raised rice strains did not hurt either. The still perplexing thing is that there are many types of beans, and there is bound to be a type that grows reasonably well in the Philippines. For example most all of the black beans consumed by humans are grown in Minnesota. I can only speculate that most Filipinos simply have not acquired a taste for beans--too bad. BTW, I never ate an olive that I did not like.

Tres3.

Anyone who keeps track of international news or just pays attention to the financial world, would know that Argentina is now in ANOTHER financial crisis. If you have been paying attention to those, you would know what I am talking about. If not, I won't try and sum it up for you. But for the purposes of the overseas monger, the exchange rate cannot be ignored. Just this week the Argentine Peso broke above 23 per USD and is just shy of 24. That's easily the highest point in the past decade. As a point of comparison, there was slightly over 3 ARS per $ this time 10 years ago. However the currency has slumped steadily against most all other currencies. In Feb. 2014 and Dec. 2015 the ARS plunged dramatically. Of course this is no surprise in a country with inflation running 26%. One could argue that the devaluation of the ARS isn't sufficient to compensate for the loss of buying power.

My question to those who travel to Argentina is, how much has inflation impacted P4P prices, and how has the devaluation worked for you? Are we seeing a rare chance for discounted mongerng with the fabled Argentine girls, or are they spiking their prices accordingly?

I am also curious how the economic calamity will effect impact the choices, as well. As has been noted on the Greece forum, the financial crisis in Greece, resulting in widespread unemployment among young people, saw more girls on the streets and selling their services at a deep discount by EU standards. I realize that this will take time to unfold, and the government has reached out to the IMF for help ( a very unpopular move, apparently), so they might get bailed out again. But, I realize this situation didn't happen overnight, nor is it the first for Argentina. Maybe some experience people who have watched the national economy over time, or some members on the ground can comment. Thanks.

[QUOTE=BigBossMan;447542]The guys in the Barron's Roundtable are not always right but they have been around the block a few times. Does anyone know how you actually do the following trade?
[/QUOTE]Well, if you have to ask how to do it, then you shouldn't even think about trying. Hopefully you didn't, but if you had taken Felix's advice you have been f*cked from the beginning. On the date that you made this post, just shy of two years ago, the exchange rate was just shy of 13.7 ARS per US$. A week later, it was 15.2 to the USD. Today its closed at 23.

The lesson? Well, as my economics professor told me back in 1980, you cannot realistically speculate on currency. You just cannot predict the direction of currency fluctuations. There are just too many moving parts. I liked to think it was possible and that my professor was being close minded. But, what did I know? I was a 22 year old student with big ideas and a blank resume of life experiences. In hindsight, he was right back then and he is right today (Thank you, Professor Behnke). Getting past my own education, the thing you must learn is that you must NEVER make a financial decision based on anything you read in the financial media. Its a good way to lose money that could better be spent on sex. If I can given any novice investor any advice, it would be to ignore investment advice by the touts in the financial media.

[QUOTE=Eszpresszo;449984]Well, if you have to ask how to do it, then you shouldn't even think about trying. Hopefully you didn't, but if you had taken Felix's advice you have been f*cked from the beginning. On the date that you made this post, just shy of two years ago, the exchange rate was just shy of 13.7 ARS per US$. A week later, it was 15.2 to the USD. Today its closed at 23.

The lesson? Well, as my economics professor told me back in 1980, you cannot realistically speculate on currency. You just cannot predict the direction of currency fluctuations. There are just too many moving parts. I liked to think it was possible and that my professor was being close minded. But, what did I know? I was a 22 year old student with big ideas and a blank resume of life experiences. In hindsight, he was right back then and he is right today (Thank you, Professor Behnke). Getting past my own education, the thing you must learn is that you must NEVER make a financial decision based on anything you read in the financial media. Its a good way to lose money that could better be spent on sex. If I can given any novice investor any advice, it would be to ignore investment advice by the touts in the financial media.[/QUOTE]I did not take his advice at that time. One way to play the current situation is in hotel room prices. I paid $260 a night in November 2017 at the Alvear Art. I looked at their site today and you can book one week for $150 a night. However, I thought the quality was slipping back in November. They are starting to cater to tour groups. So the hotel lobby will be flooded with a hundred Germans or Chinese on any given morning.

