[MichaelCorleone]

Argentina's currency practically crashed today and people are starting to talk about them defaulting again.

[samsamsam]

MC, thanks didn't know that. Any chance you could provide some more info? I'll give it a whirl myself. I am always fascinated by countries and currency issues.

Are you there now, or just observing from a distance?

Edit: Wow looks bad.

http://www.bloomberg.com/news/2014-01-23...pport.html

Quote:

Argentina devalued the peso the most in 12 years after the central bank scaled back its intervention in a bid to preserve international reserves that have fallen to a seven-year low.

The peso has plunged 12.7 percent over the last two days to 7.8825 per dollar at 3:45 p.m. in Buenos Aires, after falling to as low as 8.2435, according to data compiled by Bloomberg. The decline in the peso marks a policy turn for Argentina, which had been selling dollars in the market to manage the foreign-exchange rate since abandoning a one-to-one peg with the U.S. dollar in 2002.

President Cristina Fernandez de Kirchner, who said May 6 that the government wouldn’t devalue the peso, is struggling to hold onto dollar reserves which have fallen 31 percent to $29.4 billion amid annual inflation of more than 28 percent. Reserves are the government’s only source to pay foreign creditors. Since changing her economy minister, cabinet chief and the head of the central bank on Nov. 18, the peso has fallen 25 percent, the most in the world, according to data compiled by Bloomberg.

[MichaelCorleone]

I used to work at an investment bank after my MBA.

I am not in Argentina, but in the USA, however, I watch everything in finance very closely.

My personal opinion is that Argentina is completely totally screwed financially and it is going to get very very cheap for US people to visit, but with the country disintegrating financially I would think crime will become an every increasing problem there.

[Cincinnatus]

Maybe it's time to look at shorting stocks with heavy commercial activities in Argentina?

[samsamsam]

MC, do you think real estate will be cheap or hold its value as one of the only physical assets there?

I have always been interested in Argentina.

[MichaelCorleone]

(01-23-2014 04:55 PM)samsamsam Wrote:  

MC, do you think real estate will be cheap or hold its value as one of the only physical assets there?

I have always been interested in Argentina.

I think everything there is going to get VERY VERY cheap in USD terms, but with a financial system that is as Fd as theirs is, calling a bottom is going to be pretty hard, and you have no idea what types of other capital controls that the government might put in place. I wouldn't buy anything there, because you have no idea what might happen. However if you are a gambler, you will probably be able to get something really cheap there very soon, but you might never be able to get out of it if you wanted to sell it. You might buy something, it loses another 50% of its value in USD terms and then if you want to sell it you will take a huge loss. No one knows what will happen there for sure. I think crime is gonna get much much worse there AND if Argentina craters it will have negative effects on the rest of SA. Brazil is having some trouble now too, but NOTHING compared to Argentina.

Inflation could Skyrocket in Argentina too...it is a fn mess there.

Look at this from yesterday...their government is in a panic.

http://en.mercopress.com/2014/01/22/arge...ng-on-line

and then look at this from today - it might become chaos there

http://www.bloomberg.com/news/2014-01-23...oting.html

The Argentine women that you guys always talk about being so tough to bag will probably get much much easier for Americans, that is if you don't get jacked when you are hitting on her.

My favorite quote from the 2nd link, "The peso plunged 17.5 percent to a record low of 8.1842 per dollar today, extending its decline to more than 35 percent over the past year, as the central bank scaled back efforts to prop it up. The selloff is the worst since the devaluation that followed the default. Currencies from only two countries in the world have fallen more: war-torn Syria and Iran."

[lowside]

the incompetency of these people baffles me

[Hencredible Casanova]

I went to Argentina back when it was CHEAP to visit. I'm talking exquisite restaurants, nightlife, and the like on the CHEAP. I never had a more boss experience as a traveler than I did during that time. I can only welcome this again from a personal standpoint. I'd be willing to go back if was still that cheap, stuckup chicks aside.

[Hencredible Casanova]

(01-23-2014 04:39 PM)MichaelCorleone Wrote:  

I used to work at an investment bank after my MBA.

Some of your ilk took advantage during the infamous economic collapse in 2001. Great article about how some NY guys took advantage of a "lifestyle arbitrage."

http://nymag.com/guides/changeyourlife/16047/

[samsamsam]

I wonder how much body guards cost...

[Hencredible Casanova]

(01-23-2014 05:35 PM)samsamsam Wrote:  

I wonder how much body guards cost...

If it's anything like when I was there, safety wasn't a problem at all. But I went in 2009, which was eight years after the collapse. There was violence initially but once everything adjusted to the "new normal" the violence levels went back down to how they were before.

So, I wouldn't go like right now, but once people adjust to the new reality and prices are cheap again, that's the time to head down to live it up.

[Mekorig]

(01-23-2014 05:24 PM)lowside Wrote:  

the incompetency of these people baffles me

It is more the fricking incompetence of the peronistas, and the kirchneristas and their moronic populist policies.

[JJ Roberts]

I used to live there. The country has always been an economic basket case.

They have a financial crisis roughly once every 10 to 12 years so this one is due.

After the crash in 2001 you could buy a nice one bed apartment in a nice part of BA (like Palermo) for about $12,000 USD. An American friend of mine did exactly that.

I lived there in 2007 when it had somewhat recovered from 2001 but everything was still really cheap.

