Argentine Politics

[Gandolf50]

A lot of you say with the dollar at 15 to one makes Argentina cheap. If thats true, why can I buy Levis from Wally World in the states for $45 and here they are $1500 pesos and more? ( 45 U$D being $675p at 15 to 1) . The prices you guys say you are paying for providers make Argentina one of the most expensive mongering destinations around. So with the peso crumbling and the dollar "stronger" why are we all paying through the nose for second rate goods in a banana republic? Of course,there are some bargains to be had but not as many as you would think. Fifteen years ago when the dollar was three to one I could buy levis here cheaper then in the states and a lovely provider with the hotel was $100p. Things are actually cheaper in the city of Buenos Aires then they are in the provincia. Travel 30km outside Gral Paz and almost everything goes up in price from gasoline to meat. For some reason (Thank God!) providers remain cheaper out here in no mans land.

[Daddy Rulz]

The dollar has the advantage of being the reserve currency of the world.

Take that away . And then lets see how the dollar fares vis a vis other currencies of the world!

Maybe the Bilderberg Group picked at random in one of their secret meetings. It wasn't alphabetical, there are a bunch that start with A. Can't be the color, color isn't hierarchal, it's a wheel. Can't be age. I wonder why?

Maybe size of economy?

[Member #3320]

The dollar never gets stronger.

The dollar has the advantage of being the reserve currency of the world.

Take that away . And then lets see how the dollar fares vis a vis other currencies of the world!

[Dickhead]

So there are two primary factors that affect exchange rates: real interest rates and the balance of trade. High real interest rates (meaning the market interest rate MINUS inflation) = strong currency. Favorable balance of trade (exporting more than you import) creates demand for your currency. The dollar has strengthened against many currencies lately, or alternatively many currencies have weakened against the dollar. For example, the euro costs about 1.08 dollars today versus about 1.24 a year ago. This is mostly because Europe's more sluggish economy makes people think the ECB (European Central Bank) will lower interest rates, while it appears rates are headed UP in the US. Inflation is tame in both places.

The Canadian dollar costs about 75 cents today versus about 88 cents a year ago. The CAD is sensitive to the price of oil. Oil prices go down, Canada's trade balance worsens since it does not receive as much foreign currency for each barrel of oil it exports. So, that weakens the CAD against the USD. But it is no less correct to say that it strengthens the USD against the CAD.

[Daddy Rulz]

As many people tend to do, you're paraphrasing the peso-dollar relationship incorrectly.

The dollar does not get "stronger" or "weaker" against the peso. It is the pesos that fluctuates (usually down) in value in comparison against the relatively stable dollar.

If two men are standing side by side, and one of them doubles over with a stomach ache, you don't describe the situation by saying that the other man got stronger.

Thanks,

Jax.

Is that a Jax thing or an economics thing? Because you could describe that situation as the guy gaining strength over the guy who doubled over. I see articles where the dollar is described as "gaining strength" over the X other currency a lot.

I would agree though that simply saying the dollar got stronger would generally be misspeaking because the dollar in isolation wouldn't have changed much, but in comparison to something else I would think it's correct to say it gained strength.

Not trying to be contentious, I'm curious about this.

[Jackson]

I read somewhere Argentina has only a few million in reserves, maybe seven million. I don't think it's a problem for the dollar. The solution will be the same as in the good old USA, viz, the government will continue just printing more paper. This should make the dollar stronger and p4p cheaper for dollar holders. If Macri wins and devaluates the peso by aiming at a free floating exchange in the future, the dollar should be stronger and I think we can see 30 to 1 for free floating exchange rate someday. Of course, that assumes devaluation in a short period of time and continued inflation. Anyhow, for what it's worth, that's how I see it.

As many people tend to do, you're paraphrasing the peso-dollar relationship incorrectly.

The dollar does not get "stronger" or "weaker" against the peso. It is the pesos that fluctuates (usually down) in value in comparison against the relatively stable dollar.

If two men are standing side by side, and one of them doubles over with a stomach ache, you don't describe the situation by saying that the other man got stronger.

Thanks,

Jax.

[Bobby Doerr]

The problem is deeper then the exchange rate. The current government has drained ALL the countries resources. I read some where recently that if you subtract what Argentina owes out there is only 7 million dollars left for the reserves. Realisticly, that would put the peso at 50 to 1? 100 to 1???? They have drained the insurance (social security) and tax agency's (AFIP) accounts. Who ever is the next president is in for a large problem.

I read somewhere Argentina has only a few million in reserves, maybe seven million. I don't think it's a problem for the dollar. The solution will be the same as in the good old USA, viz, the government will continue just printing more paper. This should make the dollar stronger and p4p cheaper for dollar holders. If Macri wins and devaluates the peso by aiming at a free floating exchange in the future, the dollar should be stronger and I think we can see 30 to 1 for free floating exchange rate someday. Of course, that assumes devaluation in a short period of time and continued inflation. Anyhow, for what it's worth, that's how I see it.