[QUOTE=Eszpresszo;449983]
My question to those who travel to Argentina is, how much has inflation impacted P4P prices, and how has the devaluation worked for you? Are we seeing a rare chance for discounted mongerng with the fabled Argentine girls, or are they spiking their prices accordingly?
[/QUOTE]The following chart shows the evolution of the real exchange rate Argentine Peso / US Dollar since the last really big crisis (end of 1 Arg Peso = 1 US Dollar currency board at the end of 2001/early 2002). "Real Exchange Rate" means adjusted for both Argentine and USA inflation.

What the chart shows is that we are not yet anywhere near the days of cheap Argentine prices (P4P included) that we had in 2002-2005, for example.

Also, unemployment (another major driver of good P4P prices) is relatively stable at 8%, high by current USA levels, but actually good for the local record over past years.

Bottom line: the crisis, if there is actually one, needs to get much deeper if we are going to see chica prices going into the bargain zone.

[QUOTE=Local;449987]
What the chart shows is that we are not yet anywhere near the days of cheap Argentine prices (P4P included) that we had in 2002-2005, for example.
Also, unemployment (another major driver of good P4P prices) is relatively stable at 8%, high by current USA levels, but actually good for the local record over past years.
Bottom line: the crisis, if there is actually one, needs to get much deeper if we are going to see chica prices going into the bargain zone.[/QUOTE]Thanks for your input. Being old enough to recall double digit inflation in the US during the late 70's, I understand how it compounds over a modest amount of time.

While not on my immediate list of places to visit, BA has a reputation for some of the finest working girls in LA, but also the most expensive. Of course, it seems Argentina is always undergoing some financial crisis. This latest one probably is not the worst or will it be the last.

[QUOTE=Eszpresszo;449984]Well, if you have to ask how to do it, then you shouldn't even think about trying. Hopefully you didn't, but if you had taken Felix's advice you have been f*cked from the beginning. On the date that you made this post, just shy of two years ago, the exchange rate was just shy of 13.7 ARS per US$. A week later, it was 15.2 to the USD. Today its closed at 23.

The lesson? Well, as my economics professor told me back in 1980, you cannot realistically speculate on currency. You just cannot predict the direction of currency fluctuations. There are just too many moving parts. I liked to think it was possible and that my professor was being close minded. But, what did I know? I was a 22 year old student with big ideas and a blank resume of life experiences. In hindsight, he was right back then and he is right today (Thank you, Professor Behnke). Getting past my own education, the thing you must learn is that you must NEVER make a financial decision based on anything you read in the financial media. Its a good way to lose money that could better be spent on sex. If I can given any novice investor any advice, it would be to ignore investment advice by the touts in the financial media.[/QUOTE]With all due respect, it's a good thing that your econ professor wasn't a currency trader.

I hope you don't mind, if I chime in with a few personal observations.

There is a huge global currency spot and futures market based, in large part, upon speculation.

Most currency speculation is based upon the expectation that certain future events will impact the (rather complex) equation, expressing equilibrium between the two currencies in question. That said the biggest single component of interest rate differentials is usually the relative interest rates, offered by the respective central banks. Most of the rest of the calculus is the art of estimating risk (sovereign risk, country risk, etc.). There are lots of rocket scientists who focus on far more esoteric elements of the equation and more complex transactions (like crosses of three or more currencies), but the basics are: you bet on expected interest rate differentials and events that will impact the risk equilibrium.

The period you cited, when the peso dropped to about 15:1 was when the currency controls came off. Argentina severely limited access to FOREX 2011-2015. I tracked the official and unofficial rates (blue rate) daily, throughout the entire period. I am simplifying events and roughly approximating the ratios from memory. So, please forgive the imprecision. The free-floating peso didn't trade at 13:1 for long (minutes?). It went from about 9:1 (official rate) to 15:1 (free-floating) almost overnight. The set govt rate was under 10:1, and the blue rate (unofficial black market rate) was maybe 13:1. We were looking at a large FOREX play involving Argentina (probably the only group looking to get into, as opposed to out of, Argentina at the time, during the currency controls). I arrived at 16:1 as our "safe case." When the controls came off in 2015, the rate immediately went to 15:1 and stayed there, plenty long enough for us to unwind the position in the open market.

Right now, Argentina faces an uphill climb, after doing so well for nearly two years, making the economy more attractive to foreign capital. They are caught in several large and powerful currents.

