The economic future of Argentina

[Thomaso276]

DH: thanks.

[Exon123]

Exon,

With all due respect, I've never read anything from you about the prices you've paid for anything in Buenos Aires.

Actually, I can't recall anything you've written that was anything other than your opinion about what somebody else did.

For all we know, you are also a "Piece of Shit", "Cheap MotherFucking CockSucker".

Thanks,

Jackson

Actually Jackson I don't pay for pussy in Argentina. I just cruse arould to all the Clubs and Privado's to see the girls then go home and "Jack Off" over them.

Exon

[Jackson]

This is why I call many of the posters on this board "Cheap MotherFucking CockSuckers". These are the guy's that brag about Fucking the Chica's out of that extra $15 or $20 peso's. I'll make an exception for the expat Mongers that live their and live on the Argentine economy. But the average traveling Monger is a "Piece of Shit", wanting to save $10 or $15 bucks, bragging on the forum about it, not realizing that little bit of extra money is the whole world to these girls, The CockSuckers.

Exon,

With all due respect, I've never read anything from you about the prices you've paid for anything in Buenos Aires.

Actually, I can't recall anything you've written that was anything other than your opinion about what somebody else did.

For all we know, you are also a "Piece of Shit", "Cheap MotherFucking CockSucker".

Thanks,

Jackson

[Exon123]

Argentina suffered from the "Robin Hood" syndrome.

If you remember that's when you "Rob from the Rich & give to the Poor"!

The little I know about Argentine history and the changes in their economy date back from the Juan & Eva Peron days some 60 years ago. Before that Argentina was the 6 or 7 largest ecomomy in the world, before world war 2. You can still see evidence of it from the beautiful buildings and architecture through out the city.

As I have come to understand it, the Peron's incouraged the working class to organize their trade unions and created social and econnomic programs for the poor. The government then began borrowing money and selling assets to pay for the "New Deal" so to speak. Effectively robbing from the middle and upper class for the benifit of poor and lower class's. The Robin Hood Syndrome.

A side bar to this is that we're seeing the same thing in the United States. With the exception that "So Far" the United States Government has been able to "Hood Wink" the world into buying our debt.

Over the years of traveling to Argentina I've made many Argentine friends. I love thease people but today I'm terrified for my friends in Buenos Aires. I can see whats coming for them and it saddens me deeply.

This is why I call many of the posters on this board "Cheap MotherFucking CockSuckers". These are the guy's that brag about Fucking the Chica's out of that extra $15 or $20 peso's. I'll make an exception for the expat Mongers that live their and live on the Argentine economy. But the average traveling Monger is a "Piece of Shit", wanting to save $10 or $15 bucks, bragging on the forum about it, not realizing that little bit of extra money is the whole world to these girls, The CockSuckers.

Anyway I ran across this bit of news and it brings whats happening into prespective.

http://www.rgemonitor.com/latam-moni..._some_thoughts

Exon

[Member #2041]

This is about as simplified of a version as I can come up with. Simplification is not my strong suit. Making omelettes and eating pussy are my strong suits, along with drinking beer (but that is a "non value-added activity) But anyway I hope my analysis is helpful. The exam will cover all of these topics, but like any exam I give, will also have a bunch of questions that came from left field, covering topics that we have never even discussed. So be prepared.

Hopefully, my preparation, which includes eating pussy and fucking chicas on every available occasion, will be suitable for this test. I will probably do poorly relative to the class' grading curve, on the beer drinking section of the exam, so hopefully, I can make it up on the pussy-eating section. In any case, that's the section I'll be cramming the most for.

[Member #2041]

So what the f u c k are you about? Put your money where you fat opinions are. Any inexperienced dolt can post their opinion. But you were prepared to bet untill challenged. You don't need to be a rocket scientist to figure out the end result and the fact that when the economy hits the brick wall, that the currency will go into a tailspin. The question is when and by how much. So for a person who posted unsubstantiated opinions at 100 miles an hour, put your money where your fat mouth is! Or post something meaningfull.

