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End of Currency controls and the Cepo in Argentina

Good Lord that is quite the microscope they have him under! I wouldn't get too worked up about these things. October is still six months away which is a lifetime in politics even for stable countries. Milei's been given a huge lifeline and if he can stay focused, a lot can get done before October.
You should have seen during COVID they had a list of all Alberto Fernandezs girlfriends and escorts that were going in and off of the Casa Rosada.
 

Milei retained the controversial exchange rate system with a so-called “crawling peg" which, up until Monday, had prevented the peso from falling more than 1% against the dollar per month.

“It was a way to keep the dollar in check so that a depreciation wouldn’t spill over into prices,” Carlos Pagni, a prominent political columnist, wrote Tuesday in Argentina's La Nación newspaper. “From a political perspective, Milei’s government made a commitment to a single issue — reducing inflation. This is the way to win votes, retain power, and eventually increase it."

Why release ‘the trap’ now?

The peso's artificial peg to the dollar had become increasingly expensive for the central bank to defend — since mid-March, it hemorrhaged some $2.5 billion.

“Maintaining that pattern increased Argentina’s vulnerability,” said Ignacio Labaqui, a senior analyst at risk consultancy Medley Global Advisors. “It no longer served as an anchor against inflation and it wasn't good for accumulating reserves.”

To prevent a possible run on the peso after scrapping the controls, Milei had to replenish the central bank's precariously low reserves. Despite the IMF's reluctance to increase exposure to its biggest debtor, Milei scored major new lines of credit after months of negotiations — an upfront $12 billion Tuesday from the IMF, billions more from multilateral banks and a $5 billion credit swap line with China. (a Reuters article today says Argentina is set to receive $28 billion in 2025 alone)
 
The microscope only works for things like this. But when they look for Libra scam they don't look. Funny how that works in Argentina. I hope Milei can succeed. I don't want to see Argentina in a bad situation. I just don't think this time is different from all the other times they have tried with the IMF and failed.
If only you had a clue what causes inflation. HINT: Too much money chasing too few goods. Milei first contracted the money supply. Inflation took a dive. It won't go back up based on the exchange rate. It will go back up if the central bank starts printing more money, or production drops. So far, there is no sign of either of those things happening. In fact, further removing currency and capital controls should increase the amount of goods available, which is deflationary.
 

Milei retained the controversial exchange rate system with a so-called “crawling peg" which, up until Monday, had prevented the peso from falling more than 1% against the dollar per month.

“It was a way to keep the dollar in check so that a depreciation wouldn’t spill over into prices,” Carlos Pagni, a prominent political columnist, wrote Tuesday in Argentina's La Nación newspaper. “From a political perspective, Milei’s government made a commitment to a single issue — reducing inflation. This is the way to win votes, retain power, and eventually increase it."

Why release ‘the trap’ now?

The peso's artificial peg to the dollar had become increasingly expensive for the central bank to defend — since mid-March, it hemorrhaged some $2.5 billion.

“Maintaining that pattern increased Argentina’s vulnerability,” said Ignacio Labaqui, a senior analyst at risk consultancy Medley Global Advisors. “It no longer served as an anchor against inflation and it wasn't good for accumulating reserves.”

To prevent a possible run on the peso after scrapping the controls, Milei had to replenish the central bank's precariously low reserves. Despite the IMF's reluctance to increase exposure to its biggest debtor, Milei scored major new lines of credit after months of negotiations — an upfront $12 billion Tuesday from the IMF, billions more from multilateral banks and a $5 billion credit swap line with China. (a Reuters article today says Argentina is set to receive $28 billion in 2025 alone)
Even with this HUGE amount from the IMF today there is probably only about $4 billion in net reserves. That is nothing!

If only you had a clue what causes inflation. HINT: Too much money chasing too few goods. Milei first contracted the money supply. Inflation took a dive. It won't go back up based on the exchange rate. It will go back up if the central bank starts printing more money, or production drops. So far, there is no sign of either of those things happening. In fact, further removing currency and capital controls should increase the amount of goods available, which is deflationary.
You obviously don't know Argentina very well. If I had to guess you just got in town. Do you think Argentina works like a normal country???? Here stores and people raise their prices just because the wind is blowing. Prices on many products went up yesterday.
 
