

Argentina bans dollar purchases for savings - wslh
http://www.bloomberg.com/news/2012-07-05/argentina-bans-dollar-purchases-for-savings-infobae-says.html

======
rubyrescue
As I live here and have a consulting company here, I'm familiar with the
complexities of dealing with dollars. I'm a hacker by nature and spend a lot
of time now trying to 'hack' the financial world of the Argentine peso. In
that sense I think the article is worth posting.

Incidentally, Argentina _must_ do this because they have no access to foreign
capital markets due to things like seizure of YPF, devaluation of the peso in
2001, and failure to pay back the lenders they still owe, etc. Foreign
currency reserves just keep dwindling. As China slows down and demand for
soybeans drops, Argentina is really, really going to have a hard time. So
though it seems crazy there is some "reason" for it (I'm not trying to make a
political comment, I personally think it's crazy and they should radically
open the market, but my point is that it's not _exclusively_ xenophobia that
is driving this policy).

Unfortunately the policy just pushes the trade to the black market. One of the
interesting things here is that if you need pesos, and you have some access to
USD, you make an instant 20-25% on your money. The "black market" (they call
it "blue" here because it seems nicer) continues to diverge. If you're a
hobbyist economist like myself, it's really fascinating to watch market risk
priced into a currency in realtime as seen by the "blue"-vs-official rate
spread.

~~~
kokey
Having to fake an exchange rate sounds like the economic conditions in badly
run countries like Venezuela, Zimbabwe, Russia, etc.

What I am wondering is, with a depressed economy like that in Argentina, what
is crime and personal safety like? I am particularly wondering about violent
crimes for money, because how people react to a bad economy is determined
quite strongly by culture and not just the economic situation alone.

~~~
batista
> _Having to fake an exchange rate sounds like the economic conditions in
> badly run countries like Venezuela, Zimbabwe, Russia, etc._

"Badly run countries"? Zimbabwe maybe, but for Venezuela and Russia, I beg to
differ. They are doing things THEIR way, not the US/neo-liberals way that
would like a better slice of the pie, but Venezuela is much better off than
all the dictatorships and banana republics in the region, and Russia is way
better than when Yeltsin did things that benefited certain foreign
interests...

~~~
rafaelm
The Venezuelan way is faking the value of the Bolivar and pushing everyone to
the black market to buy dollars.The official rate is Bs.4.30 per dollar. The
black market rate is almost Bs.10 per dollar.

Are you aware that most of the products we consume here are imported?
Venezuela almost does not produce anything other than oil.

So , the clothes you buy, the medicines,food,etc,etc, everything has to be
imported. Not everyone gets access to dollars from the government , so you
have to buy dollars in the black market to import products. This causes the
25-28% yearly inflation rate we have. In the end, the people pay the price.

The solution from the government against the black market rate : make it
illegal to even talk about the black market rate. Basically,censor it.

I hardly think that is the proper way to run an economy.

~~~
excuse-me
I think the Saudis might disagree !

~~~
rafaelm
Did you read my entire comment? Do the saudis have a fake controlled economy?

~~~
excuse-me
I'm not sure they actually have an economy. Those in charge sell oil and buy
toys for themselves - the rest get very poor.

------
abtinf
This is a pretty standard example of capital controls being implemented in
non-free countries by the bureaucratic elite in order to impose hidden costs
on their people and to prevent the people from responding rationally to
terrible economic policy.

The reasons are easy to understand. People are willing to take on the risk of
owning hard currency (gold, dollars, euros) if they believe that their nominal
currency has greater risk. For example, if a government is spending
recklessly, there is serious risk of inflation. Or, if the government has
forced interest rates to be too low (well below inflation), then people want
to hedge against that too.

By forbidding the ownership of hard currency, the government forces
individuals to use the local currency. They must save in this currency, which
drives down interest rates and provides cheap capital to their government. And
it prevents (for a short time) exchange rates from significantly changing,
because it effectively limits the supply of the local currency and reduces
demand for hard currency.

EDIT: I forgot to mention the other reason governments do this - it's a great
way to force the people to bear the burden of paying down national debt. If
the country has significant debt, then the bureaucratic elite have a huge
incentive to pursue a policy of inflation, so that the debt becomes less
burdensome over time. This well written article from The Economist explains
how the west used this technique in the post-ww2 era:
<http://www.economist.com/node/18834259?story_id=18834259>

~~~
adjwilli
Argentina has direct elections of the president, multiple political parties,
and mandatory voting. How does that make them a "non-free country"? If
anything that makes Argentines more free than citizen of the United States.

Also what is your criteria for a hard currency vs a soft currency? It seems
weird to group the US Dollar and Euro with gold and put the Argentine Peso in
a separate group.

