An article on the BBC website reminds that this was the day the Argentine banks, faced with a run, were closed down, allowing only a limited daily withdrawal. The peso was unlinked from the dollar, and inflation soared. The writer had been on the point of buying a flat, and when she got access to her money again it was worth only enough to buy a car. Someone else had dollars, and was able to pay off a mortgage because of an excellent exchange rate... There's been talk of an 'r' word – 'run' – by European economists recently. Of course it was a close call with Northern Rock a few years back, although economists also think of it in terms of the flow of money in and out of central banks.
Perhaps this is one of the reasons for the flourishing and well-organised short-let business in Buenos Aires. If you have money and don't trust the banks, you buy property and rent it. & I've been told that when you buy property it's usually cash: you have to turn up with a suitcase full of notes, adding another nerve-wracking twist to an already fraught business.
It's interesting to look out on a prospering South American city ten years later, with a largely untroubled cheerful surface, at ease with itself and doing well. Being an immigrant, like being a refugee, means having to cope without a safety net. It means self-reliance, taking nothing for granted, not having time for self-pity. Perhaps Argentina was well-equipped to survive and bounce back, and feels good about itself for doing so.
Tangoandchaos has a graphic account of Buenos Aires from December 3 2001 and the following weeks.
Dear Tangocommuter,
ReplyDeleteScary stuff...but it looks like it's the whole world in economic jeopardy this time and not just Argentina. As for Argentina, the rapid inflation shocks us every time we visit. When we were in Buenos Aires in October, we checked out the property listings and it looked like the property prices are higher than those in the U.S.!
However, there is one thing - the continued inflation in Argentina can't continue for long before the economy there too, is pushed to the brink...
Irene and Man Yung
Damn right it's scary! George Soros, who often but not always gets things right, calls the EU 'ungovernable' in a recent BBC interview. He thinks the euro will pull through, really because it has to, but doubts the viability of the financial system in general.
ReplyDeleteIf you've been checking out property prices in Buenos Aires your research is a lot more thorough than mine! But Latin America – Brazil and more recently Argentina – have been through huge growth while the US and Europe have faltered. Perhaps people just don't rely on banks that much, particularly in Argentina. I got a paper the other day, and apparently the government are now beginning to talk publicly about inflation. But one interesting development: you can no longer get dollars from cashpoints. (It always surprised me you could in the first place, but there you go.)
But I do think there's an 'immigrant mentality' that strongly differentiates Argentina from Europe. & Argentina has a big, well-educated work force and a lot of land. Maybe property here might not be such a bad idea! But I'll have to stick to renting for the time being...