Skip to comments.Argentina: Black Market Grows With Currency
Posted on 05/20/2012 12:35:26 PM PDT by DeaconBenjamin
Along a busy street in the Argentine capital, the man in the brown suit doesn't need to speak above a whisper to sell his goods: "Money change. Money change." Those who want to swap pesos for dollars follow him through a run-down mall to a lingerie store. There, amid bras and pantyhose, he closes deals for greenbacks.
Argentines have increasingly turned to such black market money changers since President Cristina Fernandez sharply restricted purchases of dollars in banks and exchange houses to try to keep hard currency from pouring out of the country.
Argentina has been kept from global capital markets since defaulting on its debt during a financial crisis a decade ago, so Fernandez's government wants to keep dollars in the country to replenish central bank reserves and pay government debts. Argentines, meanwhile, are haunted by nightmares of the crisis, when banks froze deposits and the currency lost value. So they are eager for dollars to stash in vaults or under their mattress. Others send them abroad for safekeeping.
Many economists say the new black market spawned by currency controls could choke back Argentina's economic growth and create even more inflation: Controls make it harder for people to do business and undermine confidence in the peso, causing it to devalue even more quickly. That can create the threat of shortages when people are unwilling to sell goods for a currency they do not trust. The curbs could also encourage Argentines to withdraw dollars from banks.
Under the controls imposed shortly after Fernandez won re-election in October, the country's tax agency, known as the AFIP, must approve all purchases of dollars. The formal exchange rate was 4.47 pesos per dollar on Friday, a slide of about 8.6 percent from where the peso was a year ago.
(Excerpt) Read more at abcnews.go.com ...
Per a comment on zero hedge , Argentina has money sniffing dogs at border crossings.. USD cash is exiting for Uruguay.
I tried to buy 500 ordinary One-dollar us coins friday at my credit union. You cannot. They say they do not stock them. They could sell me one $25 roll of wrapped coins for collecting though. Anyone else find this happening? (I want $1.00 coins in case ATMs fail us.
The “experts” who believe that Greece can have a somewhat orderly transition to the Drachma after exiting the EU should read this.
The black market will *explode.*
You probably couldn’t get $2 bills either. The just aren’t worth the trouble stocking in large amounts if no one wants them. Did you try to order some for delivery later?
For some reason, socialists have “pattern agnosia”, lack of pattern recognition, in which they are unable to recognize that their means to ends do not result in those ends, no matter how hard or repetitively they try.
Some of them do recognize that the ends they want have not been achieved, so they blame either a lack of resources, or sabotage, or both, for not achieving those ends. They will not even consider that the means or the process is at fault, or that they inherently cannot achieve the desired ends through those means.
Others will insist that the desired ends have been achieved, despite all evidence to the contrary, to the point of sounding delusional.
The end result is that they are on a continual loop of failure, consuming as many resources as they can in the process, while demanding more, and when they fail, yet again, they ignore the failure and demand to start over in exactly the same way.
Ask not for whom the bell tolls. It'll soon toll for us.
My uncle nearly got caught smuggling diamonds out of some South American country (maybe Brazil) for payment on some industrial equipment when their government refused to allow payment in dollars back in the seventies.
Yes, you would think after Cuba, Detroit, North Korea, California, Greece, Chicago, Argentina, the Soviet Union etc., they would start to get it.
What about precious metals purchasing and smuggling in Argentina or similar places? I have always thought that someone would melt down Pt, Ag or Au (painted) and fashion it into a metal auto part or panel that would be relatively easy to conceal.
500-BOX CHESTER ARTHUR ROLL - P
2012 Chester Arthur Presidential $1 Coin 500-Coin Box, Philadelphia (BL1)
Product will be available for shipping 06/15/2012
They should just adopt the US dollar as their official currency.
Argentinian government wants to retain the power to print their own currency so that they can fund their bureaucracy and crony capital enterprises with an inflated currency. Inflation robs savers and profitable enterprises, and that’s just the way the statists want it.
The Argentine economy could not match the productivity gains of the US economy. Argentine exporters found in increasingly difficult to sell in international markets. In other words it failed.
As the Europeans are finding out you have to not only match economic policy but all policies that affect economic performance for a single currency to work.
Obama is turning us more into a banana republic everyday and if the rest of South America can match and improve on the performance of Chile and Brazil we might meet in the middle some day.
I believe it is called Insanity, and Socialist, Progressives, and liberals are all afflicted with the disorder to one degree or another.
Cognitive Dissonance. They are so wrapped up in, and emotionally committed to, their ideology that they can’t even process, let alone accept, the reality of its failure.
Argentina has been touted as a socialist success story ... by socialists of course. Argentina is going down the socialist toilet just like Europe.
