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Roberto
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Post Number: 1985
Registered: 12-2004
Posted on Wednesday, October 13, 2010 - 12:31 am:   Edit PostPrint Post

As per Arial's request...
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Arial
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Username: Arial

Post Number: 353
Registered: 10-2006
Posted on Friday, October 08, 2010 - 6:35 am:   Edit PostPrint Post

Rob brought up an interesting subject. Maybe someone can help me with info. Normally throughout world history it is not vendors who cause inflation. It is government.

Currently finance in the US is a bit complicated since the USD is the international currency (makes it possible to ship their inflation overseas and keep it away from home). For that reason the US has been able to avoid the pain of inflation at home for many years. But normally any big influx of currency into the economy causes inflation.

It is not vendors that cause it. Vendors raise prices because inflation is raising their costs and they pass it on to consumers. It is hard for some US citizens to "get it." It is not the people; it is the government. Eventually they always destroy the value of the currency. The US has had two defaults or devaluations in their history. One, I think, after the Revolutionary War and one after Roosevelt called in all the gold, then raised the price of gold, thus devaluing the dollars they had just paid for the gold! (These guys are indeed slick!)

But are there other factors in Argentina? Is Argentina an exception? And if this should be on a different page we can take it there if Roberto (or someone else) chooses. Maybe no one has any comments anyway. Also Rob, I agree that deflation does bring prices down. But usually it doesn't happen until the government has no choice but defaults in spite of all they can do, because doing otherwise involves less spending and politicians hate that!

And by the way . . . Hi Roberto! It is always great to see YOUR helpful and warm contributions and advice. You're still the best I see!
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Rob Roy
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Username: Panamahat

Post Number: 9
Registered: 6-2010
Posted on Sunday, October 10, 2010 - 11:09 am:   Edit PostPrint Post

Hi Arial
I don't know if this is the appropriate forum for this topic but maintaining the value of your funds is a very real dilemma in today's world.

It seems all countries are hell bent on devaluing their currencies including the US!

I would think that excess money printing in Argentina helped precipitate their financial crisis which led to the peso being massively devalued overnight against the dollar.

This same process of overprinting could lead to a devaluation of the dollar. It seems to be holding up right now against the Peso but in the future who knows.

Gold in this environment has done a great job of preserving capital against any currency. This is not investment advice but just happens to be true.
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Arial
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Username: Arial

Post Number: 354
Registered: 10-2006
Posted on Monday, October 11, 2010 - 12:49 pm:   Edit PostPrint Post

Well, this forum is "Living in Argentina" so maybe it isn't too far off. I can't get anything solid re Argentina about the cause, I just know what is historically the cause. I also know that these countries get into debt and then have problems paying it back and that might precipitate printing of too much money, causing inflation and even a crash. John Perkins book Confessions of an Economic Hitman was a huge wake-up for me about what happens to smaller countries at the hands of corporations to the north, and perhaps the IMF. It isn't pretty. But it makes bankers and outside corporations wealthy at the expense of smaller countries which, I guess, can't figure it out. But I don't know about Argentina.
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Roberto
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Post Number: 1986
Registered: 12-2004
Posted on Wednesday, October 13, 2010 - 1:23 am:   Edit PostPrint Post

Arial, thanks. Glad to know you are enjoying yourself in the pampas.

Here is my argentine layman view to be taken with several grains of salt. The one radical difference between the US and Argentina when it comes to inflation are expectations. Just as you may have no, or closer to none, expectations of inflation in the US and have grown used to this fact, argentines are on the other side of this spectrum. Remember, Argentina has suffered many bouts of high inflation. Members of my family went belly up because of it and most of my growing up in Buenos Aires (30 years) was under cycles of inflation to very high inflation. What this does to a citizen's psyche is beyond an economy treatise.

Devaluing and creating inflation in Argentina is pretty easy as labor is very unionized. All it takes is for unions to start the race... or the *raise* if you will, either by collective agreements or more violently, by physically confronting the government. Rising wages creates more demand which leads to some unexpected outcomes, definitely not those in economy books, such as sudden disappearance of items from shelves, shrinking of goods offered while pricing remains (to maintain gross profits) and prices adjustments on a daily basis. Local manufacturers will not invest and create new capacity as it may be suggested by authorities in the field. This may apply to advanced and mature economies, or may be just the US. Under a system that continually punishes production, local "capitanes de la industria" will avoid hiring like the plague and investing like it is a bad word.

There is a huge psychological undercurrent that is not being covered by academia when it comes to understanding people's behaviours and responses to a high pressure inflationary scenario. The responses are very local and are determined by so many factors that it becomes difficult to understand how inflation really operates, its origins and final outcome.

In Argentina's case, the usual recipe of devaluing local currency to generate an inflationary cycle can also work. But take a look at what happened since the 2000 debacle. The currency has not devalued against the dollar more than what it was a few years ago, however, its purchasing power in dollar terms has increased considerably. Which means local currency is now stronger. But how is that possible with inflation in pesos being rampant? It all sounds like a paradox which points to what an extent government can manipulate the intrinsic value of paper money. I sometimes wonder if they themselves (central banks) know what they are doing aside from getting rich by these schemes.

Traditionally, with inflation locals would have run to the dollar to protect their eroding purchasing power. It never happened in this cycle. The dollar was never attractive. So was the currency devalued or revalued? And where is inflation coming from?

Here is the one thing I know... mom-and-pop onwers can raise prices at will, anytime, anyday. And argentines have become used to shooting from the hips. It is a much more complex phenomena than most realize. I think after a while, and after so many cycles, people may not even know how to operate without it (inflation).
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Bill Howard
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Username: Veritas01

Post Number: 78
Registered: 5-2006
Posted on Wednesday, October 13, 2010 - 8:04 am:   Edit PostPrint Post

That explains why it is virtually impossible to book a hotel more than a few months in advance. Here in the US I am used to booking a room a year in advance to take advantage of the best selection and best price and to spread out the cost of the room over the year. In Argentina everytime I try and book online the systems show no rooms available call the hotel directly. When I call they say...call back a few weeks before your trip. Of course for an American that is too loose...but I do and it usually works but always at a price higher than I thought. My wife who is Argentine insists on doing the talking on the phone. She knows if they here my horrible spanish and know I am American the price will go up at least 30%.
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Rob Roy
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Username: Panamahat

Post Number: 10
Registered: 6-2010
Posted on Wednesday, October 13, 2010 - 8:52 am:   Edit PostPrint Post

Hi Roberto
I can see inflation, and how Argentines handle it is quite a complex affair.

As I mentioned in another post, Venezuela currently has the highest inflation rate in the world, with Argentina second. Hugo Chavez a short time ago devalued their currency overnight by 20% if I recall. Argentina did the same thing back in 2002 with the Peso against the dollar.

The fact that the Dollar Peso exchange rate has remained rather constant is a real puzzle to me given the weakness in the Dollar.

There seems to be a currency war on right now between the worlds central banks. many believe the US would like a lower dollar by printing massive amounts of new dollars to help pay their debts. While other countries also want to do the same thing to lower their currency against the dollar. Brazil for example.

I don't know how Argentina would react to this maybe another official devaluation, or maybe printing more money. Or maybe they learned from the last time that this policy is not working, and will allow the Peso to rise.
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Rob Roy
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Username: Panamahat

Post Number: 11
Registered: 6-2010
Posted on Wednesday, October 13, 2010 - 9:08 am:   Edit PostPrint Post

Hi Roberto
Under high inflation, you mentioned the sudden disappearance of items from shelves, shrinking of goods offered while pricing remains. This actually makes sense economically why sell something today, when you can sell it for more tomorrow.
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Roberto
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Post Number: 1988
Registered: 12-2004
Posted on Wednesday, October 13, 2010 - 9:45 am:   Edit PostPrint Post

Bill, in 10 years operating this site we have always avoided setting tour prices on the front page for that same reason. My mother has gotten used to foreigners requesting bookings so much in advance but in the beginning she would laugh. When it comes to air tickets she would still do the booking for the max. allowed and then roll it to the next due date on expiration.

There is really no pricing looking into the future. Nobody in Argentina can assure a price beyond 3 months. And that span is starting to get shorter which is a bad sign. Memory is a bad thing, or is it?

There could be another crisis in the works if the next President has to engineer and adjustment. How long before it hits us, who knows... although high grain prices may be the lifesaver this time. Problem now is that Argentina is not alone and government institutions continue to be weak in most south american democracies -except for Chile and Brazil-. I wonder what the magnitude of a next crisis will be given so many countries are playing games with their paper money.

@ Rob
Yes, that is exactly the thinking. Hoarding goods is what merchants do in periods of high inflation. So warehouses make a lot of money. Owning them and using them. Also, loan sharks make a killing and a whole bunch of black markets develop.
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Tom
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Username: Diverdown48

Post Number: 483
Registered: 6-2006


Posted on Wednesday, October 13, 2010 - 11:33 am:   Edit PostPrint Post

Having studied business management many years ago I know a bit about economics. Knowing a little bit about something can be dangerous.