The biggest monkey wrench has been that the US Fed tightening is drawing money away from Argentina (and most developing economies). During periods of increasing US rates, the risk/reward pendulum usually swings away from developing economies. While the ROI on US govt securities sucks, all US debt securities are essentially priced off of those underlying rates (and LIBOR). Therefore, a 50 basis point (or .5%) uptick in Fed rates will get priced in across the entire spectrum of dollar-based debt securities, thereby offering higher returns at a wide variety of risk profiles. That draws money into the US dollar and out of foreign currencies, starting with those of developing economies. Therefore, the declining supply increases the cost FOREX to Argentina.

The next problem (a recurring nightmare for Argentina) is Argentina's economy, and in particular, its unsustainable domestic spending. Argentina, which was already addicted to handouts, went nuts under the Kirchner reign of terror increasing handouts to unsustainable levels. Given Argentina's legendary history of populism, the guy who pulls the plug on handouts runs the risk of quickly becoming unpopular. Unsustainable spending by a govt that has limited reserves and a checkered history in the international debt markets, raises the specter that they might have some future difficulties. Therefore, the risk to holders of Argentine debt rises. Investors demand higher returns for increased risk. Therefore, the cost of capital rises.

1) Risk = Cost.

2) If risk rises, so too must the compensation to the investor.

3) Therefore, interest rates must rise in order to attract capital.

However, rising interest rates increase inflation. Inflation increases risk.

1) Risk = Cost.

2) If risk rises, so too must the compensation to the investor.

3) Therefore, interest rates must rise in order to attract capital.

Lather, rinse, repeat...

Despite the forgoing, things in Argentina arent really cheap. Unfortunately, I believe that things are going to have to get cheap in Argentina in order to break the cycle. If the govt severely cuts back domestic spending and the currency goes to something like 30:1, it might do the trick. However, I doubt the govt will have the sack to do it. Therefore, the currency will need to sink further in order to compensate for that.

[QUOTE=WildWalleye;449998]With all due respect, it's a good thing that your econ professor wasn't a currency trader.

I hope you don't mind, if I chime in with a few personal observations.

There is a huge global currency spot and futures market based, in large part, upon speculation.

Most currency speculation is based upon the expectation that certain future events will impact the (rather complex) equation, expressing equilibrium between the two currencies in question. That said the biggest single component of interest rate differentials is usually the relative interest rates, offered by the respective central banks. Most of the rest of the calculus is the art of estimating risk (sovereign risk, country risk, etc.). There are lots of rocket scientists who focus on far more esoteric elements of the equation and more complex transactions (like crosses of three or more currencies), but the basics are: you bet on expected interest rate differentials and events that will impact the risk equilibrium.

The period you cited, when the peso dropped to about 15:1 was when the currency controls came off. Argentina severely limited access to FOREX 2011-2015. I tracked the official and unofficial rates (blue rate) daily, throughout the entire period. I am simplifying events and roughly approximating the ratios from memory. So, please forgive the imprecision. The free-floating peso didn't trade at 13:1 for long (minutes?). It went from about 9:1 (official rate) to 15:1 (free-floating) almost overnight. The set govt rate was under 10:1, and the blue rate (unofficial black market rate) was maybe 13:1. We were looking at a large FOREX play involving Argentina (probably the only group looking to get into, as opposed to out of, Argentina at the time, during the currency controls). I arrived at 16:1 as our "safe case." When the controls came off in 2015, the rate immediately went to 15:1 and stayed there, plenty long enough for us to unwind the position in the open market.

Right now, Argentina faces an uphill climb, after doing so well for nearly two years, making the economy more attractive to foreign capital. They are caught in several large and powerful currents.

The biggest monkey wrench has been that the US Fed tightening is drawing money away from Argentina (and most developing economies). During periods of increasing US rates, the risk/reward pendulum usually swings away from developing economies. While the ROI on US govt securities sucks, all US debt securities are essentially priced off of those underlying rates (and LIBOR). Therefore, a 50 basis point (or .5%) uptick in Fed rates will get priced in across the entire spectrum of dollar-based debt securities, thereby offering higher returns at a wide variety of risk profiles. That draws money into the US dollar and out of foreign currencies, starting with those of developing economies. Therefore, the declining supply increases the cost FOREX to Argentina.

