Argentina tightening up capital controls

pmbug

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Argentina is making it harder for people to buy U.S. dollars to pay for travel abroad.

A new rule published Monday says anyone wanting to buy dollars for travel must first prove their money was obtained legally, and provide the tax agency with trip details including why, when and where they are traveling.

Many Argentines only declare part of their wealth and income to evade taxes, and use black-market currency exchanges to convert their inflationary pesos into dollars. Travel agencies are the latest target since they manage multiple currencies and offer customers black-market rates for their money.

President Cristina Fernandez is cracking down to keep hard currency from flowing out of Argentina, which needs the dollars to maintain its central bank reserves and pay debts.
http://news.yahoo.com/argentina-more-controls-buying-us-dollars-180240507.html

:noevil:
 

ancona

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WOW! Capital controls already? Argentina is still a neurotiuc wreck. From confiscation of privatew retirement accounts to controls on exports.....what's next? They are in just as deep a pile of shit as they were when they last defaulted. Their growth rate just isn't accountable for with higher soy production. Methinks there is some fudging tf the numbers here, in an attempt to draw in foreign capital. They will go the way of Bolivia and Venezuela.......irrelevance.
 

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Latin America’s political shift to the Left is starting to have serious consequences as far as mining companies are concerned. In April the Argentine government renationalised the oil company YPF, and early last week introduced a new law aimed at reducing mining companies’ imports into Argentina.

Last year foreign investment in Argentina’s mining sector almost reached a new record of $3 billion, but this new law calls into question future investment. This new decree means that the government will start to control all imports by mining companies, in an effort to boost Argentina's foreign currency reserves and its trade surplus.
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More: http://www.goldmoney.com/gold-research/roman-baudzus/argentine-government-moves-against-miners.html
 

swissaustrian

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I could cry for Argentina. Can you imagine that this country was one of the richest on earth just 100 years ago? So sad.
 

benjamen

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I could cry for Argentina. Can you imagine that this country was one of the richest on earth just 100 years ago? So sad.
Those riches where remedied by currency devaluation, social welfare, and universal healthcare....

Sounds familiar?
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DoChenRollingBearing

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I have been to Argentina. There are a lot of talented people there. Food's good!

But why do the Argentines keep electing socialists? Beat's me!

Yes, they were almost where the USA and France were 100 years ago. Elections DO have consequences.

I just hope Peru does not go down that road. New(-ish) Peruvian President Ollanta Humala decided (it would appear) NOT to go down the Chavez / Kirchner route.
 

benjamen

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Lessons from Argentina

For those that think it could never happen in the U.S., look at modern day Argentina:
http://dailyreckoning.com/learning-from-the-best-inflation-lessons-from-argentina/

"He tells us that it is said to be a crime in Argentina to mention the “parallel” market in dollars. On the official market, the peso still trades at about 4.4 to the dollar. On the unofficial exchanges, that is, on the parallel market, the “blue” peso trades at less than 5.1 to the greenback.

But it’s apparently illegal to mention it.

So is it supposedly illegal to publish the real inflation rate. The Argentine feds have their rate; it’s a crime to contradict them."



Edit: Looks like this could be merged with this previous thread:
http://www.pmbug.com/forum/f4/argentina-tightening-up-capital-controls-1047/
 
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pmbug

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It's heresy to contradict the high priests of finance!
 

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BUENOS AIRES, July 5 (Reuters) - Argentina's central bank on Thursday formally banned people from buying dollars for the purpose of saving them, confirming the government's de facto policy aimed at safeguarding foreign reserves.
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The currency controls are aimed at stemming capital flight and easing downward pressure on the peso in the local foreign-exchange market, where the central bank intervenes nearly every day.
More: http://www.reuters.com/article/2012/07/06/argentina-dollars-idUSL2E8I60BF20120706
 

ancona

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Argentina has enough domestic production to have a decent self supporting economy if they can just bring themselves to vote in a conservative leader, instead of these socialists who hate productive people with more than a few hundred pesos.

They have been suffering a neurosis for some time now, and have chased away investment with confiscatory taxation and stifling regulation. They are in fact their own worst enemy. Same for Equador, Chile and Venezuela. If and when the socialists take over in Colombia, all will be lost in South America. Chavez has already destroyed his economy by stealing privately owned oil production and giving it to cronies to run in to the ground. For a country that used to have a very healthy and vibrant economy, desperation and poverty are now the norm for many. As soon as you begin to take from those who produce, those who produce will flee. The "brain drain" in Venezuela includes many of the folks who keep the oil infrastructure alive. Engineers, geologists, etc. have left for more fertile ground, having been penalized with reduced salaries post-theft of companies and higher taxation.
 

pmbug

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Argentina just made it more expensive for its people to use credit cards outside the country, and more dangerous for cardholders who aren't paying all the taxes they should.

