The economic future of Argentina

This I wrote 7 months ago.

There are roughly 8 moneymakers in Argentina.

1: Soja.

2: Wheat.

3: Corn.

4: Meat.

5: Tourism.

6: Petrol industry.

7: Mining.

8: Construction.

Soja, corn and weed are on an all-time high in prices which can't be maintained because of the global economy. Meat export is not allowed. There is no investment in the mining and petrol industries thus making Argentina an import country instead of an export country, tourism will soon decline and the contruction is a boom and will soon bust.

So actually how does Argentina have an future?

I think this is pretty much the case and I will be waiting in 2008 for a big crash

[QUOTE=Redondo]Weed are on an all-time high in prices.

Ain't that the truth<sigh>

[QUOTE=Hound][QUOTE=Redondo]Weed are on an all-time high in prices.

Ain't that the truth<sigh>[/QUOTE]Sorry, must have been wheat.

Cristina has been voted in and most analyst think that she will increase the export tax for wheat, soja and Corn with about 5 to 10%

This is probally sustainable with the high international prices. They tend to go down at some point and if they do, Argentina will be fucked.

Hopefully Cristina can implent some good policies to build new industries (value added products) but that seems unlikely

[QUOTE=Sidney]An absurd policy that inhibits the strength of AR. Meanwhile Corn is off its peak price of $4.25, now $3.68. Wheat from $9.60 to $7.80. While Soybeans are at the peak of $10.06. Then there is the never ending FARM PROBLEM (high prices generate huge increases in plantings and prices fall because of the expected supply increases) AG was the backbone of the long AR recovery. AR is ''fucked'' without it![/QUOTE]Where do you get those prices from?

I don't really know about the increase in production (I never read anything about it) world wide in Corn, Wheat and soybeans but even if there is more production there will be more demand.

There is a big increase in demand for biofuels, which have to be produced in part in Argentina.

Argentina offcourse lacks the technology (unlike Brasil) to export anything more the core product.

The high prices of those 3 products and the higly populatistic prising of meat will mean that more and more farmers will chose for either corn, wheat or soybeans.

The last time, I think about a year ago, the government increased export taxes the export and production didn't suffer, but this has to end somewhere

Argentina's economy is going to go throught the same 'correction' that the US will experience. Her one saving grace is the commodity boom which might mitigate disaster. I believe that although wheat is off it's highs, commodities as a whole will continue to rise (and inflation too) over the next few years. The pain consumers feel in the pocketbook will be felt by all, but Argentinians might have less problems than a typical fatass American like me. If only Argentina could get it's politics in order (no price controls, etc) it's possible she might experience a sort of "golden age" as Brazil is currently. America is done for awhile it appears!

I talked with a friend who is a stock-broker in Uruguay and he said that the American economy will definitly go through a recession and that most big countries (Australia / New Sealand, Europe, Japan, China, India, US) will follow because there will be many people that want to sell.

But first I not sure if there will be a recession in the USA. It seems there will be one, but maybe it's not bad to get a correction.

I don't really know but I think the effect on Argentina will be limited. A lower dollar will hurt but Argentina at the moment is not really doing a lot of business with the USA. There will be lack of capital flowing into Argentina of course, but Argentina is pretty isolated anyhow.

Any thoughts?

[QUOTE=Redondo]I talked with a friend who is a stock-broker in Uruguay and he said that the American economy will definitly go through a recession and that most big countries (Australia / New Sealand, Europe, Japan, China, India, US) will follow because there will be many people that want to sell.

But first I not sure if there will be a recession in the USA. It seems there will be one, but maybe it's not bad to get a correction.

I don't really know but I think the effect on Argentina will be limited. A lower dollar will hurt but Argentina at the moment is not really doing a lot of business with the USA. There will be lack of capital flowing into Argentina of course, but Argentina is pretty isolated anyhow.

Any thoughts?[/QUOTE]Relatively speaking, Argentina has "less room to fall" than the USA. I would be living in Argentina if it were possible. The people are accustomed to very difficult times, unlike their US counterparts. I am currently in the US, and I can tell you the news is going frm bad to worse. So many financial service jobs (real estate, mortgage, and bond brokers) are losing jobs at every turn that it must drag the economy down. Add in construction employment (dismal) and you can see where things are headed. Financial service jobs are some of the best paying jobs in America, and if you read the Wall Street Journal or Bloomberg, you see the CEO's are getting booted left and right!