~~~
JumpCrisscross
A hard currency is a globally traded currency expected to serve as a reliable
store of value. The Argentine peso isn't widely enough traded, not to mention
subject to devaluation, to even remotely qualify as a hard currency.

------
rkaplan
All the economic talk these days is about Greece and Spain, but Argentina
seems to be on its knees economically based on the kind of measures they've
pursued as of late.

A few months ago, they deployed cash-sniffing dogs in airports to prevent
people from bringing large amounts of money out of the country. Yes, cash-
sniffing dogs. They have a tax evasion rate of around 40%, and they routinely
lie about economic statistics and go after watchdog groups that try to publish
the real numbers.

I'm not sure how long that can last as a national economic policy.

Sources: [http://www.globalpost.com/dispatches/globalpost-blogs/que-
pa...](http://www.globalpost.com/dispatches/globalpost-blogs/que-
pasa/argentina-deploys-dogs-sniff-out-cash)
<http://www.economist.com/node/21548242>

~~~
janus
Meanwhile, the president says "we're resisting while the world collapses on
top of us", so many lies.

------
janus
This is not new, it's been almost impossible to buy dollars since last
november, but it has been made official just recently.

The problem with this ban is that there are really no ways to save money here,
unless you have a significant amount of capital to buy a house or apartment.
What are we salaried workers supposed to do with the percentage of our monthly
income that we can save? The only alternative seems the black market, or
spending everything in things you might need in the next few months but with
no real resale value.

With a 25% inflation rate, saving in pesos equals losing money. What can we
do?

------
cs702
Prohibited from saving in dollars through official channels, Argentines will
turn to whatever other choices they have: black-market dollars, precious
metals like gold, and (I would expect) even alternative currencies like
Bitcoin.[1]

[1] [http://cs702.wordpress.com/2011/05/29/on-the-potential-
adopt...](http://cs702.wordpress.com/2011/05/29/on-the-potential-adoption-and-
price-appreciation-of-bitcoin-in-the-long-run/)

------
dlapiduz
This strategy has been tried way too many times before. It never worked and
you can tell it is the beginning of a new debacle.

Stuff like this makes me glad that I left the country.

------
jan_g
Is this stuff still going on in the world? I thought that such rules died with
the fall of east European regimes around 1990. Well, I'm glad I can open a
savings account in all major world currencies (at the moment, following
currencies are possible at my bank: CHF, GBP, USD, AUD, CAD, DKK, NOK, SEK,
JPY and of course EUR, which is official currency). More, it's possible to mix
different currencies in one account.

~~~
digitalengineer
Correct, and all those currencies float. Guess in what direction? Down. Have a
look at 'Currency Wars' and see how all country's drive down the value of
their currency in order to export more easily. As they do, paying off debt
becomes easier. However, for people that actually save money (or who are on
fixed income like pensioners) it means their purchasing power becomes much
smaller. Link to Currency Wars: [http://www.amazon.com/Currency-Wars-Making-
Global-Portfolio/...](http://www.amazon.com/Currency-Wars-Making-Global-
Portfolio/dp/1591844495)

~~~
jan_g
The problem is always this: what can I buy with the money I have? If all major
currencies (including home currency) float down, then I don't lose very much.
However, if my home currency loses 10% or more per month relative to other
currencies, then I would very much like to have access to foreign currency.
This was true 30 years ago in my country and this is probably true in
Argentina today.

~~~
ef4
"If all major currencies (including home currency) float down, then I don't
lose very much."

That's not true -- they're all floating down relative to actual goods and
services.

Coordinated devaluation prevents massive capital flight from country to
country, but only by making things suck equally everywhere.

~~~
jan_g
Yes, I understand that. But the process is slow. Hyperinflation in some
countries was/is much, much worse than regular inflation in developed
countries.

------
pmelendez
This happens in Venezuela since 10 years ago and it has been proved to be a
very bad idea.

However, this is _should_ not be in HN. This kind of politics articles just
brings undesired controversy.

