Ladies and Gentlemen, Che Misterio:
Argentina Lumbers On
By Che Misterio
Evidence mounts that Argentines will do whatever possible to leave the country and earn in hard-currency – even head the Catholic Church, if necessary.
As is customary when a financial crisis looms in this country, the government ups the rhetoric regarding the Falklands. The day before Bergoglio was elected Pope, a referendum on the Falklands could hardly have been clearer: of 1,518 votes cast, 1,513 voted in favor of remaining British, 2 were unable to successfully fill out what could not have been a particularly complex voting slip, and 3 voted in favor of becoming Argentine. Who were those three? I’d love to meet them. I barely follow British politics and the entire EU seems to be in a mess currently, but really – would anyone actually choose to be governed by the Kirchner government if they had a choice?
Argentina’s problems would apparently vanish if only they had those scraps of land some 500km off the coast, despite most of Patagonia remaining a vast unexploited expanse of nothingness. Sure, the islands are financially self-sufficient and they boast an enviably high GDP per capita which exceeds even that of Norway, with full-employment. But would this continue under Argentine management? The rest of the country’s economic performance does is not reassuring.
If a referendum were to be conducted today in Argentina asking voters to choose between being governed by the current Kirchner government or the British, I wonder if it would be quite as overwhelming as the 99.8% seen on the Islands?
Meanwhile, the US dollar hit a new landmark – 8 to 1 on the black market. In fact, I am not sure it can really be called the black market, as barely anyone is using the other market, which still doggedly insists the rate is a smidge more than 5 to 1. Admittedly almost no one is allowed to buy dollars at this rate, and no one remotely astute is selling at this rate, so there’s little harm fabricating the rate for a non-existent market.
The state petrol supplier, YPF, seems to prefer cash, as the debit and credit card machines seem perpetually “out of order”. Even the airlines now accept cash. Flights are actually quite cheap for those with dollars able to pay in pesos via a quick visit to the money-changer. A recent article suggests US$1 million a day is fleeing across the border to Uruguay, and there are no more safety deposit boxes left in Colonia, just across the river from Buenos Aires.
Rumors of an imminent devaluation appear unfounded. Kirchner’s new BFF, Deputy Economy Minister Axel Kicillof, is said to be flirting with the idea of multiple exchange rates, another tried, tested and doomed strategy to manage (or manipulate) a currency. Inflation continues its relentless erosion of value for all local currency assets, with the exception of four supermarkets who have been enjoying price controls, a privilege which will end in April. Watch for a surge in purchases on April 30th and a spike in prices on May 1st.
Supermarket trolley-arbitrage: only in Argentina.
[Ed. note: You’ll notice a new tag, entitled, “Guest Writing.” Here is where you’ll find all guest articles.]