Americans alive today haven't experienced a financial collapse as Argentinians have become acclimated. It makes for a much steeper and more painful fall for fat Americans (of which I am one) I hope it isn't crippling, but I feel there are many years of pain ahead.

The reports I read seems to indicate there will be soft landing or a small recession, for now I don't believe there will be a big recession.

But this is of course something that nobody can predict.

This seems interesting, I think you will definitly need a big spread of stocks now and maybe pick up some knock-out products.

[url]http://www.bloomberg.com/apps/news?pid=20601087&sid=ahZh1lKYXD8w&refer=home[/url]

Oct. 26 (Bloomberg) -- The New York Stock Exchange said it will no longer impose curbs on computer-program trading that were put in place after the crash of 1987, claiming they're no longer as effective in damping swings in prices.

[QUOTE=Redondo]I talked with a friend who is a stock-broker in Uruguay and he said that the American economy will definitly go through a recession and that most big countries (Australia / New Sealand, Europe, Japan, China, India, US) will follow because there will be many people that want to sell.

But first I not sure if there will be a recession in the USA. It seems there will be one, but maybe it's not bad to get a correction.

I don't really know but I think the effect on Argentina will be limited. A lower dollar will hurt but Argentina at the moment is not really doing a lot of business with the USA. There will be lack of capital flowing into Argentina of course, but Argentina is pretty isolated anyhow.

Any thoughts?[/QUOTE]Redondo,

I think we'll get threw the subprime loan crisis well enough we've been threw much worse. The Savings & Loan crisis comes to mind 20 years ago, The Crash of 87, Long Term Capital Management, 9-11, the list goes on and on, theres always something.

But what worries me is the price of "Oil", it effects the whole worlds economies. Whats kept the US economy out of recession is "Exports" heading all over the world. Should demand for those exports fall off because the price of Oil has slowed the worlds economy, well then were in trouble.

Unlike Sidney who is a "Trader", I'm a long term "Investor". I'll take a position and sit there for 20 years or more. Where as a guy like Sidney will be in and out of a position in 20 minutes or so. Thats a big difference in thinking.

Recessions come and go, thats part of Capitalism. But the guy that sits there threw thick and thin over the long run, thats the guy thats going to come out best in the stock market. Thats sorta a Warren Buffet type of thinking.

Roxana recently e-mailed me asking advice.

I told her in essence to buy high quality multi national companies that raise their dividends every year and just hold them. Don't lesson to the news, just hold the stock.

Its for this reason I like these big money center banks right now, no one wants them. As Hunt 99 puts it you buy when there's "Blood in the Streets". Citi Corp or Bank of America are not going to go broke, nor are they going to cut their dividends as the doom & gloomers have suggested possible. The problem is, when do you reach out too "Catch a Falling Knife". That I can't answer that, maybe you wait until it bounces off the floor. But at todays prices your going to get 5 to 6 percent while you wait. And thats a lot of money concidering they raise their dividends every year. So at the end of the day, 5, 10, 15, 20 years from now your "Return on Invested Capital" is astronomical, plus long term price appreciation.

I do this sorta shit for a living.

Exon

[QUOTE=DrakeCapital]Argentina's economy is going to go throught the same 'correction' that the US will experience. Her one saving grace is the commodity boom which might mitigate disaster.[/QUOTE]Drake, this is ridiculous. Argentina does not have the same level of maufacturing base as US. When was the last time you rented a DVD produced in Argentina? Argentina does not have consumers or consumers with anywhere the level of production of USA. God help us if we have to depend on export of grains to bolster the US economy.

You can buy pirated DVD's made right here in BA. Doesn't that count?

The labour market for example is still pretty good. I think as long as there are jobs (created) there is not really a big problem.

The subprime crisis will lead to some kind of correction but I just don't see a all out recession. A shake up is never a bad thing in my opinion, the bigger companies like Exxon said, will always survive.

Eastern Europe, Latin America are booming at the moment, that just doesn't go away in one day.

[QUOTE=BundaLover]Drake, this is ridiculous. Argentina does not have the same level of maufacturing base as US. When was the last time you rented a DVD produced in Argentina? Argentina does not have consumers or consumers with anywhere the level of production of USA. God help us if we have to depend on export of grains to bolster the US economy.[/QUOTE]I'm not sure what you meant about a DVD produced in Argentina but if you meant, shot, chopped and printed in Argentina there are a lot of them actually.

Of course I agree that their manufacturing capability in general is terrible.