~~~
krolley
I disagree. I wandered into the comments just to find out what would happen,
or what this means to, the market and Argentinians in general.

~~~
davidw
The results and comments are entirely predictable. It's not good news for your
average person in Argentina.

Isn't it obvious?

------
jswinghammer
The US banned using foreign coins in the mid 19th century as a misguided
attempt to bolster patriotism. Americans routinely used Spanish coins in
private transactions up until this point. I think (don't entirely remember if)
part of the reason was to encourage the use of US silver coins which had been
driven out of circulation due to the US government overvaluing gold relative
to silver. The basic problem was that by having the US dollar fixed to two
exchange rates that one was always being driven out of circulation as the
exchange rate changed. This lead to the free silver movement and the Populists
getting excited about seeing only silver used to back dollars.

This is a misguided attempt to trap people into their own crappy currency. The
US currency isn't any better fundamentally but as of now we don't force
citizens to hold dollars for savings.

------
martinrd
This is one of a couple moves by the Argentinian government that slows down
tech innovation and development.

You neither can import any electronics (or anything at all, except you also
export for an equivalent amount). So you're stuck with what the government
held companies provide.

~~~
dysoco
Sadly, yep... that's true. I recently moved back to Argentina from Spain, and
for example they just released the Samsung Galaxy S II, and it's really
expensive.

Don't even think of buying a Tablet, Phone or whatever, you just can't.

Plus, they want us to buy the shitty laptops/netbooks that are manufactured
here in Argentina, like Bangho for example, I think we also produce Lenovo,
but I like them.

Not to mention we also have restrictions importing books... yes, books!

~~~
digitalengineer
I'm very curious why you would want to move to Argentina. I've just read a
blog from a guy (Ferfal) about moving out of Argentina because of all the
violence, repression and hardship. 'Surviving Argentina' He predicted this
news as well. <http://ferfal.blogspot.nl/search/label/Argentine%20Collapse>

"They investigated your finances if you bought a big screen TV for the world
cup or send your kids to a private school. In a way they “nationalized” and
ruined private health care by including every crappy social medical plan into
private health care services that used to be of acceptable quality. They
banned the purchase of foreign currency, pretty much froze importations even
taking a Fahrenheit 451 twist when they banned the importation of books, like
a poor taste Bradburian joke.

No one saw this coming? Really? Hey, those guys that said Argentina was great
for expats and that expropriation wasn’t a risk, I suppose they crawled back
under a rock in Salta or somewhere."

Is Spain in such a terrible state that Argentina looks better? Any thoughts?

~~~
rdl
A friend of mine recently moved from California to Argentins to be with a guy
(sigh). It is even worse because she is ethnically Chinese, so people see her
on the street and assume she works in a laundry, when in fact she is a PhD
holding research scientist and manager at a Fortune 50.

Unless you have weird ties to Argentina like this, it seems irrational to move
there.

------
forinti
This has always been the rule in Brazil. In Uruguay you can open an account in
pesos, dollars, or euros (but it is a very small country that depends on
banking, like the swiss). Are there other countries where you can open an
account with a foreign currency?

~~~
_delirium
I believe it's the rule in the U.S. as well; deposit accounts must be in
dollars. Several American banks offer business accounts that let you maintain
multiple currencies, but they do so by storing (on paper) the other currencies
in the care of a foreign branch (see the asterisk note at the bottom of Wells
Fargo's info:
[https://www.wellsfargo.com/com/international/businesses/acco...](https://www.wellsfargo.com/com/international/businesses/accounts/multi-
currency)).

~~~
rprasad
It's not the rule in the U.S. that deposits must be in dollars. (Most banks
will let you open up foreign-currency accounts...they just charge more. A lot
more.)

However, foreign currency-denominated accounts are subject to yearly gain/loss
recognition as the value of the foreign currency changes compared to the
dollar. This could potentially trigger income taxes on the unrealized gain,
effectively (and usually) reducing or eliminating any interest earned. It's
also a PITA for banks to deal with the compliance paperwork.

------
rafaelm
Seems like Cristina wants to follow the venezuelan model. At least they have
some real internal production, not like Venezuela where the only thing we
produce is oil and everything has to be imported at black market dollar rates.

Ultra high inflation, here we go!

------
adjwilli
I'm not always in favor of what Christina does, but it is generally good to
have a diversity of economic models active in the world, for the same reason
biodiversity is important.

While most of the world struggled with the 2008 economic crisis - and Europe
still struggles with it - Argentina shrugged it off.

Imagine if another longer lasting crisis occurs within the US hegemonic
sphere. Countries like Argentina, which have one foot outside that sphere,
will be able to survive and perhaps even lead growth elsewhere.