Inflation often times leads to hoarding. People buy up non perisable goods believing prices will only go higher. Buy now and use later when the same goods will be more expensive.

There is manipulation of currencies to a degree but with the exception of China most are controlled by the world market. Over the years the dollar has been a safe haven and since they are cheaper now many are buying them with the knowledge that they will not become worthless. The Euro and British pound are strong against the dollar meaning they will buy more American dollars than dollars can buy them.

This sounds good for Europe but in reality it is not good. Their exports are more expensive. A weak dollar means US exports are less costly. Would you buy the same product for 10 dollars made in the US or 10 Euros made in Europe. Most people are intelligent enough to know the right one to buy.

China will not float its currencey because it wants to make their exports less costly. Wheather you have Dollars, Euros, Pounds or practically any other money you can buy "cheap"
Chineese goods cheap.

The quality of their products is suspect. Lead paint in toys. Contaminated food stuffs and even drywall for building homes.

In Florida there is a massive recall and rebuilding of homes that used chineese made drywall which had contaminants in them that are making people sick as we speak.

Not a year goes by that some major problem is found with Chineese made products and yet the world is buying them like hotcakes. They are cheap.

You get what you pay for.

One strange thing. Chineese wood is shipped in mass quantities to the US. In states like North Carolina the wood is made into furniture and shipped back to China as a finished product. The new rich of that country prize American craftmanship.

Argentina, due mainly to its agriculture exports, is an important market for the world. Why the approximate 3 to 1 ratio of the peso to the dollar remains so steady I do not have a definitive answer. But it dose mean a weak dollar signals a weak peso compared to the pound and euro makes Argentine exports very attractive to the wise buyer.
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Robert Gisborn
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Username: Bgisborn

Post Number: 23
Registered: 6-2006
Posted on Wednesday, October 13, 2010 - 2:02 pm:   Edit PostPrint Post

The exchange rate of the Argentine Peso is 4 to 1 not 3 to 1.

Argentine peso to US Dollar

It has lost about 25% of its value to the dollar in the last two years. That's steady?
I watch Telefe Noticias and read Clarin.com every day so I have a reasonable idea of the latest in Argentina. One could say Argentina's problem is and has been political corruption. Italy,France are probably more corrupt and Argentina is a boy scout compared to the Balkans and Russia. What differs is the immature nature of Argentina's corruption as compared to, say, Italy's. An Italian restaurant owner would never stick it to an American tourist because he knows that American is an investment
-he'll return and will recommend his restaurant to other American's. It seems Argentinians think there is no future past next week. The President does a little more than a meaningless huff and puff about a bunch of worthless Islands-granted Argentina only has 2.75 million KM of some of the world's richest real estate already-and people are not supposed to see that she is raking in millions for herself from somewhere- as her husband did. Follow the path down and you'll find the same thing.
As I said, Clarin knows this and Telefe Noticias is not bashful.
What I say is evident. No, Argentina does not have more corruption than Europe it's just that they're still children in that game.

(Message edited by admin on October 17, 2010)
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Tom
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Username: Diverdown48

Post Number: 484
Registered: 6-2006


Posted on Wednesday, October 13, 2010 - 2:18 pm:   Edit PostPrint Post

thanks for the update on the exchange rate.

even more reason to make another trip to the land of the Tango.

I love Argentina
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Robert Gisborn
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Username: Bgisborn

Post Number: 24
Registered: 6-2006
Posted on Wednesday, October 13, 2010 - 11:08 pm:   Edit PostPrint Post

Roberto, inflation is a double edge sword. It gives and takes. If you're a debter, it gives,if you're a bank carrying the loan, it takes. Sufficient inflation cancels all debts. The common way to deal with inflation is with indexing. When prices index up so do wages. The problem with this is obvious: Wages lag prices.
One thing about currency: It's traded as are stocks and commodities. If the traders like your currency they'll buy it, if not, they'll dump it. When they dump Argentine Pesos you have inflation. Argentine banks have a stash of dollars they could sell to bump the Peso up, but that has its dangers. Your right about Argentina having DEPOSITS of Lithium (essential for Li-ion batteries) but they are not enough of an actual supplier as they could be. Argentina is rich in many minerals but its technology lags badly. US drilling technology had to drill the shaft to extract the 33 miners. Argentina didn't offer their neighbor that help because they don't have that technology. And they should have because of their extensive mineral wealth. One last thing. Argentina does not expose its workers to the hazardous conditions-one being silicosus-that Chile allows. It does makes a modern and humanitarian attempt at enviromental and public health concerns. I just hope it returns to the dynamic and promising nation it was before Operacion Condor
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Tom
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Username: Diverdown48

Post Number: 485
Registered: 6-2006


Posted on Thursday, October 14, 2010 - 11:07 am:   Edit PostPrint Post

Inflation does not always mean wages automatically go up. In some cases workers just lose buying power. People will work for pay even if it is not a fair wage.

Much of the mining if not all in Argentina is done by foreign enterests. Several gold mines that I know of are owned by Canadian companies.

GM has or did have a Chevrolet pickup assembly plant in Buenos Aires. I am not sure if it is still operating.

Argentina is into being green but there are several manufacturing facilities on the Rio de la Plata that spew polutants into the river. And there are plenty of other instances where companies get by without paying any attention to what damage they do to the environment. Just like in any other country.

Argentina is an huge producer of agricultural products which has allways been the bottom line for the economy. In my humble opinion it will always be that way. There is nothing wrong with that. When the world bank was screaming for its money the people of Argentina still had food to eat.

Last I checked in order to survive one needs food and water. Throw in housing and clothing and that's about it. Argentina has all of that.

When you consider the large size of the country and the relatively small population you have a pretty good combination as long as the central government is stable. With that you throw in the mineral resources and the country has a bright future. It is rapidly becoming a world player, it being named as such in the US press at least.
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Rob Roy
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Username: Panamahat

Post Number: 12
Registered: 6-2010
Posted on Thursday, October 14, 2010 - 12:10 pm:   Edit PostPrint Post

Hi Tom
Yes, Argentina has a abundance of agricultural products and fresh water, along with considerable mineral resources. These are highly prized assets. If the government does not screw it up I can't help but think the country has a bright future.
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Bill Howard
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Username: Veritas01

Post Number: 79
Registered: 5-2006
Posted on Thursday, October 14, 2010 - 12:39 pm:   Edit PostPrint Post

Argentina also has a problem with illegal immigration. There are tens of thousands if not millions of people from Peru, Paraguay, Bolivia and Ecuador who enter Argentina and migrate to the cities looking for work and a better standard of living. Of course that rarely materializes. The "villas" surrounding many of Argentina's cities are home to poverty, crime, illnes and they create a drain on the economy. That in my mind is a significant problem that needs to be addressed.

Also the culture of Argentina needs to refocus. I have read a few books contrasting the Calvinistic work ethic of the USA with the Latino work ethic. I am not suggesting Argentines are lazy...hardly. But their expectations are often lower than Americans and that has an effect. Also books have been written about the historical small independent farm culture of the USA and the estancia/plantation culture of South America and its effect on how people see the work/reward equation.

Argentina was once a very wealthy and powerful country but that wealth was held by a few people and that situation continues today both in Argentina and increasingly in the USA.

Argentina's inflation coupled with very high airfares has really hurt US tourism to Argentina. I have to go as my wife's family is there but friends of mine who were considering a trip have changed their minds. Just too costly.

I fear that the bubble will continue to grow and like pyramid schemes everywhere it will burst and there will be yet another crisis.
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Tom
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Username: Diverdown48

Post Number: 486
Registered: 6-2006


Posted on Thursday, October 14, 2010 - 2:34 pm:   Edit PostPrint Post

I most respectfully disagree with the statement that Argentina needs to refocus.

I was born in Western Kentucky and lived on our family farm until I was 16. These individually owned operations have been for the most part taken over by corporations. When I was on the farm most everyone owned at least one tractork, a pickup and larger truck and the specialized necessary equipment to do the type of farming the owner was into and myriad other types of equipment that sat around doing nothing because of changes in direction of the farmers whims.

All farmers then and now claim they were and are poor. I guess nice people just give them the new cars, pickups and other trucks, the nice homes and all the farming essentials they need to operate. Maybe they buy them with the subsidy checks they get from Uncle Sam while complaining about the other "poor" people who recieve social security and other government checks.
My nephew was all to happy to give up the 2 acre (less than one hectre) tobacco allotment he had for the $50 thousand dollar check he got from the Feds. Oh he got to keep the land, just don't grow tobacco on it any more.

Most of the family farms in the county where I am from are owned by three mega farmers now, all incorporated of course. It is the way of the present and future of farming in America. Few estancia owners in Argentina own more land than these guys have.
And they own their own equipment. All of it. They don't have to rely on the roving reapers that come and harvest the different types of crops.

