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   DW News (dw@c.im)'s status on Wednesday, 13-Dec-2023 17:20:40 JST DW News

   #News Argentina devalues currency in economic 'shock treatment' https://w.st/o9w4b

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     HistoPol (#HP) 🏴 🇺🇸 🏴 (histopol@mastodon.social)'s status on Wednesday, 13-Dec-2023 17:20:39 JST HistoPol (#HP) 🏴 🇺🇸 🏴

     in reply to

     • Thomas Blechschmidt
     • Mina

     @dw

     (1/2)

     Déjà-vu, anyone?

     https://c.im/@dw/111572051961247654

     #Argentine #CurrencyBoard system and its consequences of the peso's peg to the #USD--the shape of things to come again?

     "Unemployment increased from 6.1% in 1991 to 15% in 2000 as the fixed exchange rate increased foreign price competition and forced local firms to invest in more advanced technologies that required less labor and higher productivity."

     "Income...

     @mina
     @energiepirat
     @SilviaMarton

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     HistoPol (#HP) 🏴 🇺🇸 🏴 (histopol@mastodon.social)'s status on Wednesday, 13-Dec-2023 17:21:20 JST HistoPol (#HP) 🏴 🇺🇸 🏴

     in reply to

     • Thomas Blechschmidt
     • Mina

     @dw @mina @energiepirat @SilviaMarton

     (2/n)

     ...inequality increased: the bottom 20% of the population decreased its share of national income from 4.6% in 1991 to 4.1% in 2000,..."

     "Although overall wages increased, they did not benefit all workers equally. Skilled and unskilled workers lost ground compared to managerial and professional income groups.

     Government debt increased sharply. Unwilling...

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     HistoPol (#HP) 🏴 🇺🇸 🏴 (histopol@mastodon.social)'s status on Wednesday, 13-Dec-2023 17:24:55 JST HistoPol (#HP) 🏴 🇺🇸 🏴

     in reply to

     • Thomas Blechschmidt
     • Mina

     @dw @mina @energiepirat @SilviaMarton

     (3/n)

     ...or unable to raise taxes, and precluded from printing money by the currency board system, the government's only other recourse to finance its budget deficit..."

     It will be interesting to see, if #Argentina will fare much differently in the medium to longer term.
     In the meantime, most imported goods just doubled their price.
     Economists call this "imported inflation," if the goods cannot be...

     https://en.m.wikipedia.org/wiki/Convertibility_plan

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     HistoPol (#HP) 🏴 🇺🇸 🏴 (histopol@mastodon.social)'s status on Wednesday, 13-Dec-2023 17:27:25 JST HistoPol (#HP) 🏴 🇺🇸 🏴

     in reply to

     • Thomas Blechschmidt
     • Mina

     @dw @mina @energiepirat @SilviaMarton

     (4/4)

     ...substituted by nationally produced goods and services.

     Their will be big shifts for some categories, but overall and in particular in the next 1-2 years on a macroeconomically significant level without any preparations?--Very hard to see.
     Good luck.

     //

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     Mina (mina@berlin.social)'s status on Wednesday, 13-Dec-2023 20:35:52 JST Mina

     in reply to

     • Thomas Blechschmidt
     • HistoPol (#HP) 🏴 🇺🇸 🏴

     @HistoPol

     TBH:

     The brutal devaluation in 2002 led to several years of sustained economic growth, with annual rates around 10%.

     The favourable global environment, with high commodity prices at the time, also did its part. However, at the time, the country's international currency reserves were still positive, whilst now they are negative.

     IMO, there's no other way than letting the currency fall until it reaches its bottom. It actually surprises me that

     1/?

     @dw @energiepirat @SilviaMarton

     HistoPol (#HP) 🏴 🇺🇸 🏴 repeated this.
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     Mina (mina@berlin.social)'s status on Wednesday, 13-Dec-2023 20:36:08 JST Mina

     in reply to

     • Thomas Blechschmidt
     • HistoPol (#HP) 🏴 🇺🇸 🏴

     @HistoPol

     Milei, as a liberal, chose the way of a gradual devaluation instead of going directly into a free market foreign exchange regime.

     Maintaining a currency's value above the market value has never worked in history. I don't know a single example. This means, Argentineans will suffer from at least 15 years of hidden inflation, which will hit them in a span of a year or two.

     The social cost will be tremendous. This is definitely the reason for not

     2/?

     @dw @energiepirat @SilviaMarton

     HistoPol (#HP) 🏴 🇺🇸 🏴 repeated this.
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     Mina (mina@berlin.social)'s status on Thursday, 14-Dec-2023 00:01:14 JST Mina

     in reply to

     • Thomas Blechschmidt
     • HistoPol (#HP) 🏴 🇺🇸 🏴

     @HistoPol

     liberating the foreign exchange market in one go.

     Had the country access to financial markets, the social cost could be alleviated with debt, but this is simply not the case.

     I expect people to massively default on their basic services bills, like electricity, gas and water, because they will simply not be able to pay them. I even expect hunger riots and plundering of grocery stores in the months to come.

     The obvious solution would be taxing

     3/?