You obviously don't know Argentina very well. If I had to guess you just got in town. Do you think Argentina works like a normal country???? Here stores and people raise their prices just because the wind is blowing. Prices on many products went up yesterday.
And yet it's economy reacted to a monetary contraction exactly like every other economy ever has. Just because Argentinos make some odd choices in government and running businesses doesn't mean fundamental and universal rules of economics don't apply. Gravity still holds things down, inertia still holds things back, and money supply still determines the inflation rate.
 
Even with this HUGE amount from the IMF today there is probably only about $4 billion in net reserves. That is nothing!
Larry with all due respect I think you are fearmongering. There is a lot more money coming, just this year alone. I understand this hasn't worked in the past but there are meaningful differences this time. What I don't understand is people wanting this to fail. It is Argentina's only hope to rejoin the world economy where real businesses want to invest and create jobs. The alternative is continuing to sell your future out the back door to China with the kleptocracy taking their cut along the way, and a major debt crisis every few years requiring more bailouts and sellouts. That is swirling the toilet bowl and nobody should want that.
 
Larry with all due respect I think you are fearmongering. There is a lot more money coming, just this year alone. I understand this hasn't worked in the past but there are meaningful differences this time. What I don't understand is people wanting this to fail. It is Argentina's only hope to rejoin the world economy where real businesses want to invest and create jobs. The alternative is continuing to sell your future out the back door to China with the kleptocracy taking their cut along the way, and a major debt crisis every few years requiring more bailouts and sellouts. That is swirling the toilet bowl and nobody should want that.
NOT fearmongering Craig. But I am afraid for myself and also for Argentina. You said it yourself. This has not worked in the past. I don't want it to fail. I just hate seeing Argentina drown in generations of more debt that it can't pay off. I want to see Argentina to succeed. I live here and have for the past 15 years. Do you? You probably have ZERO ties to Argentina so it does not matter what happens to Argentina as you have no stake at all in this.

But for me this is home and the government is destroying it.
 
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Larry with all due respect I think you are fearmongering. There is a lot more money coming, just this year alone. I understand this hasn't worked in the past but there are meaningful differences this time. What I don't understand is people wanting this to fail. It is Argentina's only hope to rejoin the world economy where real businesses want to invest and create jobs. The alternative is continuing to sell your future out the back door to China with the kleptocracy taking their cut along the way, and a major debt crisis every few years requiring more bailouts and sellouts. That is swirling the toilet bowl and nobody should want that.
@CraigM there are many people like Larry in Argentina. I don't honestly believe they are feargongering but just don't understand what you are pointing out. I know many friends like Larry here. In fact I'd say probably 45% or so of my friends hate what Milei is doing. Probably about the same in the USA that feel about Trump. So many are split on party lines. I doubt that will change.

I have the same attitude with my friends where I get frustrated because they are almost rooting for things to fail. But they don't look at it that way. They say they are just waiting for them to fail like they did so many times before.

I hope this time is different. But probably bad timing with some of what Trump is doing with China.
 
Larry with all due respect I think you are fearmongering. There is a lot more money coming, just this year alone. I understand this hasn't worked in the past but there are meaningful differences this time. What I don't understand is people wanting this to fail. It is Argentina's only hope to rejoin the world economy where real businesses want to invest and create jobs. The alternative is continuing to sell your future out the back door to China with the kleptocracy taking their cut along the way, and a major debt crisis every few years requiring more bailouts and sellouts. That is swirling the toilet bowl and nobody should want that.
Larry's Milei Derangement Syndrome gets worse with every good thing that happens.
 
NOT fearmongering Craig. But I am afraid for myself and also for Argentina. You said it yourself. This has not worked in the past. I don't want it to fail. I just hate seeing Argentina drown in generations of more debt that it can't pay off. I want to see Argentina to succeed. I live here and have for the past 15 years. Do you? You probably have ZERO ties to Argentina so it does not matter what happens to Argentina as you have no stake at all in this.

But for me this is home and the government is destroying it.
We bought a couple of units in BA otherwise I wouldn't be here. What got me interested in the first place was seeing real reforms that were not only intelligent but had popular support. My whole adult life I've seen Argentina commit one socialist blunder after another that peaked with YPF. This is their first real chance at reform and joining the global economy. I'm all for holding Milei to account on corruption and anything else, but wishing for a return to the Kirchner days is just nuts to me. Only China and the kleptocrats want that.
 