Argento

It's too damn bad that you are upset, but my intent was to post my opinion. Which I did. This is a forum for people to post their opinions. YOUR question was when and by how much - not mine. I never purported to know that answer, and frankly, even if I did, I would take advantage of that in far more lucrative ways than to engage you, someone whom I don't know nor care the slightest about, in a silly bet. Frankly, I can already "bet" on this, and I fully intend to, in a manner that involves no downside risk whatsoever to me - by simply exploiting the event when and if it happens. If you have a problem with that, Argento, deal with it.

[Dickhead]

The current account means exports versus imports. Import more than you export and you have a current account deficit, which has to be financed. The US is an example. It finances its current account deficit by selling Treasury securities (borrowing) This leads to a weaker dollar, all else equal. In the US the printing press is not under control of the legislative branch (it is under the control of the executive branch) so that the US Congress cannot, by itself, finance stupid projects by printing more dollars.

Argentina is currently exporting more than it is importing, so has a current account surplus. This surplus could be hoarded, which would strengthen the peso. Dollars and euros and yen and so forth would be flowing in, which could be used to buy back pesos, which would increase demand for pesos. If demand for pesos increased and supply of pesos remained constant, the value of the peso would rise against these other currencies.

But in Argentina, as in most of Latin America, the printing press is under the control of the legislative branch so the legislature can finance stupid projects by printing more pesos.

Or, the current account surplus could be invested in things like improving the power grid, the educational system, or hiring additional workers to pick up litter and dog shit. That would probably be a good thing, especially the former two alternatives which would pay future economic dividends.

Another alternative would be to take the current account surplus and spend it on stupid projects, like for example a stupid fucking bullet train that would only benefit a relatively few suck ass "chetos." This seems to be the current line of "reasoning" in Argentina.

Yet another alternative with a current account surplus would be to return it to the citizens and taxpayers from whence it came. This happened in my home state several years back, when an amendment to the state constitution required the current account surplus to be refunded. This was done a couple of ways. The state income tax rate was lowered twice, and there was a state sales tax refund that you could put in for while filing your state income tax return. This all went away once the tech stock collapse fucked up the state economy and the current account surplus disappeared.

Returning the current account surplus would probably be a bad idea right now in Argentina because there is strong economic growth and returning the surplus would further stimulate the economy and make the inflation worse.

Now, the capital account relates to outside investment versus purchases of goods and services. The capital account surplus means that more outsiders are buying stock in Argentinean companies, or opening up business with foreign money, than are selling stock or closing down businesses and repatriating the sales proceeds. I think the author of this article makes too much of this because the end result depends on what the foreign owners of the stocks or businesses do with the cash flows therefrom. The capital surplus is not (directly) in the hands of the government so they can neither spend it on education nor on stupid bullet trains.

The problem with the US dollar is that in addition to the current account deficit (trade deficit), they have a budget deficit. The government is spending more on things like wars than they are taking in as tax revenues. So there are two deficits to finance. Financing them was possible in the 1990s boom because foreign investors were anxious to buy the paper (Treasury securities) the government was issuing. That was why interest rates were so low. Now foreign investors are not so sanguine about the US so in order to sell the securities a more attractive (higher) interest rate is necessary. Interest expense is a budget item so this creates a vicious cycle where the budget deficit increases the need to borrow, which increases the interest rate, which increases the budget deficit, and so on and so forth.

So all of that is inflationary. Inflation weakens a currency relative to other currencies. The inflation in the US would be even worse if the economy was in a boom state like Argentina, which it is not (weak GDP growth in the US right now) Also the US government lies about inflation just like Argentina does, although not to such a ridiculous extent.

This is about as simplified of a version as I can come up with. Simplification is not my strong suit. Making omelettes and eating pussy are my strong suits, along with drinking beer (but that is a "non value-added activity) But anyway I hope my analysis is helpful. The exam will cover all of these topics, but like any exam I give, will also have a bunch of questions that came from left field, covering topics that we have never even discussed. So be prepared.

[Thomaso276]

I think the dollar has risen the past couple of weeks because of the farmers' block on exports which will reduce anticipated gov't income. I remember it was about 4.2 in 2003 to as low as 2.8 a couple of years later. It has been stable at around 3.0 - 3.1 for the last year or so.