I did not know their was such a large illegal immigrant population in Argentina given their seemily easy entrance requirements. I lived in Argentina for several years. My visa was good for 90 days and I could pay a whopping 100 pesos to stay another 90 days. Then I had to take a fast boat across the Rio de la Plata to Uraguay to get my passport stamped and then come back in the same day. All good for another 90 days.

I think with the advent of the internet the poeple of Argentina are not going to be fooled into accepting another dictator or military junta run government. The literacy rate of 97+ percent, free secondary and college education, excellent medical services, modern roads, relatively inexpensive quality food stuffs, etc., etc., Argentina is a great place to live.

The wealth of Argentina is where it has always been and the estancia owners I know aren't missing many beals. Like you say, the big land owners aren't a recent phenomenum.

I am not sure what is meant by a powerful country. They were able to run off the Spanish when Spain was losing wars to most everyone and then the British in the days when England was pretty much at war with everybody else, back when they didn't have aircraft carriers and nuclear subs. It seems to me over the many years the country has been in existance they pretty much get along well with everyone except themselves. Have you seen Evita? Great song.

The price to me, even if it were free to fly to Argentina, isn't as prohibitive as the 12 hour non stop flight from Miami that causes me to hesitate. Not one of your more fun adventures in flying.

I am not concerned about bubbles bursting in Argentina or the US. What Ike warned us about when he left the presidency are now reality and run the world. The military industrial complex run by multinational corporations. Argentina is too good a supplier of agricutrual products and the US is too good a consumer to be in any real trouble.
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Roberto
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Post Number: 1989
Registered: 12-2004
Posted on Saturday, October 16, 2010 - 10:04 pm:   Edit PostPrint Post

People!

Nice that everyone participates but I feel this thread has slowly morphed into something else. Tomorrow, when I get a chance I will move a bunch of posts from here to a new "Peron/history" thread -which should be interesting- so that we can focus here on "inflation" and possibly coming issues.

(Message edited by admin on October 17, 2010)
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Robert Gisborn
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Username: Bgisborn

Post Number: 35
Registered: 6-2006
Posted on Saturday, October 16, 2010 - 11:09 pm:   Edit PostPrint Post

Roberto you are correct. I apologize for my part in making a mess of the thread.
Roberto, your characterization of the monetary crises in Argentina is a handful of common and historically proven false cliches. The PIIGS are going through a worse crises and their debts are proportionally greater than Argentina's. Is that the Euro's fault? Germany is booming. Why is Germany booming? Because they have highly educated people in major fields of high technology and they make a lot of stuff-including the torpedo the Argentine navy couldn't figure out how to fire.
Currency is only as good as the power of the country behind it and soy bean power ain't much. Turn key auto factories don't impress.
When President Lincoln was faced with a civil war he went to the banks to get money to finance it. Their interest was far to high for him and he told them to shove it. He printed his own money-The Greenback Dollar, won the war, saved the union and rebuilt the South. Where does that fit into your monetary theories?
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Roberto
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Post Number: 1991
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Posted on Sunday, October 17, 2010 - 12:49 am:   Edit PostPrint Post

Dear friends, Juan Domingo Peron deserves his own thread, at a minimum. So feel free to agree and disagree over there. We then can focus on inflation and its ill effects on this one.

Robert G, according to Henry Clews Lincoln was unable to finance the war and there wasn't any money printing but large debt being issued. In "50 years in Wall Street" written by Clews during the Civil War period, he carefully explains how the government was bankrupt and had to reach out to Wall Street and its financiers, among which he was one, just to buy ammunition. A deal was struck and documented. And ever since, government and Wall Street appear to have been one, no?

(Message edited by admin on October 17, 2010)
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Rob Roy
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Username: Panamahat

Post Number: 14
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Posted on Sunday, October 17, 2010 - 8:58 am:   Edit PostPrint Post

It's interesting That the Greenback was the first currency issued by the US Government that was not backed by Gold. The US Government printed a lot, to cover the cost of the civil war.

This gave Americans a taste of something they had never experienced before, high inflation. The Yankee Greenback was soundly rejected by the population and they insisted on using Gold for transactions.
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Robert Gisborn
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Username: Bgisborn

Post Number: 37
Registered: 6-2006
Posted on Sunday, October 17, 2010 - 10:32 am:   Edit PostPrint Post

Rob Roy, From 1865 to 1900-that 35 years encompasses the American Western Mythology. The Confederate money was worthless, of course, and had to be replaced by a Union currency, and the railroads had to be built to all the western territories. Also, the destroyed cities of the south-Atlanta-for example had been burned down-had to be rebuilt. Tens of thousands of families were without a breadwinner because more Americans died in that war than were killed in any single war-including WWII. People did not exchange gold in place of money but gold was transported to western banks to back up any issuance of money they made. Because so many farms were destroyed the price of food was high-that was a supply problem. Believe me, The Daltons, the hole in the wall gang and the James gang robbed mostly paper money-paper money backed by the American gold and silver standards. The dollar coin was silver and the quarter and dime also contained silver. The paper dollar was a silver certificate-and there were a number of MINTED gold coins. 35 years after Lincoln printed the greenback a the US was clearly both economically and militarily the strongest country in the world. Now what if Lincoln had not done that? What if Lincoln had a Milton Friedman as an advisor? How long would slavery have lasted? Would we now have two countries where we have one? Do you see the utter stupidity of monetary theories? Money does not make a country strong or weak, it's the country that makes its money strong or weak. That's why the PIIGS are in trouble and Germany is booming-they all use the same money. Do you think China's currency is so strong they are trying to weaken it because of some whacky monetary theory? Here's Robert's theory of money: Stop partying, get off your butts,build schools,learn things, make things and do things and the money will take care of itself.
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Rob Roy
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Username: Panamahat

Post Number: 15
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Posted on Sunday, October 17, 2010 - 10:51 am:   Edit PostPrint Post

With the exception of the Civil War, the US experienced virtually no inflation for the whole century, while on the Gold Standard.

A cowboy could ride into town, flip a $20 gold piece on the bar of the local Saloon. That would cover a stable and hay for his horse for a week. Lodging at the Saloon with meals, endless liqueur and the services of one of Miss Kitties ladies, along with gambling money.

Those were the days when $20 meant something!
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Robert Gisborn
Junior Member
Username: Bgisborn

Post Number: 38
Registered: 6-2006
Posted on Sunday, October 17, 2010 - 10:54 am:   Edit PostPrint Post

Roberto, thanks for the new thread and I apologize for running the inflation thread off the tracks.
Lincoln had the US government print 450 million dollars using green ink to distinguish it from bank issued notes. That was a lot of money in the 1860's. If you'd like, Google Greenback Dollar.
Wall street is the location of one of the many stock exchanges in the world, The New York Stock Exchange. There are many ways to exchange stock in the US but the "Big Board" is the largest. Commodities are primarily exchanged in Chicago, The Chicago Board of Trade-but there are others. Anyway, these exchanges are in control of the country's wealth so of course they have political power. So? What of it? The cocoa exchange in New York is a small exchange but it could send the South American economy reeling-and it has. Welcome to the world of Capitalism. It works. It's a bit scary but it works.
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Tom
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Username: Diverdown48

Post Number: 492
Registered: 6-2006


Posted on Sunday, October 17, 2010 - 12:29 pm:   Edit PostPrint Post

Robert, your simplistic view of money policy is very nieve. The Chineese keep their currency at a low fixed rate so that their exports will be less expensive. They refuse to let it float as the Americans and Europeans want. It is grossly undervalued.

West Germany was rebuilt with US dollars while East Germany was occupied by the Soviets and left to rot because the Soviets hated the Germans for good reason. It was West Germany that rebuilt the East after the fall of Communism.

Gold was used to buy goods with a lot of bartering going on. Gold was the reason for Custer's defeat at the Little Big Horn along with Custers arogance. The land given to the Indians which included the Black Hills was invaded by miners after gold was discovered there. The Army was sent when the miners started getting attacked.

Gold dust was common especially after the California gold rush.
Who is partying dude? The US has fewer holidays, fewer vacation days and an older retirement age. People in France are rioting daily because the government wants to raise the retirement age to 62. The same type protests are going on in Spain, Greece, Italy and other parts of Europe.
The US currencey was backed by gold until sometime in the 50's or 60's. I am old enough to know remember when the currency was taken off the gold standard and allowed to float.

Your assertions show a decided lack of knowledge of international monetary policies and dealings.
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Tom
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Username: Diverdown48

Post Number: 494
Registered: 6-2006


Posted on Sunday, October 17, 2010 - 1:47 pm:   Edit PostPrint Post

Ricardo, you obviously do not know what you are talking about concerning the Vietnam War.
The mighty US Military machine you talk about was never beaten by the VC or NVA on the field of battle in any major engagement.
After the virtual destruction of the VC and masacre of the NVA divisions fighting in the 1968 Tet Offensive the north had no viable options except to negotiate a peace treaty in Paris.
The French lost at Dien Bien Phu because the NVA moved artillery over mountains and blasted them into submission.
They tried the same thing at Khe San against the US Marines. They lost.
In the Tet Offensive the surprise attack by full force NVA divisions and the VC during the lunar new year that previously had always been honored as a non combat time. After a few initial successes of very minor consequence the US military and their South Vietnam allies regained all they had lost and wiped out entire brigades leaving several NVA divisons obliterated.

