Argentina is often its own worst enemy
i don't think i've talked to a single argentino who doesn't believe that another economic collapse is inevitable... so, what you see people doing is engaging in an orgy of grabbing-it-while-you-can, charging ever higher prices, hitting the already-struggling poor even harder, and virtually guaranteeing that there will be, in a perfect demonstration of a self-fulfilling prophecy, an eventual collapse...
the prudent folks take their money and either park it outside the country as the snippet below describes, or they plow it into tangible assets like home improvement or other forms of real estate... during the day, my neighborhood in buenos aires, like so many others, is a cacophony of hammering, sawing, and trucks delivering building materials...
now, there's also the impact of the global economic freefall...
An estimated 34 billion US dollars have fled from Argentina
The Argentine Central Bank must ensure that the flight of capital does not erode the “wealth of the country”, warned a former head of the bank, who revealed that since the beginning of the crisis 34 billion US dollars had fled from South America’s second largest economy.
“The capital flight process begun when institutional mistrust and legal insecurity took roots in the last quarter of 2007”, pointed out economist Rodolfo Rossi.
He added that Argentina at that time “lost 8.8 billion US dollars; 23.1 billion in 2008 and 5.7 billion so far this year”.
Rossi said that the Argentine Central Bank under its current president Martin Redrado has acted “with prudence”, but his job is not only “to preserve the Argentine peso stability but also impede the country’s wealth from fleeing”.
He estimated much of those funds are in security coffers of overseas accounts, mainly neighbouring Uruguay.
Rossi said that President Cristina Fernandez de Kirchner conflict with the farmers was the milestone which triggered the flight to a “general mistrust” which was emphasized when the private pensions fund scheme was nationalized.
“This was further distorted by the naming of political appointees in the private pensions fund board of directors and disposing funds with certain degree of discretionarily plus the intention of nationalizing all deposits”, pointed out Rossi.
but wait, there's more... here's a sample of this week's headlines...
Argentina April car production and sales down 32% and 29%
Argentina’s 2008/09 crop exports forecasted to drop 56% Submit To Propeller