We bought a couple of units in BA otherwise I wouldn't be here. What got me interested in the first place was seeing real reforms that were not only intelligent but had popular support. My whole adult life I've seen Argentina commit one socialist blunder after another that peaked with YPF. This is their first real chance at reform and joining the global economy. I'm all for holding Milei to account on corruption and anything else, but wishing for a return to the Kirchner days is just nuts to me. Only China and the kleptocrats want that.
I am sorry. I didn't know that you have a stake in Argentina. I thought you were only a tourist and had no stake here. I am not saying that I want Cristina back. Just anyone besides Milei and Caputo. I would settle for Villaruel but she isn't even on speaking terms with Milei.

I am sorry but many people I know had a better life in Argentina with Cristina and her husband. Life was much better for majority of Argentines then. I would argue that Macri is the one that got Argentina into this mess.
 
Larry's Milei Derangement Syndrome gets worse with every good thing that happens.
There are a lot of people like Larry out there. Doesn't have anything to do with being a Peronista either. Argentina is full of this type. There are a lot of people with money here prefer when Peronists are in power because they have all their savings in dollars. So the worse the country is the better they do personally. My wife's family is in that position. They own many businesses and even under a tough economy they do better when the country is in the toilet. I know many such people. Then you have another 50% that are poor and want everything free and they hate Milei too. That is what you have to understand.

We bought a couple of units in BA otherwise I wouldn't be here. What got me interested in the first place was seeing real reforms that were not only intelligent but had popular support. My whole adult life I've seen Argentina commit one socialist blunder after another that peaked with YPF. This is their first real chance at reform and joining the global economy. I'm all for holding Milei to account on corruption and anything else, but wishing for a return to the Kirchner days is just nuts to me. Only China and the kleptocrats want that.
You bought at a very good time. I think you bought last year? I would guess that you are probably up at least 25% now or maybe even more. My wife's sister and brother invested in many pozo apartments and the value has gone up. You are in a no lose situation as long as you bought from a good developer.

There are many cons on pozos. Article last week on just one out of the thousands of cons like this in Argentina. I know a few people that got conned on pozos.


@CraigM you are in a no lose situation if you bought last year. And if the economy goes to sh*t even better as tourism will be busier so probably a no lose situation. Prices keep going up each month. Plus you can sell your pozo if you want before it's done.
 
There are a lot of people like Larry out there. Doesn't have anything to do with being a Peronista either. Argentina is full of this type. There are a lot of people with money here prefer when Peronists are in power because they have all their savings in dollars. So the worse the country is the better they do personally. My wife's family is in that position. They own many businesses and even under a tough economy they do better when the country is in the toilet. I know many such people. Then you have another 50% that are poor and want everything free and they hate Milei too. That is what you have to understand.


You bought at a very good time. I think you bought last year? I would guess that you are probably up at least 25% now or maybe even more. My wife's sister and brother invested in many pozo apartments and the value has gone up. You are in a no lose situation as long as you bought from a good developer.

There are many cons on pozos. Article last week on just one out of the thousands of cons like this in Argentina. I know a few people that got conned on pozos.


@CraigM you are in a no lose situation if you bought last year. And if the economy goes to sh*t even better as tourism will be busier so probably a no lose situation. Prices keep going up each month. Plus you can sell your pozo if you want before it's done.
I think Wally makes a great point. It's not just Peronistas that don't like Milei but Wally points out something that many people don't want to talk about. Many wealthy in Buenos Aires that have already made their money probably do better in an environment on a strong blue dollar vs. official. I know some people like this. They were willing to pay higher prices if things drastically improved but there are a lot of locals that will complain no matter what happens. Argentines love complaining. I've always said that Milei isn't perfect but he is Argentina's best hope of turning things around. Having a fiscal surplus in a country like Argentina is a big deal. Still, the huge bailout of the IMF shows show bad of a situation Argentina is in.

@CraigM, kudos on your timing of jumping into BA real estate. I loaded up in mid 2023 at the bottom and buying as much as I can now. I just bought another PH and buying up a lot of properties for clients. The properties I bought in mid-2023 that are finished now are renting very well and providing a great ROI and cash flow and the value on them went up as I predicted in 2023.