After a peace treaty was signed in Paris, the US military withdrew leaving their hardware with the South Vietnamese. When the North broke the treaty the US government made a political decison, not a military one, to not send troops back into the country. Had we done so we would have beaten the NVA into submission again.

Your niave assertions belie the facts. No small country can beat a super power when the Super Power has the desire to wage war with all their resources.

I watched the war on the evening news every day and then became a part of it when I joined the Army in 1970. You have no clue as to the military war versus the political war in Vietnam.

The first thing you want to do in war is gain air superiority. Unlike the contest in Korea we had it the whole time we were in Vietnam. From land based Air Force and Marine aircraft and US Army helicoptors and Navy aircraft carrier forces we roamed the skies at will. Yes some were shot down but far more reaked havoc on enemy forces in the south and north.
Our Army and Marine ground forces went where ever they wanted to go under the civilian US government restraints. The only real enemy of our forces was our own government. Otherwise we would have made short work of the North Vietnamese and their VC allies. An all out war like the one we waged in WWII would have turned North Vietman into a pock marked moon scape.

And if we had wanted to go back into the war in Vietnam we could have wiped out the north in a few bombing runs with nuclear weapons which we did have contingency plans to use.

For anyone to say the US Military was defeated in Vietnam shows they do not know history as it really was.

All you remember is Marine helicoptors taking out Americans and some of their Vietnam allies off the roof of the US Embassy. That is not the war. That was an evacuation of mostly noncombatants after the treaty was broken by the north.

The ratio of enemy vs US forces killed has been said to be as high as 20 to 1.

The Vietnam war for the US was a black mark but not because of its military might. A lack of will to go back in with our military by the civilian leaders of the US was the reason the north took over the south. pure and simply.

It is interesting to note that we are now friends with Vietnam and support them in their oppostion to the claims of their giant neighbor to the north as to their rights off their sea coast.
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Ricardo
New member
Username: Gromit

Post Number: 23
Registered: 12-2007
Posted on Sunday, October 17, 2010 - 2:29 pm:   Edit PostPrint Post

Tom,
If you actually believe what you wrote, it is obvious that you are delusional. Vietnam kicked our imperialistic butts. Historically no war has ever been won against a nationalistic guerrilla army. However, if it gives you a testosterone rush to beat your chest & claim otherwise...enjoy.
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Tom
Senior Member
Username: Diverdown48

Post Number: 496
Registered: 6-2006


Posted on Sunday, October 17, 2010 - 7:38 pm:   Edit PostPrint Post

Ricardo, you are totally out of your league and have no idea what you are talking about.
Guerilla wars have been won many times.
We beat the guerillas in the Phillipines.
We helped beat the guerillas in Guatamalla.
We were on the side of the guerillas twice in Cuba and won both times.
Vietnam never kicked our imperialistic butts any more than they kicked the Japaneese butts when they were in it. They did beat the French.
If you want to be delusional, so be it. Name one victory the Vietnamesee of the north won over American forces. There were times whin small unit patrolls were beaten by the VC and NVA.
You obviously don't like our country RICARDO so why don't you go back where you came from.
Facts are facts. Screaming about being delusional and pounding ones chest does not make you wise and wonderful. You no nothing of the war in Vietnam.
Oh, by the way, the guerillas of Afghanistan beat the butts of the Soviets with our help also.
The least imperialistic country major country in the world is the US.
Imperialists win wars and take countries to satisfy their imperialist appetite.
In the 20th century the US has not taken any land from any country it beat. Not even Japan or Germany.
Show me a scintilla of facts to back your assertions.
Facts, not silly words of condemnation.
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Robert Gisborn
Junior Member
Username: Bgisborn

Post Number: 41
Registered: 6-2006
Posted on Sunday, October 17, 2010 - 9:51 pm:   Edit PostPrint Post

Here is what I would like tom see Argentina do. First, break the strangle hold of the agrarian sector. No nation today can be a first world economic power if its economy is chiefly agrarian.
Let the agrarian sector sell any its products abroad. Just tax their profits. It may be better for Argentina to buy abroad then allow this agrarian dominance. This sector only gives work to about 1% of the labor force-it is an insignificant employer.
Expand petroleum exploration and wind energy development. Patagonia is probably one of the greatest and most accessible wind energy resources in the world. The oil discovery in the Malvinas only means the Patagonian continental shelf is loaded with it and Argentina has most of that. As you know, Argentina is loaded with Triassic fossils and that means it was once covered with an enormous bio mass that is now hydro-carbons.
Cordoba could be another "Silicone Valley". It will take a bit of foreign investment but the area should attract the finest minds from around the world to work there. Also, Argentina must start doing more of its own R&D.
In the north, mate is gold but not the way Argentinians drink it. That's an acquired taste and I ain't sharing a bombilla with anyone who does not look like Sharon Stone. In Paraguay they're developing mate products geared for more universal tastes, seasoned with herbs and sweetened mixed and bottled. Mate is fantastic and many Americans won't go without it-Hillary Clinton for one. But we're not into the bombilla culture thing. I use a french press and add spices or buy only the spiced kind with stems. It could be a market as great as coffee, if it were possible to supply such a market. Producing it is necessarily labor intensive and could give significant employment.
Now, though the agrarian sector does not give much employment, food processing does-but that could be food from any where. Argentina could buy unprocessed food stuffs and do the processing domestically.
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Ricardo
New member
Username: Gromit

Post Number: 24
Registered: 12-2007
Posted on Sunday, October 17, 2010 - 11:55 pm:   Edit PostPrint Post

Tom,
Which league am I totally out of?
Might it be the hysterical irrational league of war mongers that after some 40 years refuse to accept that North American Imperialistic aggressiveness has been & still is a dominant force on our planet that has murdered millions of innocent civilians?

Bertrand Russel in 1967 at the opening of the 2nd session of the International War Crimes Tribunal wrote'...it is in the nature of imperialism that citizens of the imperial power are always among the last to know--or care about circumstances in the colonies'.

So Tom, wake up and smell the coffee and see the blood we have on our hands.
Even McNamara admitted that he was wrong about the savage American assault on a largely helpless rural population of Vietnam.

FYI...between 1965-1969 we dropped four and a half tons of aerial bombardments--nine times the tonnage of what was dropped in the Pacific against the Japanese, bombing every square mile of Vietnam--about 500 pounds for every man, woman & child in Vietnam. Want to talk about the number of Vietnamese children affected by Agent Orange?

So you say, 'If I don't like our country'...
Are you speaking of the US or Argentina...and where am I suppose to go back to?
Is it because of my name that you suppose I have a country other than the USA to go back to? By the way, my family came over on the Mayflower? Would it be England that you suggest I return to?

Serious folks can't possibly pay attention to your minimal acquaintance with the Imperialistic foreign policy of the United States. Your viewpoint disfigures our history and reflects a historical naivete & self righteousness that is based on pure fantasy. Your contentions do not even merit refutation. You, like a few other dinosaurs, have an inability that defies measurement to comprehend even elementary facts of contemporary history.
DeGaulle remarked in his memoirs about the North American "will to power, clocking itself in idealism".
So Tom continue to cloak yourself in misguided idealism that the USA can do no wrong in their criminal wars of aggression... obviously to you power, military might & winning at any cost, is everything.
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Tom
Senior Member
Username: Diverdown48

Post Number: 497
Registered: 6-2006


Posted on Monday, October 18, 2010 - 2:18 am:   Edit PostPrint Post

Robert, sounds like a plan.

