The parable of Argentina
A CENTURY ago, when Harrods decided to set up its first overseas emporium, it chose Buenos Aires. In 1914 Argentina stood out as the country of the future. Its economy had grown faster than America’s over the previous four decades. Its GDP per head was higher than Germany’s, France’s or Italy’s. It boasted wonderfully fertile agricultural land, a sunny climate, a new democracy (universal male suffrage was introduced in 1912), an educated population and the world’s most erotic dance. Immigrants tangoed in from everywhere. For the young and ambitious, the choice between Argentina and California was a hard one.
There are still many things to love about Argentina, from the glorious wilds of Patagonia to the world’s best footballer, Lionel Messi. The Argentines remain perhaps the best-looking people on the planet. But their country is a wreck. Harrods closed in 1998. Argentina is once again at the centre of an emerging-market crisis. This one can be blamed on the incompetence of the president, Cristina Fernández, but she is merely the latest in a succession of economically illiterate populists, stretching back to Juan and Eva (Evita) Perón, and before. Forget about competing with the Germans. The Chileans and Uruguayans, the locals Argentines used to look down on, are now richer. Children from both those countries—and Brazil and Mexico too—do better in international education tests.
Argentines jockey to cope with economic turmoil
Posted: Jan 30, 2014 1:42 PM Updated: Jan 30, 2014 1:42 PM
BUENOS AIRES, Argentina (AP) — Consumer prices are soaring, the treasury is running low on foreign currency and the peso has had its sharpest slide in 12 years. Instead of rioting, though, Argentines are falling back on tried and true survival skills to cope with the turmoil.
Inflation is at about 30 percent and there’s been a 15 percent drop in the peso’s value against the U.S. dollar over a few days. But Argentina has gone through five much more dire economic times since the 1930s.
So some Argentines are hoarding dollars, while others stockpile goods or plow their savings into real estate.
More people ride bikes now following recent increases in public transportation fares. They eat less at restaurants and cook at home. They buy cheap, pirated DVD copies of the latest films rather than go to the cinema.
Sofia Basualdo, a 43-year-old geography teacher, responded to growing inflation with a shopping spree to beat further price rises.
“I might pay one peso for a product today, but next week I’ll likely have to pay two pesos,” Basualdo said as she left a Buenos Aires supermarket pushing a shopping cart filled to the brim. “In this country, when you start smelling inflation it’s best to buy and save.”
Many Argentines note that the current economic woes are not as bad as Argentina’s financial collapse in 2001-2002. Unemployment remains relatively low, and many people benefit from government handouts. Yet they worry the country may be at a tipping point.
“People are adopting defensive measures to survive,” said Jorge Raventos, a political analyst and former spokesman for Argentina’s foreign relations ministry. “People endure this by zig-zagging along, but it’s hard to know how much they can take before they explode.”
Although it is exceedingly difficult because of strict regulations, some people and businesses have succeeded in past years in sending their dollars out of Argentina as a hedge against inflation. Then Deputy Economy Minister Axel Kiciloff last year estimated Argentine individuals and companies had socked away up to $200 billion in undeclared currency outside the country.
But like most people, Carlos Partcha, an 80-year-old retired journalist, has taken the simpler measure of buying U.S. dollars and stashing them under his mattress — as he has done for more than a decade.
“We don’t trust anything anymore. Not even the banking institutions,” Partcha said. “I had saved in dollars, and when the banks froze deposits in 2001, I got pesos back and lost my money.”
Argentina’s Crumbling Economy
Officially, inflation is 10.5%, but skeptics think it’s much higher. Capital flight is accelerating.
By Mary Anastasia O’Grady
Expats Found it Easier to Move to Uruguay than to Argentina
“I faced the same choice 2 years ago, Uruguay or Argentina. I already had an apartment in Buenos Aires, wanted to relocate from coastal Brazil and did not want to live in a big city. We ended up near Punta del Este (but a world away in many respects) in Uruguay. The political and financial situation in Argentina is impossible. A few months ago it was impossible to get dollars (by decree of the President) and no one outside of Argentina wants their pesos. Inflation is 25-30%. I gave up trying to get residency. We still have our apartment in BA and enjoy the 35 minute flight from Punta to be in a great city every month. Since you mentioned you need to be near an airport there is one (Laguna del Sauce) 5 minutes from our house. And Uruguay seems very stable, the people are friendly, inflation is 7% and banking is easy. Both countries have winters and August is particularly gloomy. If you are visiting in July and August you will see the worst of the weather. I thought I would share my experiences with both countries,” explained one expat in Punta del Este.……….You will have to have a car anywhere outside of Montevideo, whereas in the city you won’t need one. (Frankly…I wouldn’t DRIVE in Argentina, much less own a car. I’ve lived in Mediteranean Europe, Mexico, etc…and Argentina is BY FAR the most dangerous place to drive I have ever seen. Noone stops…EVER. Uruguay by contrast is simply ‘sort of bad’, comparable to many other places outside the U.S.”