The next problem (a recurring nightmare for Argentina) is Argentina's economy, and in particular, its unsustainable domestic spending. Argentina, which was already addicted to handouts, went nuts under the Kirchner reign of terror increasing handouts to unsustainable levels. Given Argentina's legendary history of populism, the guy who pulls the plug on handouts runs the risk of quickly becoming unpopular. Unsustainable spending by a govt that has limited reserves and a checkered history in the international debt markets, raises the specter that they might have some future difficulties. Therefore, the risk to holders of Argentine debt rises. Investors demand higher returns for increased risk. Therefore, the cost of capital rises.

1) Risk = Cost.

2) If risk rises, so too must the compensation to the investor.

3) Therefore, interest rates must rise in order to attract capital.

However, rising interest rates increase inflation. Inflation increases risk.

1) Risk = Cost.

2) If risk rises, so too must the compensation to the investor.

3) Therefore, interest rates must rise in order to attract capital.

Lather, rinse, repeat...

Despite the forgoing, things in Argentina arent really cheap. Unfortunately, I believe that things are going to have to get cheap in Argentina in order to break the cycle. If the govt severely cuts back domestic spending and the currency goes to something like 30:1, it might do the trick. However, I doubt the govt will have the sack to do it. Therefore, the currency will need to sink further in order to compensate for that.[/QUOTE]LOL..... Argie land is rapidly approaching 30 to 1 !

[QUOTE=Gandolf50;450004]LOL..... Argie land is rapidly approaching 30 to 1 ![/QUOTE]Very Disappointed in Myself !

Sold a few items for $75,000.00 and I thought it was 21 to 1 !

Lost a little cash I guess.

TL.

Anybody need Pesos ? I can help you .

I have a question. Have prices in Argentina shot up as the currency has crumbled? Have you guys on the ground really benefited by this drop? It seems as if you have received a windfall. I am happy for you!!!

[QUOTE=PirateMorgan;450017]I have a question. Have prices in Argentina shot up as the currency has crumbled? Have you guys on the ground really benefited by this drop? It seems as if you have received a windfall. I am happy for you!!![/QUOTE]Inflation seems to be out pacing the decline of the peso. Most things are cheaper in the states where you are at least earning dollars and not pesos.

If inflation is outpacing the peso...that is one xxxxload of inflation. Ouch.

[QUOTE=WildWalleye;449998]With all due respect, it's a good thing that your econ professor wasn't a currency trader.

I hope you don't mind, if I chime in with a few personal observations.

There is a huge global currency spot and futures market based, in large part, upon speculation.

[/QUOTE]Thanks for your detailed input. It was an informative read.

Yes, I was aware that there is an enormous amount of speculation in currency markets. But, I am grateful that my econ professor told me long ago, that I couldn't speculate on those things. Otherwise, I would have tried to do it at some point. As a result, I would have most certainly lost money like I have with any purely speculative investment I have attempted.

So, from the sound of things it, the situation will need to get much worse before young women are selling their bodies at discount prices, due to the lack of income or employment opportunities. But, Brazil is appearing to have a bit of a currency crisis, too. Maybe the pickings will be better there?

[QUOTE=Eszpresszo;450031]Thanks for your detailed input. It was an informative read.

Yes, I was aware that there is an enormous amount of speculation in currency markets. But, I am grateful that my econ professor told me long ago, that I couldn't speculate on those things. Otherwise, I would have tried to do it at some point. As a result, I would have most certainly lost money like I have with any purely speculative investment I have attempted.

So, from the sound of things it, the situation will need to get much worse before young women are selling their bodies at discount prices, due to the lack of income or employment opportunities. But, Brazil is appearing to have a bit of a currency crisis, too. Maybe the pickings will be better there?[/QUOTE]Personally, I prefer Argentinian women to Brazilian women. I really like the old world feel of Bs As, the wine, the food and the culture. I'd be willing to pay a premium for those things.

However, I suspect that most of the developing economies, that are not currently rocking and rolling (from an economic perspective), are going to face an uphill battle, over the next six months and for the foreseeable future. The US Fed will raise rates at least another two times, this year. That probably means another .50% on the Fed Funds Rate. That will continue the "capital flight" mentioned in my previous post.

Despite the IMF life-line, things (from a currency perspective) are going to get worse in Argentina, before they get better. Additionally, as previously discussed, despite currency devaluation, the inflation of prices has offset much of the devaluations, therefore, things haven't actually become much cheaper. That means that the scales haven't been tipped in favor of the foreign investor (something that needs to happen in order to entice foreign investment).