Ricardo, your family did not come over on the Mayflower. I am argueing a point. I have forgotten more wrongs we have done in the name of freedom than you will ever know. DeGaulle was certainly no prince. Get a life.
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Robert Gisborn
Member
Username: Bgisborn

Post Number: 56
Registered: 6-2006
Posted on Thursday, October 21, 2010 - 4:38 pm:   Edit PostPrint Post

Actually, the most important thing for any economy is that the figures be properly doctored to give it an appealing appearance. The etymology of the word credit is belief and people believe what they see.
An example: The US public debt is a tad over $13,000,000,000,000. or a bit over twice the value of all the gold ever mined on earth at the present price of gold. I don't know if that says something about the price of gold or our debt, but whatever. Sure all those zeros look scary. Let's be scientific and render that as $13E12. Now, does that look so bad? Or we can take a tip from the IT people and use hexadecimal. $BD2CC61D000. See, it's not so bad. I'm thinking that after the forbidding Dec. 21 2012 we will go to the Mayan base 20 system.
I might note that the charge that the US simple prints money as it needs is a notorious lie. We do it electronically. Why can't Argentina do the same?
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Tom
Senior Member
Username: Diverdown48

Post Number: 509
Registered: 6-2006


Posted on Thursday, October 21, 2010 - 8:26 pm:   Edit PostPrint Post

The national debt does not mean just printed money.
Billions of dollars are in the hands of coin and currency collectors.
There are US Savings bonds. I buy them for my grand children. My grand children own part of the national debt.
Also securities and other bonds.
Money owed to foreign companies and governments who accept dollars for their goods.
In history there are governments who just said forget it. We are not going to pay it.
Full faith and credit in the government of the US is why people lend the government money in many forms.
The balance sheet is not as bleak as it sounds.
The possessions of the US government are many, varied and valuable including gold reserves and M16 rifles.
The last figures I heard were the US gives foreign governments over 13 billion dollars yearly. Several countries depend on that gift each year to maintain their existance.
Bill Clinton balanced the federal budget. Some other resourceful president will do it again some day. That's called full faith and credit.
When my grand children cash in their bonds I have no doubt they will be paid in dollars that will buy goods and services.
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David Cummings
New member
Username: Tierraman

Post Number: 3
Registered: 3-2008
Posted on Friday, October 22, 2010 - 6:53 pm:   Edit PostPrint Post

No doubt that inflation is taking hold in Argentina and something will have to give - what who knows its Argentina after all - an economy that works against the rules. In BA its tough enough for those who earn in pesos but for those in the countryside ie where my estancia is Tapalque its even worse - in these areas they pay up to 50% more than the city but the wages are much much lower. Its well known that Argentines live for today - those of you who like plan ahead had better get out if Argentina!!
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Tom
Senior Member
Username: Diverdown48

Post Number: 518
Registered: 6-2006


Posted on Friday, October 22, 2010 - 8:18 pm:   Edit PostPrint Post

what has bummed me out the price of a ticket from Miami to Buenos Aries is right at 1k.

I have a girlfriend down there not to speak of my wife. Give me a break.

Going back and forth gets expensive after awhile.
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Robert Gisborn
Member
Username: Bgisborn

Post Number: 62
Registered: 6-2006
Posted on Friday, October 22, 2010 - 9:04 pm:   Edit PostPrint Post

David, I think people are over hyping over inflation. First of all inflation has been the typical aspect of all economies since there were economies. I remember in Salanika in '55 a merchant charged me 10 drachmas for something (thinking back them it was probably ouzo).
I told him the smallest note I had was 10000 drachmas. He said 'That's now our 10 drachma note"
In the US not so long ago-the '70s-we ran an inflation rate of 20%/anum. Big deal. I was collecting 10% interest on my savings account, the value of my house jumped 20%. I could sell my old car for more than I paid for it new.
What is bad is stagflation. That is inflation coupled with poor business activity and unemployment. The problem with the Argentine economy is stagflation. As I mentioned in my posts to some consternation, the Argentinians are to a great extent to blame for that. $US 3. for a grande at Starbucks -in a paper cup no less- is a defensive short sighted rip off that will make some cancel a trip altogether. One thing you don't mess with in Seattle is our coffee. There's an American proverb: Fool me once, shame on you. Fool me twice, shame on me.
In Germany there is a typical glass for each beer. Near the top of that glass is an etched mark where the head should start. That's how closely the Germans watch their beer.
If I even heard about an American being charged more than a local for something I wouldn't go near that establishment and I'd warn others. Besides, ripping people only runs up prices and its really bad for business. So my advice to the Argentina business man: Don't ever mess with a foreign tourist. Treat those old retirees right and they'll pour money all over you. Also, that extra peso you charged may cost you a customer.
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Roberto
Board Administrator
Username: Admin

Post Number: 2008
Registered: 12-2004
Posted on Friday, October 22, 2010 - 10:30 pm:   Edit PostPrint Post

Hey, David! Welcome back. Long time since you last posted.

I am curious about your estancia and the life in a ranch... When you have time and if you feel like it, please tell us more about the place. Pictures would be great too. Here, the "outdoors" forum would be ideal. You can start threads by clicking the "start..." at the bottom.
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Robert Gisborn
Member
Username: Bgisborn

Post Number: 63
Registered: 6-2006
Posted on Friday, October 22, 2010 - 10:40 pm:   Edit PostPrint Post

Here is an article which you might be interested in. It's current and show's you the general impression investors have.

http://www.ieco.clarin.com/economia/Argentina-vista-complicado-nuevos-emprendedores_0_179100010.html

(Message edited by admin on October 22, 2010)
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David Cummings
New member
Username: Tierraman

Post Number: 4
Registered: 3-2008
Posted on Saturday, October 23, 2010 - 9:54 am:   Edit PostPrint Post

Hi Roberto . Thanks for for the invite certanly being an owner of an estancia (www.estancialamargarita.com) makes life interesting in Argentina . I will more than happy to give a vision of how life is here the good and the bad . I commented about about inflation but I cant seem to see where it landed - someone called Robert has responded but I cant find my post (umm rasing cows is a lot easier for me than the internet). He mentioned that inflation is overhyped - not sure if he was joking - hope not cos its real enough - try re -fencing land and having to buy fencing each week only to find the price rising each week. There was a time when people invested in fencing as a hedge against infaltion here - maybe the time has come again

(Message edited by admin on October 23, 2010)
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Robert Gisborn
Member
Username: Bgisborn

Post Number: 66
Registered: 6-2006
Posted on Saturday, October 23, 2010 - 11:30 am:   Edit PostPrint Post

David, I have to make assumptions about your estancia. Let's assume it's a working estancia that also takes guests. Inflation means the capital value of your land and cattle have increased. You are Peso richer. The fencing problem you describe is one of supply and distribution. Anytime that occurs, regardless of the monetary system the price of those affected goods increase. I'll discuss the problem with booking guests some other time but to make it short. Quote prices to foreign tourists in their non inflationary currency. As an American tourist I don't give a hoot how many Pesos it costs, I want to know what is that in US dollars. You can accept Pesos but that exchange should be in constant dollars.
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Robert Gisborn
Member
Username: Bgisborn

Post Number: 67
Registered: 6-2006
Posted on Saturday, October 23, 2010 - 12:46 pm:   Edit PostPrint Post

I know it sounds like a joke, but one very serious index used to determine if a country's currency is over or under valued relative to the US dollar is the BigMac index. According to that, the Argentine Peso is greatly undervalued. This is a confidence problem.
I know this does not solve your problems but it is important to realize that your government's behavior is not something done in secret but within minutes news of it travels around the world. This affects foreign confidence. Argentina is particularly closely watched for numerous reasons.
Back to your fencing problem. If fencing is in such demand it would be logical to assume everybody would be rushing in to get into Argentina's fencing distribution business. Are they? If an Argentine business could come to the US and buy some of the most expensive hotels in this country like the Ritz Carlton they surely should be able to invest in Argentina.
Back to forward pricing for guests. become familiar with the BigMac index. It's a good guide to where you can be competitive.
No, I'm not giving you a link to it though I could. You're capable of your own research.
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Roberto
Board Administrator
Username: Admin

Post Number: 2011
Registered: 12-2004
Posted on Saturday, October 23, 2010 - 2:52 pm:   Edit PostPrint Post

http://www.oanda.com/currency/big-mac-index.

Robert, your comments -which are good- sound too academic but stripped out of any reality. Have you lived in Argentina at any time of your life? Or have you only studied it? You are surely well read and well informed but have you lived through high inflation and more so, during any hyperinflation period in your entire life?

About your post, the big mc index does not show the peso is *greatly* undervalued but only slighlty. However, it is a bit laughable to try to take this index as any kind of serious assessment of buying power when you deal with a country -Argentina- that offers red meat much cheaper than in the US. Why don't you try the "devilishly tasty Mc filet mignon" index instead. But then, you will say the peso is astonishingly undervalued as filets are a lot cheaper down there than at my grocery aisle in Miami Beach. The big mc index is not a proper measure of where relative prices should fall.

I do not want to come across defending David's remarks, he can certainly does this if he feels the need. But a few considerations may apply.

First, he described fencing as a hedge. Not a business. So only local speculators would look at this opportunity as it relates to local inflation and local currency loss of buying power.

Secondly, the farming problem he described as it relates to fencing is about cash flow. So it has nothing to do with his capital structure. In other words, he can be richer in pesos AND SOLVENT, as you say, but completely illiquid when it comes to operating his business. So he is doomed. And no, he won't be able to raise his room rates fast enough before ALL his employees go on strike asking for a cut of the new higher rate.

Finally, those who lived through really high inflation periods when the Joe Owners of mom and pops go into a craze inside their stores marking up prices with stickers EVERY WEEK -you can actually see employees with the plastic gun machines applying the new price stickers unto all items- can understand the ramifications both psychologically and business wise that inflation carries.