Wally is right. Definitely stay away from pozos that aren't from reputable developers. I can't tell you how many emails I get each month from foreigners that bought into pozos and didn't understand what they were getting into. Many were scams or never finish. I've been buying many pozos since 2002 but I only buy with mostly the same developer that has been around 40+ years. Others that I have bought are only developers that have been around 20+ years and have done this a long time.

I've talked to many locals, even people experienced in real estate that jump into deals that are "too good to be true" and they almost always are. Aoid any pozos other than huge developers with great track records.
 
We bought a couple of units in BA otherwise I wouldn't be here. What got me interested in the first place was seeing real reforms that were not only intelligent but had popular support. My whole adult life I've seen Argentina commit one socialist blunder after another that peaked with YPF. This is their first real chance at reform and joining the global economy. I'm all for holding Milei to account on corruption and anything else, but wishing for a return to the Kirchner days is just nuts to me. Only China and the kleptocrats want that.
True about one socialist blunder after another. Hope that Argentina can finally get its act together. But they have to do a lot more than just borrowing their way out of things.
 
We bought a couple of units in BA otherwise I wouldn't be here. What got me interested in the first place was seeing real reforms that were not only intelligent but had popular support. My whole adult life I've seen Argentina commit one socialist blunder after another that peaked with YPF. This is their first real chance at reform and joining the global economy. I'm all for holding Milei to account on corruption and anything else, but wishing for a return to the Kirchner days is just nuts to me. Only China and the kleptocrats want that.
I bought my first unit even before Milei got elected. Saw the sales prices and it seems like either with the biggest socialist in place property prices were dirt cheap. I was blown away how great Buenos Aires is. Reminded me of a nice city in Europe at a fraction of the prices.

My apartment has been booked non-stop since I finished it. Very solid investment! The value on my new place keeps going up too. I just hired @BuySellBA to buy my 3rd property in BA.
 
Larry with all due respect I think you are fearmongering. There is a lot more money coming, just this year alone. I understand this hasn't worked in the past but there are meaningful differences this time. What I don't understand is people wanting this to fail. It is Argentina's only hope to rejoin the world economy where real businesses want to invest and create jobs. The alternative is continuing to sell your future out the back door to China with the kleptocracy taking their cut along the way, and a major debt crisis every few years requiring more bailouts and sellouts. That is swirling the toilet bowl and nobody should want that.
Craig when will you realize that Milei is full of sh*t. He lies nonstop.

 
Craig when will you realize that Milei is full of sh*t. He lies nonstop.
I dont understand why all of you are celebrating that Milei and Caputo are enslaving Argentina just like Macri did. Generations of Argentines are going to suffer. Do you not realize this? Same games. Milei's plan was not working. All he is doing is letting carry traders make money again. It is about to get even more ridiculously expensive here. Those of you that don't live here don't understand what is going on. You see some crazy guy with a chainsaw on TV and you think he is some hero. Milei is not a hero. He is a thief.

 
There are a lot of people like Larry out there. Doesn't have anything to do with being a Peronista either. Argentina is full of this type. There are a lot of people with money here prefer when Peronists are in power because they have all their savings in dollars. So the worse the country is the better they do personally. My wife's family is in that position. They own many businesses and even under a tough economy they do better when the country is in the toilet. I know many such people. Then you have another 50% that are poor and want everything free and they hate Milei too. That is what you have to understand.
That's a very interesting perspective, thanks Wally.
You bought at a very good time. I think you bought last year? I would guess that you are probably up at least 25% now or maybe even more. My wife's sister and brother invested in many pozo apartments and the value has gone up. You are in a no lose situation as long as you bought from a good developer.

There are many cons on pozos. Article last week on just one out of the thousands of cons like this in Argentina. I know a few people that got conned on pozos.


@CraigM you are in a no lose situation if you bought last year. And if the economy goes to sh*t even better as tourism will be busier so probably a no lose situation. Prices keep going up each month. Plus you can sell your pozo if you want before it's done.
Yes we bought last year. We viewed it the same way - properties were far too cheap and unlikely to stay that way, and longer term we would have a toehold in a great city. Milei's reforms got us interested in the first place but it wasn't our motivation to buy property. Stocks would have been a much better investment in that scenario. Thanks to BuySellBA for all their advice and resources.
 
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