Argentina restricts online shopping as foreign reserves drop

http://www.bbc.co.uk/news/world-latin-america-25836208

by ytNumbers • 13 years ago

89 85 13 years ago

bbc.co.uk

ye2• 13 years ago

Argentina is now the primary candidate for Bitcoin adoption.

High GDP.

Crazy inflation.

Corrupt stupid government.

Totalitarian-style financial laws.

Easy widespread internet and mobile access.

Not enough dollars.

wslh11• 13 years ago

No, [We] Argentinians follow the dollar religiously. Don't try to give rational arguments in favor or against bitcoins it doesn't work here.

fennecfoxen2• 13 years ago

Eh. Bitcoin won't solve Argentina's foreign-exchange woes anyway. Their fundamental problem is the nation is poor, but the government wants to declare that they're not poor by fiat (printing money, and pretending that the currency hasn't devalued by making it illegal to trade it at a decent price.)

Bitcoin won't make the country prosperous any more than black-market dollars will.

maxerickson3• 13 years ago

Can you explain how a large amount of bitcoin end up getting sold into Argentina?

I don't see why anybody (in country) with dollars would bother selling them for bitcoin, and I don't see why anybody with bitcoin is going to be excited about pesos.

So you get a little trickle.

gojomo2• 13 years ago

Whatever people are doing to get the pesos, they can do directly for bitcoin instead.

narrator• 13 years ago

They make good wines in Argentina. Someone could start selling those for bitcoins. There's also a fair amount of tourism.

GigabyteCoin4• 13 years ago

It's nearly impossible if you think about it in depth.

Argentina does not allow money (in significant amounts) to leave their borders.

Bitcoin is a world-currency.

In order for an argentinian to acquire a Bitcoin, he must pay taxes in excess of 50%, be limited to a few hundred USD in purchases per month, and find somebody who owns bitcoin to take argentine pesos which are in an inflationary spiral at the moment: http://www.xe.com/currencycharts/?from=USD&to=ARS&view=10Y

The value of Bitcoin is doing the exact opposite of argentine pesos.

Anybody holding Bitcoin would have to be insane to exchange them for argentine pesos.

rahimnathwani7• 13 years ago

There's a market exchange rate (different from the official exchange rate), and if you could buy the pesos for less than that market rate, you could make money.

If you (a bitcoin seller) were to acquire pesos and hold them, it wouldn't work too well, as your money would get inflated away, eliminating and reversing any profit. However, you could instead (i) use them for transactions, or (ii) sell them to somebody else who has, say, dollars, but needs to buy assets in Argentina.

zby• 13 years ago

Maybe from turists? I don't know about Argentina - but in cases like this turists are often forced to buy the local currency by using the official exchange rate.

exit• 13 years ago

so the problem isn't an imbalance of imports (sending foreign currency out) vs exports (bringing foreign currency in)?

fennecfoxen2• 13 years ago

It is, and the underlying problem is that people don't want to bring dollars to Argentina. Why not? Well, because it's illegal to buy pesos with dollars at a fair price; you must accept a really crappy exchange rate or go to the black market. You can see why few would bring dollars to the country under those conditions.

Currency controls like this are the hallmark of a corrupt regime trying their best to pretend there isn't any problem with printing a whole lot of money.

michaelbuckbee• 13 years ago

I have an actual real-life case study that supports this. I know someone who is currently outsourcing development to Argentina (close time zone, technical population and he gets to practice his spanish).

His current method of paying them is to pay a US residing relative of theirs who is basically holding the money as a stateside retirement account for the Argentinians.

He offered over a year ago to start paying them in BTC so that they could actually spend they money he was paying them (for which I'm sure they are kicking themselves for turning down now).

So while there are all sorts of issues with BTC in terms of liquidity, exchange and security its probably a mark of how bad it is in Argentina that BTC looks sane and stable in comparison.

wslh11• 13 years ago

One of the simple ways to solve the payment issue is to open an LLC in USA, receive the payments in a US bank account and transfer the money via a "cueva" (cave).