[Gandolf50]

Ahhhhhhhhhhh !! Two days of respite from all the BS and lies. In the past Cristina has always broken the law and campaigned claiming she was just making "important announcements..." Monday cant come too soon so all this nonsense will be behind us!

[Dickhead]

Letting a currency float is not an anti-inflation tactic. The former peg to the dollar was an anti-inflation tactic, but that of course fails when the pegging country runs out of the pegged country's currency.

It should be remembered that inflation is always and everywhere a monetary phenomenon: too much money is chasing too few goods. This the Spaniards found out when they finally realized that taking gold and silver back to Spain did not increase wealth because there were no goods to buy with the bullion.

So if Macri wants to fight inflation, he has to tighten the money supply. That will lead to a recession for sure, which should be good for those with dollars. It would also make him very unpopular and so he probably won't have the stones to do it.

[Daddy Rulz]

What you say is true. But keeping a arbitrary low rate like they have in the past just fuels inflation which also eats into ones income. Which is worse??

I want to preface the rest with that statement. I think these following things, I do not know them.

I said it was bad because I think a fucked up peso (and what can make a currency more fucked up than nobody having any idea what it's worth) with monetary restrictions like we currently have are good for those spending in dollars.

I think if Macri gets elected and he removes the whateveryoucallit and allows the peso to truly float it will and it will be less than the current blue rate. Substantially less INHO (substantial meaning 10% or more) because whatever it lands at it will have an ACTUAL value not a "hmmmmm what do we trade for today" value.

I think it will do something to stem inflation but I don't think it will stop it.

As it is now the dollar pretty much keeps up with inflation. It doesn't do it smoothly, it tends to languish behind for a few months then move ahead, then sit around, then move ahead. Right now it's sitting around 15-1 sometimes higher sometimes lower but around 15-1. If it floats I think it will stay further behind and I will be able to buy less pussy for my dollars and to me that is bad.

I could also be completely fucking wrong about this because, as I said, I'm not an economist and this is Argentina where the rules often don't seem to work.

[Tres3]

The below link appeared in today's Miami Herald. Oppenheimer is a well respected, bilingual, and well connected, columnist who writes a syndicated column about Latin America.

http://www.miamiherald.com/news/loca...e45375171.html

Tres3.

[Gandolf50]

The problem is deeper then the exchange rate. The current government has drained ALL the countries resources. I read some where recently that if you subtract what Argentina owes out there is only 7 million dollars left for the reserves. Realisticly, that would put the peso at 50 to 1? 100 to 1???? They have drained the insurance (social security) and tax agency's (AFIP) accounts. Who ever is the next president is in for a large problem.

[AllIWantIsLove]

This is bad. It will make getting money in easier but really floating the peso will result in less purchasing power for dollar denominated income.

Can you elaborate/explain? My simplistic notion is that a floated peso should be worth about what the Blue rate peso is. Maybe that is wrong; but if not then dollars would maintain their purchasing power.

Thanks, Bob.

[Spassmusssein]

You mean relative to the blue rate, correct?

As for the holdouts, I don't expect Macri or anyone else to pay them in cash on the barrel head. So long as they don't have to increase payments to all bond holders (I believe that provision expired January-'15), they can negotiate a settlement, create a new bond and start paying it, over time like all the other bonds.

What will happen is, that the private banks and big players here will found a fund and pay Singer and Co.

When the tecnical default (31.07.2014) took place, for 3 hours here the headline of "ambito finianciero" published, THAT solution.

BUTTTTT.

Then interfiered "the Queen" and blocked the good solution.

As she tried to ruin "the campo y la oligarchia" as al of those where those, who killed N.K.

Which could/should be doubted.

Macri will arrange in that form, Brito (MACRO-Bank) will lead the solution.

[Wild Walleye]

This is bad. It will make getting money in easier but really floating the peso will result in less purchasing power for dollar denominated income.

You mean relative to the blue rate, correct?

While this is true, the resultant devaluation will make everyone holding pesos seem poorer (while in reality they are already so), which will further erode local demand for nonessential goods which should have a deflationary effect on the price of those less essential goods and services. This process will not be without pain. However, for the good of the Argentine people, it is best (IMO) to break with past practices of whistling past the graveyard and pretending that the problem doesn't exist.

I am very excited about the prospect of a Macri win (it will help m business interests in Argentina and create more opportunity for all), I am so distrustful of the govt that I'll withhold my excitement until I actually see the results.

As for the holdouts, I don't expect Macri or anyone else to pay them in cash on the barrel head. So long as they don't have to increase payments to all bond holders (I believe that provision expired January-'15), they can negotiate a settlement, create a new bond and start paying it, over time like all the other bonds.