Argentine Economy

[Eszpresszo]

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?

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.

[Eszpresszo]

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.

[Tres3]

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.

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.

[Dickhead]

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.

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.

[Tres3]

If you are referring to the aguinaldo, 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.

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.

[Dickhead]

where else in the world to people work for ten months a year (or less) and collect for thirteen months????

If you are referring to the aguinaldo, 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.

[Gandolf50]

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.

[PickCherry12]

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.

That's terrible news. Well, 'sadly' bad times bring more chicas into the business.

[Ponelover]

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.

[Tres3]

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.

[Big Boss Man]

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.

[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.

http://blogs.barrons.com/emergingmar...rrons&ru=yahoo

Tres3.

[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.

http://finance.yahoo.com/news/latest...062350554.html

Tres3.

[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.

http://news.yahoo.com/argentine-sena...210725713.html

Tres3.

[Tres3]

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

http://www.bloomberg.com/news/articl...=yhoo.headline

Tres3.