Life times of economic crises in Argentina have taught Argentines to depend on
no one but themselves, which means protectionism sometimes.

~~~
Daishiman
We shrugged it off because soy prices are at a record high and the state gets
huge amounts of cash from those exports. Living and dying by the sword of
commodities prices is _not_ progress.

------
Uchikoma
Funny how nevertheless many people promote Argentina as a model for Greece.

~~~
heelhook
A great model of what would happen if they go with the seemingly easy way out.

[http://www.cavallo.com.ar/wp-
content/uploads/2011/10/Greece-...](http://www.cavallo.com.ar/wp-
content/uploads/2011/10/Greece-should-restructure.-revised.pdf)

------
javert
This is one reason why Bitcoin can be useful. Maybe this will lead to
additional Bitcoin adoption in Argentina.

------
thdn
And why is this on HN ?

~~~
hackNightly
HN isn't only for tech articles. It's for articles that may interest the tech
community. You'll often find posts on politics, finance, and other obscure
topics as well.

~~~
davidw
The guidelines indicate that most political articles are off topic:

> Off-Topic: Most stories about politics, or crime, or sports, unless they're
> evidence of some interesting new phenomenon. it's probably off-topic.

Political articles really should not be here: it's a poisonous topic that, on
a site like this, usually just rehashes the same old things, which makes them
not particularly 'gratifying of one's intellectual curiosity'.

This article isn't really obscure, it appeared on Bloomberg.com, and the
Argentinean government fooling around with foreign exchange, banks, and
statistics is not really news either.

An example of an article that I think would be more in the spirit of hacker
news might be something about options trading evolving between medieval
Florence and Flanders, or something like that...

~~~
eragnew
I'm not trying to be argumentative here, but in my view, the article isn't
just 'political'. With currency and money involved, there is an 'economic'
angle that I, personally, want to learn about. And with a government being
involved, there are moral/philosophical issues that I, personally, want to
learn about. So for me, this article gratifies my intellectual curiosity.

I guess what I'm trying to say is that the link may seem off-topic to you, but
it's highly relevant to me. And there's nothing wrong with any of that. And of
course, just because an article shows up here doesn't mean you have to read it
:)

~~~
scott_s
The front page is a zero-sum game. Every article that appears does so at the
expense of another article. The articles that appear on the front page get the
most comments, which drive the community.

I'm not arguing against this article, nor am I arguing that _all_ articles on
the front page should appeal to me. However, I am arguing that your final line
of reasoning does not hold in general.

~~~
mikeash
I disagree that the front page is a zero-sum game. A front page filled with
good variety has more value than a front page filled with repetitive articles
on the same basic subjects. Whether this particular article is good variety or
not is beyond what I'm willing to address, but I don't think it's correct to
describe the front page as a zero-sum game, and too much conformity can be
harmful.

~~~
scott_s
I think you're correct that I misused "zero-sum," since the utility of the
front page is not always the same; it can increase or decrease based on the
quality of the articles. I incorrectly used it to describe a situation where
the gain for one is the loss of another, which is a necessary but not
sufficient condition for a zero-sum game.

Regarding your point, I think we're dangerously veering into platitudes. Of
course I agree that a front page with "good" variety is better than a page
with "repetitive" articles. And of course I agree that "too much conformity"
is a bad thing. But I was originally countering the commonly spoken notion "If
you don't like it, don't read it!" Because of the gain-for-one-is-loss-for-
another nature of the front page, exactly _what_ appears on the front page
drives the community. If too many off-topic posts become the norm, HN will
become a general interest site, and lose the community that makes it so
valuable.

edit: There is zero reason to downvote mikeash. I tried to correct with an
upvote of my own, but apparently at least two HN readers are mistaken.

~~~
heelhook
That makes me wonder about what the economics of having a dynamic number of
articles in the front page instead of the fixed 30 would look like.

------
maeon3
The argentine peso inflates very rapidly, then the government slashes zeros
off the end of the money. Why on earth would I work hard to exchange toil for
receipts that don't hold their claim on human labor? If people convert the
peso to the dollar then they can store wealth. What kind of monster forces
people to store labor in recipts made up in diappearing ink? Isn't that
watered down slavery? To toil and be unable to save any excess for later? Its
a fate worse than death for me.

~~~
batista
The kind of "monster" that wants the country as a whole to survive, not just
the few lucky ones that can "store wealth".

~~~
ninguem2
These monsters should then vote for someone with economic sense, not the
clusterfuck of idiots that you've been putting in power since the 1940's.

------
jerguismi
Blatant advertisement: start your local bitcoin exchange today, escape the
tyranny! <http://localbitcoins.com/cash_exchange_howto> ;)