There are legal ways also, you can find the details in the Globant's SEC filling: https://www.sec.gov/Archives/edgar/data/1557860/000114420413...

In that way you can buy and sell dollars using the black market currency in a legal way.

rtpg• 13 years ago

despite all that inflation bitcoin's volatility is a lot higher.

ekianjo• 13 years ago

Not so much in the past few weeks. After the China news stories the price has been pretty stable.

martinvol2• 13 years ago

Actually no, today the peso was devalued by 3% compared to the US dollar. In just one day.

And bitcoins can easily be exchanged by US dollars, so is not a bad a idea for Argentinians after all.

Argorak• 13 years ago

Unsurprisingly, there is high interest in Argentina for Bitcoin. The latin american bitcoin conference was in Buenos Aires and there is a foundation.

http://labitconf.com/ http://www.bitcoinargentina.org/

A lot of argentinian hackers I spoke to are very well-informed about bitcoin.

JVIDEL• 13 years ago

What happens with the Argentine economy is that everybody who actually kept it afloat (not the corrupt politicians, crony CKD assemblers passing as "industry" or the masses of unskilled and unemployable public employees who can make or break an election) just plain gave up

This is very difficult to explain to people in developed countries, but what you have to understand first and foremost is that in Argentina there is no "plan" at all, is a country in a permanent state of improvisation, and because of that you have things like this which are literally implemented overnight with no warning let alone debating about it, you know like democracies are supposed to do...

Because of crap like this many Argentines give up and either live off savings or just leave. And really, with an effective tax-rate of over 60% with virtually no rebates and a VAT/sales tax in the mid 20s you reach a point where your income no matter what you do is lower than your expenses, so why keep going? you are actually acquiring DEBT in order to WORK.

The current dolar reserve crisis is being handled in such a stupid sloppy manner that is difficult to explain, because it makes no sense whatsoever. For example the government wont let you buy or sell any foreign currency, but it subsidizes every operation in foreign currency at between 40% and 50% lower than real value. The excuse is to avoid an inflationary spiral but it actually created one, and destroyed the reserves of the central bank.

nickff3• 13 years ago

I could not agree with you more, but I do have a simple explanation for the currency exchange regulations.

The government is taxing exports by underpaying exporters for their goods, while collecting market prices from the foreign customers. The government achieves this by overstating the value of the Argentinian peso, which the exporters are forced to accept as payment (at government dictated exchange rates). This would be a problem if the government allowed citizens to purchase USD at the artificial (low cost per USD in pesos) price, so the government restricts USD purchases in Argentina.

The Chinese government implemented this policy before Argentina, which is why they are always accused of manipulating their exchange rates.

wslh11• 13 years ago

There are a lot of differences with China. For example, China produces a lot of goods locally where Argentina "can't" produce a reliable refrigerator... and depends on a lot of foreign components in every industry.

Argentina, obviously, produces some high quality goods but in another scale.

rahimnathwani7• 13 years ago

The alleged manipulation by China is the reverse: China has been accused, by western politicians, of keeping the value of its currency lower than it would be if freely floated. This, if true, would effectively be a subsidy for exporters: they receive dollars for exports, whilst paying (cheap) local currency for labour and rent.

altero2• 13 years ago

Some European countries have tax around 60% and VAT over 20%...

wslh11• 13 years ago

But you don't need to rely on private health, private security, and private education there. The taxes in those countries have a counterpart.

martinrame2• 13 years ago

...and Agentina has an unemployment rate of 6.8 (with the highest salaries of the region) against 10.9 of european union (26,7 in spain, and 12.5 of italy).

Sources:

Just google "unemployment rate of xxxx" (argentina, spain, italy).

itchitawa• 13 years ago

After a century of failing to manage its economy, Argentina continues to fail to manage its economy.

In other news, water is wet.