A tip, argentines will apply an additional 10% to 20% price hike after the adjustment only as a prevention to offset the next spike in prices, inadvertently creating even more and faster price spikes.
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Robert Gisborn
Member
Username: Bgisborn

Post Number: 68
Registered: 6-2006
Posted on Saturday, October 23, 2010 - 4:57 pm:   Edit PostPrint Post

Roberto, First you are factually wrong or are guilty of an hyperbole. Argentina does not have HYPER inflation. In recent history ours in the US approached theirs and we went on with our business. Their not Zimbabwe or even Venezuela.
The subject of fencing as a hedge is a charge-in his opinion- but certainly not the root cause of problems with distribution and supply of fencing.
Naturally when people expect inflation of any kind they buy reserves of goods ahead of time as an investment hedge. Future prices can be estimated from the futures market. In October if I see July cattle considerably over spot price and I have cattle, I sell cattle July delivery but I may hedge with call options. Hedging is normal business practice vital to any economy.
The BigMac index is a very important index and when the relative value is 2 to 1 that is large-very large. Remember value is always relative it is not an absolute measure. Under and over values are relative.The moms and pops live day to day. Normally commodity future markets are not in their world.
What is more they do have a cash flow problems in an inflationary period and without access to available credit they are through-out of business. If any business does not have access to credit it is toast.
Let me return to the BigMac. Guess what, the US is a big, producer of beef-like 100,000,000,000 lbs per year. We can and do produce it cheaper than Argentina. You say your familiar with Florida. Drive through the State-count the cattle. Argentina has intentionally cut its beef production to jack the price of beef.
If they're producing so much beef at low cost than they can compete with the US on the export market and they wouldn't trying to be butting their supply.
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Robert Gisborn
Member
Username: Bgisborn

Post Number: 69
Registered: 6-2006
Posted on Saturday, October 23, 2010 - 5:26 pm:   Edit PostPrint Post

I do have a question. Where is(are) the cattle futures exchange(s)
in Argentina?
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David Cummings
New member
Username: Tierraman

Post Number: 5
Registered: 3-2008
Posted on Saturday, October 23, 2010 - 6:42 pm:   Edit PostPrint Post

You dont sound as though you live in Argentina Robert if you did your view would be diffent - still its your opnion only that and I sure you are writing with some tongue in check I cant think why else you would write what you have - still it made me chuckle thanks
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David Cummings
New member
Username: Tierraman

Post Number: 7
Registered: 3-2008
Posted on Saturday, October 23, 2010 - 6:57 pm:   Edit PostPrint Post

As regards the Big Mac index if you have a look at it futher they took it when Argentina had some sort of offer on Big Mac and it totally distorted the index as regards the Argentine peso. Fencing was not a big business opportunity it was just a means to try to stay in the game and survive - you of course would be quids in with your hedging knowledge no doubt! As regards my prices there is no way I could up my price to stay ahead of inflation - small amounts of inflation are healthy large doses are deadly but you must know that Im sure
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Robert Gisborn
Member
Username: Bgisborn

Post Number: 70
Registered: 6-2006
Posted on Saturday, October 23, 2010 - 8:19 pm:   Edit PostPrint Post

David, I don't know the details of your business model. Is it a combination working ranch and guest ranch? If a working ranch I assume you have livestock and crops. It could be you're simply a guest ranch. If you sell cattle and need immediate cash by all means sell some futures contracts as they are high. I'm assuming you would have no problem making delivery. If the guest part of your business plan is what you're talking about quote all prices for foreign guests in $US or Euros-not Pesos. This covers your back side in case of Peso inflation.
The price of beef is held artificially by your government. The US could easily compete in your market but your government won't allow beef imports from the US. THIS distorts your market.

Here's a link to the back this up.
http://www.fas.usda.gov/gainfiles/200809/146295744 .pdf
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Robert Gisborn
Member
Username: Bgisborn

Post Number: 72
Registered: 6-2006
Posted on Sunday, October 24, 2010 - 12:35 am:   Edit PostPrint Post

I tried to find the futures market for cattle but was only able to find the one for agricultural products. Here is their site. If you have sufficient deliverable products you probably are familiar with them. If you've never dealt in the futures this is no place to learn by doing. Fortunes can be made or lost in days-and are. Nevertheless, the vital for the farmer. This is where the term hedge began. If you have never visited the floor of a commodities futures market than you've missed one of the greatest experiences in capitalism. Please do. You won't regret it. It might seem like a mad house but this is where your economy is formed and where more money is at stake than in all the casinos of Argentina combined. Some even call this, the greatest casino of all.

http://www.matba.com.ar/

(Message edited by admin on October 24, 2010)
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Robert Gisborn
Member
Username: Bgisborn

Post Number: 73
Registered: 6-2006
Posted on Sunday, October 24, 2010 - 12:59 am:   Edit PostPrint Post

David, you have a beautiful estancia but I see some of your difficulty. The guest part is beautiful and the guests will have a wonderful experience but as for cattle...It would be difficult.. the land appears over crazed and I question how much water your wind driven well pumps can supply. It is possible you have deep well electric ones. I'm sure you have more than sufficient water for guests, but for much live stock? It does not appear that way.
Anyway, put the prices in your English page in $US not pesos.
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David Cummings
New member
Username: Tierraman

Post Number: 8
Registered: 3-2008
Posted on Sunday, October 24, 2010 - 8:49 am:   Edit PostPrint Post

Hello Robert - it is hard to understand how you can estimate how much water I have for my cattle - are you my neighbour??. You may be a would be economist but you are certainly no farmer my cows have lots of water as does our soya but of course water fall is always out of our control - look at Russia. Also the price is in US$ in the English page for guests or did you miss that - however as Roberto mentioned we pay for everything in pesos so if prices go up as they do daily the US$ buys less - if we put our prices up everytime the peso price went up we would soon be out of business as regards guests as they wouldn't come. I think we have come to the end of this discussion I dont want to bore the rest of the readers to death but once again I ask you if you have ever lived in Argentina and experienced real inflation or just the theory - just curios
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Robert Gisborn
Member
Username: Bgisborn

Post Number: 74
Registered: 6-2006
Posted on Sunday, October 24, 2010 - 11:42 am:   Edit PostPrint Post

I'm sorry David, I had very little information available on your situation and my intention was to give you some help. I certainly did not want to make you angry.
I realize there are situations you're facing that I could not possibly know of. You have a beautiful estancia and I wish you success.
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Robert Gisborn
Member
Username: Bgisborn

Post Number: 75
Registered: 6-2006
Posted on Sunday, October 24, 2010 - 1:16 pm:   Edit PostPrint Post

Actually areas of the Argentine economy are booming partially because of inflation or the weakening of the peso. Here's a link from today's paper about the medical services offered in Buenos Aires and why they are enjoying unprecedented success. Of course quality of care is the most important thing but the weakening Peso has given Argentina a competitive advantage.

http://www.clarin.com/sociedad/tendencias/Mil-extranjeros-curarse-ponerse-implantes_0_359364326.html

(Message edited by admin on October 24, 2010)
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Christopher Henson
Junior Member
Username: Sandiegochris

Post Number: 35
Registered: 7-2007
Posted on Sunday, October 24, 2010 - 3:01 pm:   Edit PostPrint Post

Robert. I will weigh in now as I am involved in the medical tourism industry here in Argentina, specifically bringing North Americans, Europeans, and others here to Buenos Aires for primarily plastic surgery. The boom is not a result of inflation, actually that hurts our industry as prices rise here, Argentina becomes less competitive in the world market: think Thailand, Mexico, Costa Rica. Inflation is our enemy. The market segment is growing because we now have the support and full weight of the Argentine Ministries of Tourism and Health helping promote Argentina as a world medical tourism destination in many events and campaigns. As the economy in the U.S. is still suffering, medical professionals there have begun to lower their fees as well, putting a squeeze on our margins as well. If something is not done to rein in inflation, the Paris of South America is fast approaching costs in Paris, France. Once the costs are the same, tourists will go to the first Paris instead as it has more to offer. Currently Argentina offers a good bang for the buck, but as that wanes people will just stop coming...except for Brazilians (a whole different market) who come here to shop as it is cheaper since the real is strong. Currently Argentina is experiencing high inflation, not yet hyperinflation like the 80s....stagflation is next if world economy doesn't improve according to my economist friends. Thanks for the interesting reading on this thread.
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Robert Gisborn
Member
Username: Bgisborn

Post Number: 76
Registered: 6-2006
Posted on Sunday, October 24, 2010 - 4:13 pm:   Edit PostPrint Post

Christopher, I based my comments on the article itself not a personal opinion. It specifically makes the point that the cost of the care is a big factor. Inflation means that the relative value of a currency sinks relative to some standards. Some of these standards are other currencies. The bang for a buck comes from the quality of the care AND its cost.
As I said, inflation is part of economics. There never was at any time in history a nation did not experience inflation. I mentioned the commodities future markets. Why do you think we have such markets? They would not exist without inflation. Anyone who does not understand commodity futures has no business trying to make a living with farming. The producer-farmer if you will-is not squeezed by inflation because in inflation future contracts are high and he can go short with the crop not yet planted and collect money immediately for it (called hedging). He can reverse hedge by buying (going long) options on the same contracts if he really fears a greater inflation.
The people hurt by inflation are the lenders and those who are dependent on low interest credit. But it cuts two ways. Others gain from inflation.
Now, the problems with Argentina-in my opinion-are due to people trying to dictate an economy by fiat. Why not declare the value of PI to be exactly 3? It's the same thing. Restricting imports and at the same time restricting exports on beef will produce the result it produced as surly as water flows down hill.
The laws of physics and economics are the same in Argentina as they are anywhere. Tell that to the K's
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Robert Gisborn
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Username: Bgisborn