[portofmanteau]

(01-23-2014 05:33 PM)Hencredible Casanova Wrote:  

Some of your ilk took advantage during the infamous economic collapse in 2001. Great article about how some NY guys took advantage of a "lifestyle arbitrage."

http://nymag.com/guides/changeyourlife/16047/

I'm pretty sure none of those guys lasted very long here. I ran into these types of people (including some of the people named) back in 2006/2007 and their ideas were not sustainable - they had their fun for a bit and left. Not really different from just taking a cheap vacation somewhere.

[samsamsam]

(01-23-2014 06:30 PM)JJ Roberts Wrote:  

I used to live there. The country has always been an economic basket case.

They have a financial crisis roughly once every 10 to 12 years so this one is due.

After the crash in 2001 you could buy a nice one bed apartment in a nice part of BA (like Palermo) for about $12,000 USD. An American friend of mine did exactly that.

I lived there in 2007 when it had somewhat recovered from 2001 but everything was still really cheap.

I wonder how many people are hoping for 12k apartments. I know I would be all over it.

[Hencredible Casanova]

Some friends of mine went down in like 2012 and prices were expensive, just like NYC or any other top tier city.

Before the crash of 2001, Buenos Aires really was a top tier city in terms of cost of living and standards. You can tell by how grand Buenos Aires looks in many parts (the architecture, etc) just how rich it once was. Argentina was at one point on track to become the leader of the Americas by most standards of living, even potentially surpassing the US.

[samsamsam]

HC, I was down there in the off season - even with the rain, BA seemed like a grand city. Very nice. Good food and nice looking ladies. I spoke a little Spanish and it helped.

What was interesting was that all the grocery stores were owned by Chinese. I thought that was odd. Just unexpected.

I could see it had a good standard of living, and it did feel like Europe a bit.

A few expats seemed to be involved in the bar business. I wonder how they are doing.

[portofmanteau]

(01-23-2014 06:30 PM)JJ Roberts Wrote:  

After the crash in 2001 you could buy a nice one bed apartment in a nice part of BA (like Palermo) for about $12,000 USD. An American friend of mine did exactly that.

Did your friend actually buy a place in Palermo for $12k US? Did you go in it? It's true that there were some apartments that sold for prices like this, but actually very few - unless people were in a sell-or-starve situation, pretty much everyone knew real estate prices would bounce back, so the window for buying at stupid prices like that was very small. Argentines tend to think of real estate as the only stable investment - and the devaluation was 3:1, so even if he bought in that panic window that apartment shouldn't have been more than $36k before the crash.

[portofmanteau]

(01-23-2014 04:59 PM)MichaelCorleone Wrote:  

My favorite quote from the 2nd link, "The peso plunged 17.5 percent to a record low of 8.1842 per dollar today, extending its decline to more than 35 percent over the past year, as the central bank scaled back efforts to prop it up. The selloff is the worst since the devaluation that followed the default. Currencies from only two countries in the world have fallen more: war-torn Syria and Iran."

Inflation has run over 20% for many years now so a 35% devaluation over a year isn't really that telling. The 12% one-day drop is a very, very bad sign, the central bank no longer has the assets/will to pump up the peso.

This year is definitely going to be horrible for Argentines on a fixed income. The government is trying to shut down the cuevas (black market exchanges) again with raids, but I believe that will only cause more of a panic, and one way or another people are going to keep dumping their pesos for USD.

[JJ Roberts]

(01-23-2014 06:41 PM)portofmanteau Wrote:  

Did your friend actually buy a place in Palermo for $12k US? Did you go in it?

Sure. I went to a few parties at his place.

Same apt in any major US city would be about $250k

[portofmanteau]

Also looks like no one has posted zerohedge's take yet:

http://www.zerohedge.com/news/2014-01-23...y-collapse


Local rate tracking here:

http://www.ambito.com/economia/mercados/monedas/dolar/

and here:

http://dolarblue.net/

The story zerohedge's report is based on (in Spanish):

http://www.ambito.com/noticia.asp?id=725651

[Vampire]

I am heading to Argentina in two months. The flights are locked in, so I can't cancel without losing money. Hopefully the power outages and protests fizzle out by then. It should be interesting.

[portofmanteau]

(01-23-2014 08:38 PM)Vampire Wrote:  

I am heading to Argentina in two months. The flights are locked in, so I can't cancel without losing money. Hopefully the power outages and protests fizzle out by then. It should be interesting.

Bring as much USD in $100 bills as you can.

[Hencredible Casanova]

(01-23-2014 08:53 PM)portofmanteau Wrote:  

(01-23-2014 08:38 PM)Vampire Wrote:  

I am heading to Argentina in two months. The flights are locked in, so I can't cancel without losing money. Hopefully the power outages and protests fizzle out by then. It should be interesting.

Bring as much USD in $100 bills as you can.

Where do the black market moneychangers hang out? Calle Florida?

[Duke Castile]

(01-23-2014 08:53 PM)portofmanteau Wrote:  

(01-23-2014 08:38 PM)Vampire Wrote:  

I am heading to Argentina in two months. The flights are locked in, so I can't cancel without losing money. Hopefully the power outages and protests fizzle out by then. It should be interesting.

Bring as much USD in $100 bills as you can.

I remember on another thread you were saying that people would go to a neighboring country (Uruguay?) and hit ATM's.

Could you go into a bank there and take out a cash advance?

I just went to Popular Bank in the Dominican Rep. and pulled out 4k no problem.