[QUOTE=BundaLover]Drake, this is ridiculous. Argentina does not have the same level of maufacturing base as US. When was the last time you rented a DVD produced in Argentina? Argentina does not have consumers or consumers with anywhere the level of production of USA. God help us if we have to depend on export of grains to bolster the US economy.[/QUOTE]Consumers with the level of production? They are not even related. Basic economics, man.

Argentina DOES have great agricutural opportunities, but a poor political climate. Look at the price of every commodity that Argentina produces-through the roof! That is fact. The reasons it dosen't flow to the "common man" are politics.

And, America DOES have much further to fall than a country of people that were wiped out financially just 6 years ago!

Perhaps you really meant production per capita? Bunda needs to get to another thread or take some economics classes!

[QUOTE=DrakeCapital]Consumers with the level of production? They are not even related. Basic economics, man.

Argentina DOES have great agricutural opportunities, but a poor political climate. Look at the price of every commodity that Argentina produces-through the roof! That is fact. The reasons it dosen't flow to the "common man" are politics.

And, America DOES have much further to fall than a country of people that were wiped out financially just 6 years ago!

Perhaps you really meant production per capita? Bunda needs to get to another thread or take some economics classes![/QUOTE]This is not right because with the export tax the 'common' man can travel almost for free, have cheap gas, cheap services and go to the hospital or to UBA.

Offcourse the wealth distrubution is below par, but that's mainly because there are very few people who are rich, they do everything in there power to stay rich.

But the Argentine state is definitly trying to get a fairer wealth distribution. See for example AFIP

Interesting article on inflation in South America, especially Argentina:

[url]http://news.yahoo.com/s/mcclatchy/20071116/wl_mcclatchy/20071116bclataminflation_attn_national_foreign_editors_ytop[/url]

[QUOTE=Redondo]This is not right because with the export tax the 'common' man can travel almost for free, have cheap gas, cheap services and go to the hospital or to UBA.

Offcourse the wealth distrubution is below par, but that's mainly because there are very few people who are rich, they do everything in there power to stay rich.

But the Argentine state is definitly trying to get a fairer wealth distribution. See for example AFIP[/QUOTE]Rodondo's economic sense is about as good as the sense put out by the Argentine economic policy makers. Both are economic asses. However if anything, the government is slightly superior simply due to a consistancy woefully lacking in Redondo's posts. Check back on his mammoth quantity of posts in the past 5-6 months. First he fortells of a currency meltdown; I still don't see that anytime soon, and now he pretends to know that the Argentine government is benevolent to its citizens. Government power in Argentina is about capturing the maximum quantity of money from bribes. Period! Power is money here. Don't ever forget the maxim; "Follow the money". And don't ever forget as well, that in the northern provinces, at least 200 children die of malnutricion a month, while the Portenos have cheap rail travel. A bit of perspective please.

And Redondo, please keep up your rate of posting. For economic and commerce graduates, you give us living proof of the old saying, "Bullshit baffles brains."

[QUOTE=DrakeCapital]Consumers with the level of production? They are not even related. Basic economics, man.

Argentina DOES have great agricutural opportunities, but a poor political climate. Look at the price of every commodity that Argentina produces-through the roof! That is fact. The reasons it dosen't flow to the "common man" are politics.

And, America DOES have much further to fall than a country of people that were wiped out financially just 6 years ago!

Perhaps you really meant production per capita? Bunda needs to get to another thread or take some economics classes![/QUOTE]I think that Bunda wanted to say that the Argentine consumer base doesn't justify to install a manufacturing base like the American one. The bigger your potential market, the better the economies of scale. That's why many companies from Argentina moved to Brazil (and particularly Sao Paulo) after the onset of Mercosur.

As of the agricultural sector, it is very unlikely that it provide by itself the money necessary to develop other areas and industries. If it were for the main players on that sector, they would pay minimim taxes and leave their money at Cayman, Luxembourg or Isle of Man. That's one of the reasons for the Argentine government to impose "tax retentions" on agricultural exports. They get enough money from exporting and have zero interest in investing elsewhere.

Andres

[QUOTE=Facundo]Interesting article on inflation in South America, especially Argentina:

[url]http://news.yahoo.com/s/mcclatchy/20071116/wl_mcclatchy/20071116bclataminflation_attn_national_foreign_editors_ytop[/url][/QUOTE]Thanks for the article.

What I find funny is that many journalists don't check their info. Calling La Matanza a middle-class suburb is ridiculous, since it's one of the poorest ones.