Post Number: 77
Registered: 6-2006
Posted on Sunday, October 24, 2010 - 6:11 pm:   Edit PostPrint Post

If you are sure Argentina is going to have hyperinflation then I'm going to tell you how to become very wealthy. Take all your savings and borrow as much as you can and buy as many Jan 2012 soy bean options at whatever strike price you can afford. If you're right-and remember you're sure-then you'll make a fortune. Of course in the teensy weensy chance you're wrong you'll lose every cent you gave for the options. I will tell you that soy bean futures has made millionaires but has destroyed even more millionaires. As a famous US philosopher (Yogi Berra) once said: The hardest thing to predict is the future.
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Roberto
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Username: Admin

Post Number: 2014
Registered: 12-2004
Posted on Sunday, October 24, 2010 - 6:15 pm:   Edit PostPrint Post

> Inflation means that the relative value of a currency sinks relative to some standards.

Robert, this is proof you aren't aware of the argentine situation. Traditionally, this has been the case but NOT in the last cycle. You should put this argument aside for now. Central bankers have managed to keep the peso depreciation at bay meassured against the dollar. In practical terms: foreigners need to change MORE dollars TODAY to buy the same stuff they could have bought 2 years ago exchanging LESS dollars. What does this tell you?

That central bankers can defy gravity :-) ... until it all blows up.

More seriously: they have discouraged and penalized demand for dollars. Don't overlook that there could be some ulterior purpose for this.
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Robert Gisborn
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Username: Bgisborn

Post Number: 78
Registered: 6-2006
Posted on Sunday, October 24, 2010 - 7:46 pm:   Edit PostPrint Post

Roberto, remember value is a relative measure. It is measured against some standard. We often use the price of gold as a common standard. Relative to the price of gold the peso is weaker to the dollar than at some time in the past. That is, in Argentina, I can buy more gold with my dollars than I could with my pesos today than I could at some point (you choose) in the past. So relative to gold the peso has suffered from more inflation than the dollar. That is also relative to copper, soybeans and any number of raw commodities. If the BigMac index is current it accurately reflects this difference. So why am I paying 3 bucks for a grande a Starbucks in BA or more to rent an apartment. These are market distortions caused by Argentina's own political chaos and not evil foreign bankers. This chaos causes loss of confidence in Argentina's own investors to say nothing of foreign investors. This in turn causes specific shortages and sets up an out liar where more money is chasing fewer goods. Let me give you a trivial example. The Apple corporation will not sell ipads to a retailer unless they let Apple set the RETAIL price and Apple determines how many ipads they get. Yet, ipads in Argentina are US$200. more than the US. The high price is simply because they can gauge because of the supply. Come to think of it, I don't know the Spanish term for price gouging but I'm certain the Argentinians have one.
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Robert Gisborn
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Username: Bgisborn

Post Number: 79
Registered: 6-2006
Posted on Monday, October 25, 2010 - 12:00 am:   Edit PostPrint Post

http://www.ieco.clarin.com/economia/Ranking-competitividad-World-Economic-Forum_IECFIL20100909_0001.pdf
This is a lot of reading. 6.5 megs and no one will read it all but it shows how investors rate nations, that is how competitive they are. It's a detailed analysis. Argentina can ignore a vast unemployable underclass for example, but the numbers expose that as well as other limitations. Argentina is fairly high for Latin American nations-equivalent to Brazil but still ranks about 87th out of 139 nations.

(Message edited by admin on October 25, 2010)
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Robert Gisborn
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Username: Bgisborn

Post Number: 80
Registered: 6-2006
Posted on Monday, October 25, 2010 - 12:28 pm:   Edit PostPrint Post

http://www.ieco.clarin.com/economia/Crucero-Amor-escala-puerto-argentino_0_171600012.html
This piece from Clarin is a gem. I did have to reference the word italpark which is probably very familiar to people in Argentina. It was a amusement park that was well known for wild rides. Simply, the economy of Argentina has moved more as a roller coaster than a love boat-so what's new?

(Message edited by admin on October 26, 2010)
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Robert Gisborn
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Username: Bgisborn

Post Number: 81
Registered: 6-2006
Posted on Monday, October 25, 2010 - 4:02 pm:   Edit PostPrint Post

http://en.wikipedia.org/wiki/Tables_of_historical_ exchange_rates_to_the_USD

Of course in 2001-2002 Argentina suffered a crises but since 2002 the Argentine Peso has only fallen about 20% in reference to the dollar and proportionally to gold. Not bad at all.
I did make an error in choosing soy beans as a measure of local inflation. In fact it is decoupled from almost anyone's inflation and has alway experienced extreme swings. There would need to be a futures market in soy beans even in times of general price stability. There are products that are inflation coupled, beef, for one, but not soy beans.

(Message edited by admin on October 26, 2010)
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Robert Gisborn
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Username: Bgisborn

Post Number: 82
Registered: 6-2006
Posted on Monday, October 25, 2010 - 6:06 pm:   Edit PostPrint Post

Sometimes what I don't see tells me more about an economy then what I do see. Here in Washington one can't leave the house without seeing pampas grass. It was brought some time in the past from South America because it can be a very decorative plant. One thing that was soon realized is that this grass is really hearty and prolific. Some local codes have considered outlawing it in their jurisdiction. When I see a picture of an Argentine pampas I certainly expect to see pampas grass-unless of course the land has been over crazed. A land control issue?
We drink a lot of wine-well we drink a lot of everything. Our stores are filled with wines from everywhere in the world, France, Chili, Australia, and of course the local stuff. I can't find Argentine wine on our shelves. I never saw it. Some comes in, I'm sure but it seems rare. That says something about your export model does it not?
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WTMendoza.com
Senior Member
Username: Welcometomendoza

Post Number: 481
Registered: 7-2007


Posted on Tuesday, October 26, 2010 - 8:35 am:   Edit PostPrint Post

Hi Robert, your "posting model" is cracking me up..kind of a trouble maker, eh? lol

Not having access to Argentine wine in your favorite liquor stores is a result of your neck of the woods being affected by your local distribution problems and/or challenges.

Wine exporters here are having a gangbusters time, and Argentine wine is being imported in masse to the USA, and less often than so, ending up in older distribution channels that are often pre-configured with years of deal-making. It's not that easy to convince a wine importer in the USA, or a local distributor, to make a change. So following the path of least resistance, currently, results in lucky wine drinkers having access to Argentine wines in lots of great spots in the USA, but not in your neighborhoods yet.

Cheers
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Bill Howard
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Username: Veritas01

Post Number: 82
Registered: 5-2006
Posted on Tuesday, October 26, 2010 - 9:12 am:   Edit PostPrint Post

Here in Connecticut and in all the states around us Argentine wine is readily available. For several months after we get back from a trip to Argentina I pop into a liquor store and pick up a decent bottle of Argentine wine to give to people we are visiting or who are hosting a party. I say...here is something from Argentina for you. I am not lying. I just didn't carry it back myself. People are always so impressed I am so thoughful. :-) I just have to remember to peel off the price sticker
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Robert Gisborn
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Username: Bgisborn

Post Number: 84
Registered: 6-2006
Posted on Tuesday, October 26, 2010 - 11:20 am:   Edit PostPrint Post

Thanks for the info.
In any business model negotiation is key. Quite seriously, studies have been made which show of the four factors, cost,service,product and negotiation methods, negotiation style is responsible for 80% of the successful sales. I'll send you a Clarin link if I can find it again.
I'm presenting myself not as a seller but as a potential buyer and one who might bring in potential buyers. I'm sure Argentina exports very good wine and their wine is a highly competitive product. But the sellers-it seems to me- could be better negotiators. Maybe they need to lighten up. Do ya think?
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Robert Gisborn
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Username: Bgisborn

Post Number: 85
Registered: 6-2006
Posted on Tuesday, October 26, 2010 - 12:03 pm:   Edit PostPrint Post

Here's the infamous opinion of "Doctor Doom". It's in today's paper so you may have read it already.

http://www.clarin.com/politica/Roubini-critico-inflacion-desenfrenada-crecimiento_0_360564000.html

(Message edited by admin on October 26, 2010)
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Robert Gisborn
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Username: Bgisborn

Post Number: 86
Registered: 6-2006
Posted on Tuesday, October 26, 2010 - 12:42 pm:   Edit PostPrint Post

For those interested in doing business with Mendoza businesses here is a valuable link that I might have missed in your other Mendoza links. Did I WT?

http://rondavirtualdenegocios.com/

No Spanish no problem it offers a full English version.
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Robert Gisborn
Member
Username: Bgisborn

Post Number: 89
Registered: 6-2006
Posted on Tuesday, October 26, 2010 - 7:49 pm:   Edit PostPrint Post

WT here are the numbers.

http://www.nationsencyclopedia.com/Americas/Argent ina-FOREIGN-TRADE.html

Exports depend upon trade agreements and private party agreements.
I think the view of Washington State is that of a rainy place. Actually most of the State is semi arid and very sunny. We are a big wine producer. We export wine. When one negotiates with distributors here that point must be factored. Of course, Argentina's negative trade balance with us makes that difficult for Argentina.
Right now Argentina exports are heavily petroleum dependent. Bad? No way! It should be increased! But also how about some home generated R&D and home based machine and tool construction and I'm not talking turn key assembly plants. What about soft ware development and generic drug manufacturing?
Anyway, back to wine. One always negotiates from the standpoint of the buyer. If Argentina were to promote their wine here they would start a ground swell of demand. That would awaken the distributors to the possibility that they may be able to make some real money with Argentine wine-as much as they can with the domestic product.