One measure published in Friday's official bulletin adds a 15 percent tax every time people make a purchase outside the country using a card issued by an Argentine bank. Another requires the banks to report every credit card purchase, home or abroad, to the tax agency.

The moves target Argentines who have discovered that by using credit cards outside the country, they can get around increasingly tight currency controls and shelter their money from soaring inflation. Purchases outside Argentina using peso-denominated cards soared 48 percent in June compared to the year before, obligating the central bank to send $289 million out of the country in just one month. Overall capital flight soared to $23 billion in 2011.
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http://news.yahoo.com/argentine-tax-agents-track-credit-card-buys-141152829.html?_esi=1
 

bushi

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Quote :
BUENOS AIRES, July 5 (Reuters) - Argentina's central bank on Thursday formally banned people from buying dollars for the purpose of saving them, confirming the government's de facto policy aimed at safeguarding foreign reserves.
...
The currency controls are aimed at stemming capital flight and easing downward pressure on the peso in the local foreign-exchange market, where the central bank intervenes nearly every day.
This is a blueprint, what will happened in the future, more or less everywhere, just replace "pesos" with dollars above, and "dollars" with gold/silver.

It happens to-a-letter, every time, everywhere, whenever public loses faith in local currency - people turn to some external form of money, outside government control - depending on geography and culture, be it Dollars, Deutsche Mark, Swiss Franc etc.

Since "native" people owning dollars, in the event of faith collapse, wouldn't have the alternative currency to convert to (when dollar goes, everything else goes with it), they will turn to gold/silver (probably, more to silver than to gold, gold will be waay to expensive for average folks).

And obviously, government, in the coup to "control" the impossible monetary situation, will impose the same bans/confiscation. As they always did, as they did everywhere.

So, be prepare to be vindicated, but also, be prepared to go below the radar.
 

pmbug

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Yep. Watching events unfold in Argentina is like getting a sneak preview for what's coming everywhere else.
 

benjamen

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pmbug

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Yeah, I have relatives in Argentina. I can only shake my head in dismay.

#fiatmoneyproblems
 

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Thousands of Argentines marched Thursday night in the largest protests yet against the government of President Cristina Fernandez, who has lost popularity since her landslide re-election last year due to corruption scandals, violent crime and her ever-tightening controls over the economy.

“Cristina, the vote doesn’t provide impunity for moral frauds or wiping out the economy,” read a huge red sign that a group of young protesters carried into the Plaza de Mayo, in front of the Government Palace.

The pot-banging protests known as “cacerolazos” are an Argentine tradition, and this one appeared to be organized by everyday citizens on social networks without the support of opposition parties. In numbers bigger than any protests seen since Fernandez took office in 2007, people marched on public plazas in the capital and other major cities around Argentina.
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Crime, inflation and currency controls were the main worries of people who surveyed last month by Management & Fit consulting firm, which found 72 percent disapprove of her management of the economy, and 58 percent disapprove of her performance overall. The survey of 2,259 people nationwide, which had a margin of error of 2.2 percentage points, found that nearly 70 percent also disapprove of her political opponents’ performance.
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http://www.washingtonpost.com/busin...4e07d2-fe11-11e1-98c6-ec0a0a93f8eb_story.html
 

pmbug

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benjamen

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http://dailyreckoning.com/que-quilombo/

Holy hyper-inflation...
"During the past four decades, when all was said and done, after the various changes of currency and slicing of zeroes, one peso convertible was equivalent to 10,000,000,000,000 (10^13) pesos moneda nacional."

Overall, a good article on the troubles in Argentina. It is a very good example of how to ruin a currency. Once the USD loses it's global reserve curreny status, I see no reason why the dollar will not follow the same path.
 

pmbug

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Argentine President Cristina Fernandez de Kirchner’s foreign-exchange controls are driving pesos underground.

A quarter of Argentines are keeping their pesos at home, up from 19 percent a year ago, according to a survey conducted in September by the Catholic University of Argentina and TNS Gallup. The increase reflects how people are shifting money out of banks to trade dollars in a cash-dominated black market where the cost of the U.S. currency has surged 35 percent this year, according to Buenos Aires-based research company EconViews.

The migration of cash out of the financial system is stripping banks of funding and undermining Fernandez’s efforts to hold down interest rates and bolster an economic rebound. The 30-day deposit rate has jumped 1.8 percentage points in the past four months to 14.8125 percent. A three-day decline of 0.8 percentage point that pared the increase in the benchmark rate will prove short-lived as annual inflation of 24 percent drives more Argentines to move money into the underground economy, said Eric Ritondale, an economist at Econviews.

“Money’s moving out of the banking system and out of the formal economy,” Ritondale said in a telephone interview from Buenos Aires. “As much as the government wants to promote the use of pesos, the truth is they won’t be able to achieve it. You can’t get it done” with interest rates below inflation.
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More: http://www.businessweek.com/news/20...ound-as-dollar-ban-backfires-argentina-credit

It's a similar dynamic with money flows into precious metals (see Turkey).
 
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