Argentina is going to have to take some bitter medicine in order to break the cycle and turn the corner...a corner it had sort of turned with the election of Macri, but truncated by the moods of the markets (and Fed Rate hikes). However, these things take time and patience, two things voters tend to lack. If things go poorly, the Argies will fall back on electing Peronistas and the whole cycle will begin again. The biggest problem with that repugnant form of governance is the economic isolation that it comes with it. The IMF loan will be the last foreign money Argentina sees for the foreseeable future, if it starts to move back towards the Peronistas.

If the country falls back on old populist handout politics, the country will be plunged into an economic decline that will make 2001 look like a cakewalk. Conversely, if the country takes its medicine (eliminate many entitlements and what is effectively an economy-wide write-down of many assets and service in the country via further erosion to the peso) it will be able to begin anew climbing up the slope of economic recovery.

From AP and the local foros, I believe that thing are starting to get less expensive in Argentina, including chicas. However, prices still have a long way to go. IN 2007, I started spending a lot of time in Bs As. An hour romp at 1707 Ste Fe was $39. A similar romp, today is about $52. So, we'll need to see about a 24% drop in prices (AR$33:1USD) to get to back to what I consider the good ole days. The old timers here knew it when it was much better than that.

[QUOTE=PirateMorgan;450020]If inflation is outpacing the peso...that is one xxxxload of inflation. Ouch.[/QUOTE]...and in order for things to "normalize" the devaluation of the peso needs to exceed inflation...

[QUOTE=WildWalleye;450035]...and in order for things to "normalize" the devaluation of the peso needs to exceed inflation...[/QUOTE]

[QUOTE=WildWalleye;450034]Personally, I prefer Argentinian women to Brazilian women. I really like the old world feel of Bs As, the wine, the food and the culture. I'd be willing to pay a premium for those things.

Despite the IMF life-line, things (from a currency perspective) are going to get worse in Argentina, before they get better. Additionally, as previously discussed, despite currency devaluation, the inflation of prices has offset much of the devaluations, therefore, things haven't actually become much cheaper. That means that the scales haven't been tipped in favor of the foreign investor (something that needs to happen in order to entice foreign investment).

[/QUOTE]Plus bureaucratic and legal issues. I looked at taking a stake in a business down there about a year after Macri came in. Small deal, nothing like a forex play, but oh boy the fuckery. Lets just say the accounting was ... Artistic, and not because they were bad guys, but hiding money and greasing skids are accepted parts of competition.

I still dig around while I'm there, if only to make the trip a write off and get plugged into the city. But anything that matters involves significant inside baseball and most official interactions are an adaptation of "Esprando a Godot." Sorry Argentina, I'm not sophisticated enough to price that sort of risk.

That said, there are still strong underlying strengths, and by underlying, I mean deep in the bucket. Highest regional broadband penetration, a relatively educated population, a ton of unexploited minerals, oil, and gas. 50% of the country doesn't have a bank account, Still the most culturally significant country in South America. How they unlock all that I have no idea.

[QUOTE=Jhskiier;450063]Plus bureaucratic and legal issues. I looked at taking a stake in a business down there about a year after Macri came in. Small deal, nothing like a forex play, but oh boy the fuckery. Lets just say the accounting was ... Artistic, and not because they were bad guys, but hiding money and greasing skids are accepted parts of competition.

I still dig around while I'm there, if only to make the trip a write off and get plugged into the city. But anything that matters involves significant inside baseball and most official interactions are an adaptation of "Esprando a Godot." Sorry Argentina, I'm not sophisticated enough to price that sort of risk.

That said, there are still strong underlying strengths, and by underlying, I mean deep in the bucket. Highest regional broadband penetration, a relatively educated population, a ton of unexploited minerals, oil, and gas. 50% of the country doesn't have a bank account, Still the most culturally significant country in South America. How they unlock all that I have no idea.[/QUOTE]Let me know when you are going back to Bs As. Maybe we should meet up.

I bought and sold a company in Argentina in the late '00s. My local lawyers and accountants were excellent. We made a ton of money. I have looked at acquiring several businesses in Argentina, since Macri was elected, but I have a very strict discipline when evaluating ops. I think that this currency blow up is part of what I have been waiting for.