To an aside. I'm watching Telefe Noticias as I'm writing this. I'm watching the latest the spontaneous citizen justice process in Mendoza. I have mixed feelings about it. I find it difficult to judge them. Actually, I see it as a process that will contribute to a better judicial system. I mean that very seriously.
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Robert Gisborn
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Username: Bgisborn

Post Number: 90
Registered: 6-2006
Posted on Tuesday, October 26, 2010 - 8:12 pm:   Edit PostPrint Post

I realize my last post may seem to be a thread break. Let me explain why not. Raw petroleum is internationally traded in dollars. These exports bring in US dollars to Argentina. This moderates inflation. Second, the peso inflation in Argentina, which may be pushing the comfort zone, eases the negative balance of payment problem of Argentina. Of course we don't want to see 2001 repeated but a lower peso would make certain Argentine goods cheaper and more competitive. Nevertheless it is undervalued-I think- and I think the Merval index is showing that.
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Tom
Senior Member
Username: Diverdown48

Post Number: 520
Registered: 6-2006


Posted on Tuesday, October 26, 2010 - 11:00 pm:   Edit PostPrint Post

what did I miss
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Tom
Senior Member
Username: Diverdown48

Post Number: 521
Registered: 6-2006


Posted on Tuesday, October 26, 2010 - 11:02 pm:   Edit PostPrint Post

i clicked on the site but it was nothing
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Tom
Senior Member
Username: Diverdown48

Post Number: 522
Registered: 6-2006


Posted on Tuesday, October 26, 2010 - 11:03 pm:   Edit PostPrint Post

Roberto, I took a break from giving love
and to all my brothers and sisters, amigos y amigas, what a wonderful night
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Tom
Senior Member
Username: Diverdown48

Post Number: 523
Registered: 6-2006


Posted on Tuesday, October 26, 2010 - 11:05 pm:   Edit PostPrint Post

are we talking again about inflation still. the last time I presupposed WWIII, forgive me Lord for I have sinned
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Robert Gisborn
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Username: Bgisborn

Post Number: 91
Registered: 6-2006
Posted on Wednesday, October 27, 2010 - 11:23 am:   Edit PostPrint Post

Tom, good to see you back. I guess this thread is a bit worn. We had some fireworks but nothing as noisy as WWIII.
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Robert Gisborn
Intermediate Member
Username: Bgisborn

Post Number: 101
Registered: 6-2006
Posted on Friday, October 29, 2010 - 10:02 pm:   Edit PostPrint Post

No one in Argentina is complaining about this inflation. As I said, it cuts both ways.

http://www.clarin.com/politica/cotizacion-soja-bat io-record_0_362363856.html
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Robert Gisborn
Intermediate Member
Username: Bgisborn

Post Number: 107
Registered: 6-2006
Posted on Sunday, October 31, 2010 - 12:29 am:   Edit PostPrint Post

It does appear that the Argentine inflation rate has been misrepresented..


http://www.clarin.com/politica/precios-Moreno-subieron-ultimos-anos_0_363563676.html

This worries me.

(Message edited by admin on October 31, 2010)
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Robert Gisborn
Intermediate Member
Username: Bgisborn

Post Number: 118
Registered: 6-2006
Posted on Monday, November 08, 2010 - 5:29 am:   Edit PostPrint Post

One seeming paradox of assembling motor vehicles for foreign owners is although the finished product can be exported the balance of payment deficit actually can worsen with increased production.

http://www.clarin.com/politica/cuellos-botella-frenan-expansion-automotrices_0_368363185.html

This the situation in Argentina at the present time.

If the country does not open up more opportunities for high tech professionals and engineers these skills will leave the country. The government must begin encouraging home grown research and development. Technologically, it can't afford to fall too far behind Brazil.
Argentina could do more to foster that type of immigration that brings skilled people and capital in the country. One failing I've noticed of some contributers to this site is that many who are going there to live and invest are not doing due diligence. It may be that in the process of encouraging people to live
there the government is letting immigrants think they can smooth every path with Euros or dollars. Long term, this is bad for both.

(Message edited by admin on November 08, 2010)
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Roberto
Board Administrator
Username: Admin

Post Number: 2029
Registered: 12-2004
Posted on Monday, November 08, 2010 - 9:20 am:   Edit PostPrint Post

The Businessweek issue of Oct. 24/31 published an article about the chilean governemnt pushing to make Chile a hub for foreign entrepreneurs and they have begun a program funding business ventures and high tech research. Many young american entrepreneurs have applied, according to the article. Chile aims at bringing in "brains" that may help spread the "intellectual wealth". Not to compete with Silicon Valley or Bangalore but to become a center of innovation in South America. Another lesson we can take from them.

So far, the Kirchner (both) administration has been busy taking from here and puting it over there type of thing. With no serious long term strategic or developement plan. And these structural problems are beginning to show in the inflation numbers.

(Message edited by admin on November 09, 2010)
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Robert Gisborn
Intermediate Member
Username: Bgisborn

Post Number: 119
Registered: 6-2006
Posted on Monday, November 08, 2010 - 11:44 am:   Edit PostPrint Post

That's true. The President as chief representative and virtual human face of the nation could prepare a rich and beautiful table of all the promising opportunities in Argentina. A country that still has all the promises of the New World. The K's seemed more intent on spinning myths for their own citizens. The inflation statistics being one but also hyping the Malvina's issue as if they were still at war. Things like this sew uncertainty.
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Robert Gisborn
Intermediate Member
Username: Bgisborn

Post Number: 123
Registered: 6-2006
Posted on Monday, November 15, 2010 - 3:34 pm:   Edit PostPrint Post

Now why in the name of sanity and logic would anyone come up with a law that tells merchants when they can run discounts on out of season clothing? The seller wishes to sell something at a price the buyer wishes to pay that price. Does the government of Artgentina feel that they have so little to do that they have to regulate somehing no one wants them to regulate? I know this is a long way from dropping bombs on people who attended a speech of a President they elected so that a dictatorship can be installed to save democracy. I applaud progress.

http://www.ieco.clarin.com/empresas/Intentan-regular-liquidaciones-ropa_0_186300011.html

(Message edited by admin on November 16, 2010)
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Roberto
Board Administrator
Username: Admin

Post Number: 2033
Registered: 12-2004
Posted on Tuesday, November 16, 2010 - 1:15 pm:   Edit PostPrint Post

Welcome to the land of free markets... not!

In Argentina, it's capitalism with a twist. Even those who travel to Cuba and support the revolution have accounts with Merrill. Always remember someone in-the-know will be making money out of this regulation.
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Robert Gisborn
Intermediate Member
Username: Bgisborn

Post Number: 128
Registered: 6-2006
Posted on Friday, November 26, 2010 - 8:32 pm:   Edit PostPrint Post

As if the people if Argentina needed any more evidence that the official inflation rate was more fantasy than Snow White and the Seven Dwarfs.
Well, it's a good deal for tourists in the know. Bargain with dollars- cash.


http://www.clarin.com/economia/Duro-informe-UBA-INDEC-reforma_0_379162319.html

(Message edited by admin on November 29, 2010)
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Robert Gisborn
Intermediate Member
Username: Bgisborn

Post Number: 132
Registered: 6-2006
Posted on Friday, December 03, 2010 - 3:00 pm:   Edit PostPrint Post

I don't think this is shocking for most people in Argentina but the audacity of the K's just amazes everyone else.

http://www.clarin.com/politica/Confirman-pedido-movimientos-financieros-Kirchner_0_383361809.html

(Message edited by admin on December 03, 2010)
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Roberto
Board Administrator
Username: Admin

Post Number: 2040
Registered: 12-2004
Posted on Friday, December 03, 2010 - 5:24 pm:   Edit PostPrint Post

Still shocking that they (now her) can get away with it.

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