     @dw @energiepirat @SilviaMarton

     HistoPol (#HP) 🏴 🇺🇸 🏴 repeated this.
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     Mina (mina@berlin.social)'s status on Thursday, 14-Dec-2023 00:01:26 JST Mina

     in reply to

     • Thomas Blechschmidt
     • HistoPol (#HP) 🏴 🇺🇸 🏴

     @HistoPol

     the rich (which exist), but I doubt there is the political will to do so, and I doubt, there's even the institutional infrastructure for such a measure.

     I can only see blood, sweat and tears, until it eventually gets better in a couple of years, if there still is a country to speak of, then.

     4/4

     @dw @energiepirat @SilviaMarton

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     HistoPol (#HP) 🏴 🇺🇸 🏴 (histopol@mastodon.social)'s status on Thursday, 14-Dec-2023 00:15:07 JST HistoPol (#HP) 🏴 🇺🇸 🏴

     in reply to

     • Thomas Blechschmidt
     • Mina

     @mina

     In foreign exchange markets, countries going against the international markets live on borrowed time.

     Even larger economies with a strong(man) leadership have to give up eventually.

     Take the #Turkish lira as an example:

     The 5 year chart shows the devaluation over 5 years from 5 liras to 29 liras per US dollar.
     Things will probably go in a similar way for the #Argentine peso, despite the drop from 37 to 366 in the last 5 years.

     https://www.xe.com/currencycharts/?from=USD&to=TRY&view=5Y

     @dw @energiepirat @SilviaMarton

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     Mina (mina@berlin.social)'s status on Thursday, 14-Dec-2023 04:46:21 JST Mina

     in reply to

     • Thomas Blechschmidt
     • HistoPol (#HP) 🏴 🇺🇸 🏴

     @HistoPol

     Remember the match George Soros v The Bank of England?

     Even the BoE could not withstand market pressure.

     As far as the Argentinean Peso is concerned, the 366 is a fantasy price. The real price is around 1,100 (for credit card purchases even above 1,200AR$) for 1U$D.

     The 366 is the clearing price for exporters and licensed importers.

     There's a lot of ground to cover until reaching realistic prices.

     @dw @energiepirat @SilviaMarton

     HistoPol (#HP) 🏴 🇺🇸 🏴 repeated this.
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     Thomas Blechschmidt (energiepirat@mastodon.social)'s status on Thursday, 14-Dec-2023 05:29:43 JST Thomas Blechschmidt

     in reply to

     • HistoPol (#HP) 🏴 🇺🇸 🏴
     • Mina

     @mina @HistoPol @dw @SilviaMarton El Dolar libre se lamma Solar Blue, el Euro tambient Euro blue. Pero de la tarjeta recien me cobraron el curso oficial de 370 Pesos. Lamentablemente. El blue se realiza solo con efectivo.

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     HistoPol (#HP) 🏴 🇺🇸 🏴 (histopol@mastodon.social)'s status on Thursday, 14-Dec-2023 05:41:08 JST HistoPol (#HP) 🏴 🇺🇸 🏴

     in reply to

     • Thomas Blechschmidt
     • Mina

     @energiepirat @mina

     Oh, estuviste en #Argentina recientemente?

     Ya no entiendo. Tú dices, que las tasa de intercambio libre =Blue) sólo se realizan en efectivo.
     Bien.

     Pero Mina dice lo contrario:

     "...for credit card purchases even above 1,200AR$) for 1U$D."

     ....mientras que tú dices que te cobraron la tasa oficial con tu tarjeta.

     Cómo eso?

     @dw @SilviaMarton

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     Thomas Blechschmidt (energiepirat@mastodon.social)'s status on Thursday, 14-Dec-2023 06:01:40 JST Thomas Blechschmidt

     in reply to

     • HistoPol (#HP) 🏴 🇺🇸 🏴
     • Mina

     @HistoPol @mina @dw @SilviaMarton Todo que se realiza utilizando instituciones financieras cobra la tasa oficial. Eso es lo que pasa. Estabamos para compar mercaderia para 11 Milliones de pesos y terminamos pagar en Dolares 36.000 mil pagando por tarjeta. Mientras en Blue pagabamos 12.000 Mil en efectivo.

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     Thomas Blechschmidt (energiepirat@mastodon.social)'s status on Thursday, 14-Dec-2023 06:03:34 JST Thomas Blechschmidt

     in reply to

     • HistoPol (#HP) 🏴 🇺🇸 🏴
     • Mina

     @HistoPol @mina @dw @SilviaMarton Es asi En el momento cuando pagas por un banco, se usa la tasa oficial. Western Union pidió 15.700 Dolares. Si, estuve en Argentina hace 4 semanas.

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     Thomas Blechschmidt (energiepirat@mastodon.social)'s status on Thursday, 14-Dec-2023 06:04:55 JST Thomas Blechschmidt

     in reply to

     • HistoPol (#HP) 🏴 🇺🇸 🏴
     • Mina

     @HistoPol @mina @dw @SilviaMarton Me fui a MDP por Remis. Con tarjeta me pidieron 580 €. Cash 250 €.