As for cooling down growth, it's somewhat true but also tricky. The same advisors who recommend to freeze wages also recommend to significantly rise utilities, a move that doesn't help on the long term if there are no additional investments in infrastructure.

Andres

[QUOTE=Argento]Rodondo's economic sense is about as good as the sense put out by the Argentine economic policy makers. Both are economic asses. However if anything, the government is slightly superior simply due to a consistancy woefully lacking in Redondo's posts. Check back on his mammoth quantity of posts in the past 5-6 months. First he fortells of a currency meltdown; I still don't see that anytime soon, and now he pretends to know that the Argentine government is benevolent to its citizens. Government power in Argentina is about capturing the maximum quantity of money from bribes. Period! Power is money here. Don't ever forget the maxim; "Follow the money". And don't ever forget as well, that in the northern provinces, at least 200 children die of malnutricion a month, while the Portenos have cheap rail travel. A bit of perspective please.

And Redondo, please keep up your rate of posting. For economic and commerce graduates, you give us living proof of the old saying, "Bullshit baffles brains."[/QUOTE]Quotes please.

And while you are at it try to response with arguments or facts, personal insult will only show that your parents did a lousy job

I would like to know if the 8 billion peso extra who are supposed to be raised in 2008 with higher export taxes are enough to offset the increasing imports and reaching the goal of 4% of primary surplus.

[QUOTE=Redondo]I would like to know if the 8 billion peso extra who are supposed to be raised in 2008 with higher export taxes are enough to offset the increasing imports and reaching the goal of 4% of primary surplus[/QUOTE]Before anybody thinks to offer a reasonable, earnest response to another insipid question from Redondo, I will weigh in. The very large percentage of Redondo's posts are intended to give him the opportunity to be an abrasive, argumentative antagonizer. They are "passive aggressive" in nature and not a valid, "honest" call for information. He is a "sick fuck" sin duda, and not worth the time and effort displayed by many informed posters who respond to him. He is also a despised poster on another BA based expat site. His reputation is well earned.

Dogg

What the fuck

[QUOTE=Doggboy]Before anybody thinks to offer a reasonable, earnest response to another insipid question from Redondo, I will weigh in. The very large percentage of Redondo's posts are intended to give him the opportunity to be an abrasive, argumentative antagonizer. They are "passive aggressive" in nature and not a valid, "honest" call for information. He is a "sick fuck" sin duda, and not worth the time and effort displayed by many informed posters who respond to him. He is also a despised poster on another BA based expat site. His reputation is well earned.

Dogg[/QUOTE][blue]Hi Doggboy,

A well written assessment, and I agree entirely.

Thanks,

Jackson[/blue]

He's an annoying fucker, I'll give you that. But I wouldn't go as far as calling him a " sick fuck ". Here is some advice I am sure you won't accept Redondo. Contribute to the board, endless economic and political commentary gets boring after a while. Maybe you could give some useful information in other areas of interest?

[QUOTE=Doggboy]Before anybody thinks to offer a reasonable, earnest response to another insipid question from Redondo, I will weigh in. The very large percentage of Redondo's posts are intended to give him the opportunity to be an abrasive, argumentative antagonizer. They are "passive aggressive" in nature and not a valid, "honest" call for information. He is a "sick fuck" sin duda, and not worth the time and effort displayed by many informed posters who respond to him. He is also a despised poster on another BA based expat site. His reputation is well earned. Dogg[/QUOTE]

I, for one have missed your pithy comentary:

-Some of the best mongering commentary on this board.

-Don't let the republican senors get under your skin, I dout any of them would vote for the bushes again, or at least I hope so[please don't flame me too much. A little bit is OK]

This thread is about Madame K and her next set of moves and their impact: the k's are a dynamic couple like bill and hilliary.

Madame K is courting the international investment community and her husband is still romancing chavez to argentina's advantage ---think bonds! Think oil and gas piplines.

Does Bad have any insight or thoughts on the subject?

Jackson always encouages vigorous discussions without personal attacks. We can all disaggree about politics and enjoy a good steak together.

[QUOTE=Badboy13]He's an annoying fucker, I'll give you that. But I wouldn't go as far as calling him a " sick fuck ". Here is some advice I am sure you won't accept Redondo. Contribute to the board, endless economic and political commentary gets boring after a while. Maybe you could give some useful information in other areas of interest?[/QUOTE]Maybe you red my posts about Rosario, Salta, Mar del Plata, La Plata for example?