I agree with Dickhead regarding substitute purchases. Over the past several years I have learned the bus system to avoid taxis (I always enjoyed walks but a round trip of 20+ blocks is about my limit) not gone to Recoleta clubs or restaurants, buy clothes and sneakers from the US when I visit, changed gym options and bought less expensive beef in the market, etc. Etc.

The weak dollar is not helping anyone but if you look at the Euro at almost 5 pesos we are really getting screwed by the US monetary policy.

I am on a pension and when I retired several years ago I knew that inflation would be my biggest enemy. It was very evident I could not afford to live in the States while I can still live here comfortably.

One of the articles I read talked about capital reserves, which is routinely pointed out as about 50 million dollars but they are "borrowed." Since I am not an economist maybe Dickhead can explain why the reserves are not so solid. I do not understand the termonology. Here is the article:

http://www.rgemonitor.com/latam-moni...rgely_borrowed

My point of the post (and I appreciate ALL the opinions) is that Argentina seems to be self-destructing or maybe it is just Buenos Aires. Bullet train? The day after the deal was signed, editorials pointed out that the standard rail system is a disaster and should be repaired, upgraded before they try a system geared toward the upper class wanting to go to Rosario and Cordoba.

Good points about the politicians. The recent deal to buy back some of Arg. Airlines poiinted out that years ago when the Spainish company first invested they paid a dollar for the stock, now they are selling it back to the Gov't for millions. The unions want this deal so they have more power with the Gov't handling the business (along with a local K supporter - the owner of Busquebus - who is potentially partnering the deal)

Yes I have dollars, things are still cheaper here than alot of places, crime is relatively low, medical & dental costs are cheaper, utilities are cheaper, chicas prices for those who shop are still acceptable. I enjoy living here. But I maintain that the cost of a trip for about a week by the standard monger has changed drastically. I don't see the same guys posting about buying custom suits and shirts, leather products, dinners at restaurants in Puerto Madero, stunning chicas for 200 pesos an hour, etc. I understand that a guy coming here for a week doesn't have the time to shop around as much. That is why this board is so important because if they read and learn they can save lots of time and money on everything from airlines to lunch specials to chica recommendations.

Exon pointed out the 20% inflation from the 70's. I remember that time but did not pay as much attention (because as a hippie student I did not have any money! I guess the daily shock of seeing prices rise over the past two years with no end in sight has been too much. Especially if some of these price / products exceed the same in the USA and the government here acts like nothing is happening. Maybe they want a correction so Mr. K can return with Lavagna and straighten it out again like they did in 2003 (which one recent article suggested)

We'll see how it plays out.

[Argento]

My point was contingent upon the "collapse" of the Argentine economy that several posters have contended is coming - some said 2 years, others have claimed that it is much more imminent. I personally see little reason to dispute these forecasts, although I will admit that I lack local knowledge. Suffice it to say that if and when the aforementioned collapse occurs, it will coincide with this currency effect. If there is no collapse, it's a moot point, as the status quo will continue.

So what the f u c k are you about? Put your money where you opinions are. Any inexperienced dolt can post their opinion. But you were prepared to bet untill challenged. You don't need to be a rocket scientist to figure out the end result and the fact that when the economy hits the brick wall, that the currency will go into a tailspin. The question is when and by how much. So for a person who posted unsubstantiated opinions at 100 miles an hour, put your money where your mouth is! Or post something meaningfull.

Argento

[Member #2041]

Please note we have a bit of an "apples and oranges" discussion going on here.

I totally agree. My issue was that I was always referring strictly to the issue as it relates to a U. S. Tourist deciding where to visit for hobbying. It was Thomaso276 who framed his argument that things were going to hell in a handbasket in terms of the place becoming a poor value for U. S. Tourists, which was not accurate - when what he should have done was confined his complaint to the degree that people living in Argentina were seeing a decline in their purchasing power - something that I have never disagreed with in the slightest.

[Member #2041]

Give me a time frame on your scenario. Subject to that, we can discuss the bet. Jackson can hold the wagers if he agrees.

Argento

My point was contingent upon the "collapse" of the Argentine economy that several posters have contended is coming - some said 2 years, others have claimed that it is much more imminent. I personally see little reason to dispute these forecasts, although I will admit that I lack local knowledge. Suffice it to say that if and when the aforementioned collapse occurs, it will coincide with this currency effect. If there is no collapse, it's a moot point, as the status quo will continue.