[QUOTE=Jhskiier;450063]That said, there are still strong underlying strengths, and by underlying, I mean deep in the bucket. Highest regional broadband penetration, a relatively educated population, a ton of unexploited minerals, oil, and gas. 50% of the country doesn't have a bank account, Still the most culturally significant country in South America. How they unlock all that I have no idea.[/QUOTE]Except broadband, I think that’s been the issue with Argentina for the last 100 years.

[QUOTE=Jhskiier;450063]Plus bureaucratic and legal issues. I looked at taking a stake in a business down there about a year after Macri came in. Small deal, nothing like a forex play, but oh boy the fuckery. Lets just say the accounting was ... Artistic, and not because they were bad guys, but hiding money and greasing skids are accepted parts of competition.

I still dig around while I'm there, if only to make the trip a write off and get plugged into the city. But anything that matters involves significant inside baseball and most official interactions are an adaptation of "Esprando a Godot." Sorry Argentina, I'm not sophisticated enough to price that sort of risk.

That said, there are still strong underlying strengths, and by underlying, I mean deep in the bucket. Highest regional broadband penetration, a relatively educated population, a ton of unexploited minerals, oil, and gas. 50% of the country doesn't have a bank account, Still the most culturally significant country in South America. How they unlock all that I have no idea.[/QUOTE]Broadband is nice, but not the great equalizer it was promised to be.

As for natural resources, Brazil owns most of Argentina's.

[QUOTE=WildWalleye;450035]...and in order for things to "normalize" the devaluation of the peso needs to exceed inflation...[/QUOTE]I believe that we are starting to see this take place. The currency has been crushed, recently.

What is happening to prices? What are you guys paying for a cup of coffee, empenadsas and poontang?

Hey, W Squared .

I see that youre trying to get a handle on BsAs real-world inflation too.

What I do is get on the Coto Grocers website and look at the price of food staples (frequently updated). I then compare those prices to what I was paying during Dec of 17 (peso/us$ @ 19). For me, the price of domestic cheese, orange juice, milk, Coke/Pepsi is a good indication. I buy a lot of this during extended stays. Notwithstanding sales prices, I find that these items are pretty much the same as they were in Dec.

If you dont already have a price reference point, you can always start one. E.g. On day one note the Coto grocery item price, and compare it that price on, say, day 45.

Hope it helps!

[QUOTE=WildWalleye;450166]I believe that we are starting to see this take place. The currency has been crushed, recently.

What is happening to prices? What are you guys paying for a cup of coffee, empenadsas and poontang?[/QUOTE]

[QUOTE=Macgoo;450167]Hey, W Squared .

I see that youre trying to get a handle on BsAs real-world inflation too.

What I do is get on the Coto Grocers website and look at the price of food staples (frequently updated). I then compare those prices to what I was paying during Dec of 17 (peso/us$ @ 19). For me, the price of domestic cheese, orange juice, milk, Coke/Pepsi is a good indication. I buy a lot of this during extended stays. Notwithstanding sales prices, I find that these items are pretty much the same as they were in Dec.

If you dont already have a price reference point, you can always start one. E.g. On day one note the Coto grocery item price, and compare it that price on, say, day 45.

Hope it helps![/QUOTE]Thanks. Yes, I am trying to get a grip on real prices. So, if I go to La Biela and am having my doble cortado and demi lunas, whilst contemplating getting some honey on my stinger, what are the prices? I have plenty of references from past time in Bs As. I am more curious to know if a cup of coffee is $0.50 or $2.00. How much is a pack of smokes? What is 30 mins at a privado?

Cheers.

[QUOTE=WildWalleye;450168]Thanks. Yes, I am trying to get a grip on real prices. So, if I go to La Biela and am having my doble cortado and demi lunas, whilst contemplating getting some honey on my stinger, what are the prices? I have plenty of references from past time in Bs As. I am more curious to know if a cup of coffee is $0.50 or $2.00. How much is a pack of smokes? What is 30 mins at a privado?

Cheers.[/QUOTE]FYI -.

Of the three Independent girls I have seen recently, two have kept their price the same as 8 months ago and one increased her rates by about 15%, three months ago (she is high end). I did not question it, but would suspect it is due to the peso drop. And this was before the additional drop last week. I have also seen a few changes in restaurant prices, but to be honest, I don't pay that much attention to what each item costs.

Not sure if that helps you or not. Cheers!

Large normal coffee 70$.

Yuppie coffees as high a 335$.

Regular coffee with a ham and cheese on toast 145$.

Prices as of today, hope this helps.