See our future. Bipartisan favored constituents receive money from their debt regime, have indirect regulatory control over their neighbors and continue to steal all that they can from them through regulations, false accusations and other politically correct tactics. That should heat things up nicely for the collapse.
Most politicos aren’t the producers that they claim to be. They’re socialists, from government employees, to contractors, to services, riding a debt wave while being watched closely by the currently silent, private sector masses. That’s why they fantasize so much about killing “zombies” (those who would really produce, were it not for the regulations and other thefts of the NIMBYs).
Me? I’ll keep working, building and being poor (but healthy, hopefully, and certainly happy) in the middle of nowhere, having already had enough excitement for a lifetime. Peace and quiet.
I wish that were true, but they'd be no better off if they don't fix their fiscal and regulatory mess. Argentina found that out about a decade ago.
Until gold is accepted as the universal standard, countries will have to go it on their own with their fake, fiat currencies.
Why coins instead of bills?
They are mostly copper, maybe about 10 cents worth and nobody wants them.
When currency is devalued “old peso’s” for “NEW Peso’s” (for example) the paper money is typically recalled and exchanged but the coinage , because there is actual expense to creating it (far more than paper) and because there is typically so little of it in circulation it is usually left in circulation.
Maybe more people need to watch Goldfinger and learn about his Rolls Royce.
It’s the economy - everywhere? Does it ever dawn on the reporters that it is socialism that is causing all this trauma?
Argentina is on th edge of being totally Orwellian/Ayn Randian
Excellent post and spot on. I wish I’d read it before I posted. You said it better.
Sort of like the G8 summit pledging more spending to spur their economies?
Over a century ago Argentina was competitive with the US. This is the war over what is seen and what is unseen. Sadly, the consequences of policy choices which lead to the current US domination of 25% of the world’s economy v. Argentina’s fiscal mess are “unseen” by the liberal monsters who wish to eat our society to death.
Yep. AKA cognitive dissonance.
Good post. It's going onto a gimmick t-shirt tomorrow.
It would never occur to these reporters that it is caused by socialist policies because they don’t think that could be possible. “JournOlisters” are true believers.
“Argentina has been touted as a socialist success story ... by socialists of course. Argentina is going down the socialist toilet just like Europe.”
Actually, Argentina is farther along that road than Europe. If the Europeans want to see their future, they only need to look at Argentina. Sad-the days when “as rich as an Argentinean” and the “peso de oro” are well and truly gone.
For example, May 2011, keep in mind the Unemployment Number is down because there are less available jobs;
Goolsbee isnt the only one saying more than 2 million private sector jobs added in the last 14 months;
May. 6, 2011
That means over the last 14 months, Obama said, weve added more than 2 million jobs in the private sector.
White House Press Secretary Jay Carney pointed out to reporters that April was the 14th consecutive month of growth in private sector employment, for a total of 2.1 million jobs
Reminded of Democrat EconOmist...Christina Romer, Paul Krugman, Jared Bernstein, Tim Geithner, Larry Summers, Dr. Mark Zandi, Dr. Alan Blinder, Bob Kuttner, Heather Boushey, Bill Hambrecht, Allen Sinai...
libs are libs
Ecuador still uses the US dollar; no mas Sucres(?).
One of those countries (it may have been Uruguay) changed their coins as well; the new ones had a dollar sign with “N” in front of it.
“I tried to buy 500 ordinary One-dollar us coins friday at my credit union.”
Just drop by your local gun store and buy a box of 50 9MM a week. They’ll be wroth more in the long run. :)
Supposedly, too many people were buying the coins to earn credit card points and immediately turning them into the banks rather than circulating them.
Personally, I think that is a crock. They could have easily controlled this by numbering the rolls and blocking your future card transactions if they showed up at banks within 60 days or whatever, or limiting sales to $250 per month or whatever.
But they wanted a kabuki show about how they were saving taxpayer money by discontinuing what they called the circulating dollar coin program.
I believe the Chester Arthur coin is the first minted after the announcement the program was discontinued. So it actually might be minted in small enough numbers to have some collector's value in the future.
Democrat EconoMissed! Since all their predictions ‘missed’!
I don’t understand what you’re saying. YOu tried to get Anthony dollars?
One more reason for the Argie government to try to take back the Falklands and get at their oil reserves. They need the money and the b*tch they have for a President is obviously not at all beyond trying to steal it.
They do so at their peril. Traditionally, countries with a history of currency debasement would peg to the dollar. But, as Argentina learned the hard way, when the dollar soared in the late nineties due to Greenspan's inflation-caused stock bubble, Argentinian raw materials became uncompetitive and the economy tanked.
At the moment, Ecuador (which also depends on exports of raw materials) is probably doing alright because a dropping dollar is making its products attractive. But a Republican presidential victory coupled with a Euro collapse could drive the dollar high enough to make them regret their decision.
These small countries should forget the politically-driven American dollar and go on a gold standard.