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An Alternative Investments fund, owned by a group of friends, we make investments and we work together in several projects,
| Argentine Economics and currency | |
| I suspect that most of the developing economies, that are not currently rocking and rolling (from an economic perspective), are going to face an uphill battle, over the next six months and for the foreseeable future. The US Fed will raise rates this year. That probably means another .50% on the Fed Funds Rate.
Despite the IMF life-line, things (from a currency perspective) are going to get worse in Argentina, before they get better. Additionally, despite currency devaluation, the inflation of prices has offset much of the devaluations, therefore, things haven't actually become much cheaper. That means that the scales haven't been tipped in favor of the foreign investor (something that needs to happen in order to entice foreign investment). Argentina is going to have to take some bitter medicine in order to break the cycle and turn the corner...a corner it had sort of turned with the election of Macri, but truncated by the moods of the markets (and Fed Rate hikes). However, these things take time and patience, two things voters tend to lack. If things go poorly, the Argies will fall back on electing Peronistas and the whole cycle will begin again. The biggest problem with that repugnant form of governance is the economic isolation that it comes with it. The IMF loan will be the last foreign money Argentina sees for the foreseeable future, if it starts to move back towards the Peronistas. If the country falls back on old populist handout politics, the country will be plunged into an economic decline that will make 2001 look like a cakewalk. Conversely, if the country takes its medicine (eliminate many entitlements and what is effectively an economy-wide write-down of many assets and service in the country via further erosion to the peso) it will be able to begin anew climbing up the slope of economic recovery. I believe that thing are starting to get less expensive in Argentina, prices still have a long way to go. WW. US Investor |
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| Written 6 years ago | |
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:: See Darkness in a radiant Lite :: |
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An Alternative Investments fund, owned by a group of friends, we make investments and we work together in several projects, |