Lucheon tickets will be integrated into the salary, if this goes with hefty salary-raises this would spark lay-offs sooner then later.

Wheat harvest could go down 10 to 20% due to frost. That would definitly hurt Argentina as well.

Hydro carbons exports are banned, last year it represented about 8% of the total exports

Harvest of Soja could 20% down on 2007.

For whatever it's worth, tons of brand new bar / restos have opened in the San Telmo area over the past few months. Whether these folks are flying on a wing and a prayer I don't know, but there are alot of them and well furnished, smart looking places.

Have been watching the tennis DC cup quarter finals (Argentina-

Sweden) this afternoon live from Buenos Aires.

Have been watching from Europe (in Isola, France)

The broadcast technically, reminds me of the Olympics from.

Moscow in 1980.

All the time technical problems, on several occasions, what you.

See switches from the Tennis Stadium to a football warmup.

For a soccer game.

Even Sudan or Chad (or any other poor African.

Country) would have been embarrassed for a similar.

Service.

Maybe these BA chicas compensate for everything, but even.

Rio nowdays works like a swiss clock.

Argentina is stuck.

[QUOTE=Doggboy]For whatever it's worth, tons of brand new bar / restos have opened in the San Telmo area over the past few months. Whether these folks are flying on a wing and a prayer I don't know, but there are alot of them and well furnished, smart looking places.[/QUOTE]On the recomendation of Sidney, I had a great lunch in Congresso. Paella. The place Plaza Mayor, Venezuela 1399. Apart from a great meal, the local real estate has changed significantly in the past year. So much for the booming economy. I estimate about a third of the premises are empty, available for lease or for sale. And all with-in a bull's roar of the oblisk. Not too good an economy there. Someone should whisper in Christina's ear about how she could could stay in touch with reality. Have a late lunch at Plaza Mayor and check out the booming real estate market that Redondo harps about.

Argento

[QUOTE=Argento]that Redondo harps about.

Argento[/QUOTE]Give me a quote

IMF for one is worried about food prices, and high prices are likely to stay.

It's the Treasury, stupid!

[quote]HERALD STAFF

Nothing which the government has said about saving the country from soy monoculture etc. Has served to convince too many people that the main motive for the explosive increase of export duties was anything other than fiscal need (or greed) If the export duties were pre-eminently a fiscal solution, it then follows that there must be a fiscal problem and perhaps the most effective debate here would be to tackle this problem at root rather than the more specifically agricultural issues discussed yesterday by Cabinet Chief Alberto Fernández and the farming leaders.

When President Cristina Fernández de Kirchner and Economy Minister Martín Lousteau took over the helm last December, there was a widespread assumption that last year's wild public spending was pure electioneering and would surely descend this year, thus restoring the solidity of the fiscal surplus — this assumption has yet to materialize and it is the failure of the government to reverse or even halt the upward spiral in public spending which lies at the heart of the fiscal problem, leading to intolerable increases in the tax burden and having far more impact on escalating inflation than the government would care to admit (any more than it cares to admit to the inflation itself) An increase of nearly 40 percent in February's public spending followed by a 26 percent rise in March revenues is obviously not a formula for bolstering the fiscal surplus from under three to four percent of Gross Domestic Product, the buffer which most economists agree is required (even with Central Bank reserves topping 50 billion dollars) Public debt payments of over 15 billion dollars are scheduled for this year at a time when an extremely severe international financial crisis conspires against a capital inflow which government policies were in any case discouraging. Even if this crisis may serve to tame global oil prices somewhat, Argentina is still expecting an extremely hefty fuel import bill this year.

Above all, there are now evident limits to growth within a model which has produced five consecutive years of all-out economic expansion. A modest industry working at full capacity and a consumer market of barely 40 million people purchasing in pesos suggest obvious constraints while neo-Keynesian public spending becomes positively dangerous once the corner from the deflation of the 2001-2 meltdown is turned, as we are now starting to see. Inflation is the reason why the extra pesos from artificially high export dollars can no longer be divided comfortably between the state and farmers. Insofar as the government reacts to this pernicious inflation at all, the strategy remains to float a vague social pact against reckless price increases and wage demands but it is high time the government accepted its own responsibility for inflation in the form of runaway public spending and monetary policies designed to buy the dollar upwards and to stimulate consumer-led growth.[/quote]

[url]http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a2NbGfwtMn2U[/url]

Here's an article that explains what's up with the Losteau resignation. Pesos up to 3.19 today.