[Alan23]

Even if one assumes that during this same 24 month period of time, Argentina has experienced 30% overall inflation, while the rest of the world has experienced 12% overall inflation (It's actually been closer to 20% in Thailand during that time) the simple fact is, Argentina has still become a better deal for Americans in that time frame than any of these other destinations has.

Please note we have a bit of an "apples and oranges" discussion going on here. I have referred to a period of 30 months (2 1/2 years) - the length of time I have lived in BsAs. You have referenced inflation numbers of some pretty reliable governments, with the exception of the Argentine. But the most important factor in measuring inflation is what comprises the "basket of goods". I was careful to note the increases I had experienced on the goods and services I purchase, which are very specific to certain demographics.

I appreciate your comparison to other countries and their current inflation situation. But the point is I have chosen to live in Argentina, so the other country comparisons are interesting - but somewhat irrelevant. I moved here from a country other than the USA, due to a deteriorating inflation situation.

I thank our resident Professor for the Econ 101 pop quiz and the correction - he is absolutely correct, I misspoke / wrote: My cost has increased 50% , not my buying power. While the comparison between Argentine and USA inflation is a necessary academic exercise, I would not waste much time on this -given the USA CPI-U inflation for the last eight years has averaged 2.78% , compared to a country with 15, 20, 30%!

Would appreciate Dickhead expounding on the following: "Bascially the stupid crap the US government has been doing the past few years is reducing Americans' ability to vacation in total, including, importantly, the ability to vacation within the United States due to high energy prices." in the appropriate thread of course.

[Argento]

I'm willing to bet that in the event of the aforementioned collapse, the "pegging" to slightly over 3 pesos to the dollar will fail as the Argentine government cannot keep up, and you will see something closer to 5+ pesos to the dollar. If the natural exchange rate absent govt. Intervention were really around 2.5, then the dollar would be trading at the LOW end of the recent trading range, not the high end, and the Argentine govt would be putting more pesos into the market, not buying them up with dollars. Rather, what has happened is that the pegging of the Peso to Dollar rate at 3.1 has required too many pesos to be injected into the market, and Peso inflation has run rampant within this trading range. This means that the natural Peso to Dollar exchange rate is something HIGHER than the 3.2 that is presently being seen with government intervention. You watch, when the government can no longer keep up, the rate will end up pushing above 5 pesos to the dollar.

Give me a time frame on your scenario. Subject to that, we can discuss the bet. Jackson can hold the wagers if he agrees.

Argento

[Member #2041]

Furthermore:

V = Q / P.

Where:

V = value.

Q = quality.

And.

P = price.

The quality of the mongers' target product is higher here than in most other places, increasing the V for any given P.

But, since Quality is subjective, I ignored it for the purpose of these discussions. Personally, I still find the quality in Thailand to be the best available anywhere, and I know more than a few folks who would contend that Brazil is even better. But, that's really a matter of personal taste.

[Dickhead]

Furthermore:

V = Q / P

Where:

V = value
Q = quality, and
P = price

The quality of the mongers' target product is higher here than in most other places, increasing the V for any given P.

Many mongers are experiencing a greater than necessary loss of purchasing power because they are ignoring the "substitution effect. " When the price of beef rises compared to the price of chicken, eat more chicken and less beef. The market is screaming for this to happen. Maybe Madaho's and 2036 Santa Fe are beef and maybe Ness and 343 Uruguay are chicken. Now, an argument can be made that if I prefer beef to chicken I am less well off if this occurs. I respect and accept this argument if, and only if, one has actually tried chicken.

I got fresh 18 year old pussy and a large glass of whisky for 130 pesos last night. My purchasing power remains strong and the price of my pussy has gone up considerably less than the rate of general inflation. Quality is subjective (and so ineluctably is value) but I am pretty satisfied.

As an example of the substitution effect, it has always been the case that it was cheaper to go to Uruguay to renew my visa than to go to immigration to extend it. Now the extension is 100 and the boat ride is 106, so I will have to consider substituting standing in a couple of lines for sitting on a boat. Flexibility is the key.