Daishiman• 13 years ago

Yeap, holy shit did I pick a good time to leave.

kfk• 13 years ago

It’s good to point out that a G8 country like Italy is going about the same way as Argentina. Those 2 countries are extremely connected, Argentina’s Italian descends today might be as much as 60% of the whole population. As Italian, I am not trying to stick yet another stereotype to us, but this is an interesting fact after all and it says a lot about the future of Italy too if you ask me.

edit O yeah, and Europe too, it says a lot about the future of Europe too

hrnnnnnn• 13 years ago

This is pretty much how it's been in Iceland for several years now.

blueskin_4• 13 years ago

The main difference is that Iceland has so far not made territorial claims on Greenland to try and distract its population from their miserable situation.

bevacqua2• 13 years ago

I live in Argentina and _I bought pesos at 11.665_ on the dollar yesterday. Today it's closing in on the 12 mark, at 11.85.

Lately, the Argentinean peso has been plummeting in value. Yesterday the official peso dropped with a rate that hadn't been seen in 5 years.

The government converts USD, if I were to place them in my bank, to the official peso. They don't sell USD, though. So I would never get real USD if I were to use my bank account in Argentina. That currency currently sits at 6.89, over 70% below the real value.

Now they're attempting to limit online shopping to, get this, TWICE _per year_.

This makes me want to flee the country.

estebank4• 13 years ago

I've left the country exactly a year ago.

There's no legal way of leaving the country with your savings. You're unable to exchange your savings legally as the only concept that the AFIP (local IRS) accepts for exchanging is exports. I know, I checked every possible avenue. The people you talk to's attitude ranges from apologetic, passing through not-give-a-shit reaching abuse.

Luckily for me, I didn't have any big savings, not really, but if you have a house/car/anything (IE, have roots) and you sell it you're royally fucked. Even if you exchange in the black market you cannot leave the country with more than USD 10K per person, and if you do and get caught in either Argentina or destination country, it'll get confiscated in its entirety. And once you've arrived to a country with USD 10K, you have to exchange it to the local currency (let's say EUR). But now you have EUR 7380 in cash that no bank will touch with a 10 foot pole because almost no other country in the world disallows it's citizens from doing bank transfers, so that money is suspected of being laundered.

On top of all this, you can use your credit card outside of the country, with a 35% tax to every purchase, with a monthly top, so if you're left with pesos, as I was, you can start chipping away at the meager pesos savings bit by bit. But then you have to keep in mind the incredible inflation rate that the peso has[1][2] of over 28% for 2014[3](3.38% in a month!).

[1] http://imgur.com/va1o1C1

[2] https://docs.google.com/spreadsheet/pub?key=0AuNh4LTzbqXMdFJ...

[3] http://www.infobae.com/2014/01/14/1537019-la-inflacion-congr...

lazyant• 13 years ago

"you cannot leave the country with more than USD 10K per person, and if you do and get caught in either Argentina or destination country, it'll get confiscated in its entirety"

I don't know if it's different because I was coming from a different country but I arrived once in the US with more than $10k, I just declared it and filled out a form.

gadders• 13 years ago

I expect the Falklands will get a mention by their president soon. Normally any time they have an internal problem they try a bit of sabre rattling to distract the population.

blueskin_4• 13 years ago

With a bit of luck, they can prove the downfall of two Argentine dictatorships instead of just one.

blueskin_4• 13 years ago

Argentina keeps resembling a dictatorship / failed state more and more with every passing month.

acd• 13 years ago

There is no gold in the vaults only useless paper notes backed up by the fraudulent system of fractional reserve banks. Paper notes goes back to their intrinsic value that of paper.

Argentina and India will most likely by their history of high inflation be keen to use cryptographic currencies like Bitcoin.

martinvol2• 13 years ago

It's incredibly what the government had done to the economy just in a couple of years. In 2008 we were virtually safe from the world crisis.

Then they didn't stop the public spending, so the emitted more and more pesos, which lead to inflation, that they didn't want to admit, so they started fixing the exchange rate with the dollar.

Until it was unbelievable cheap, so they started to control it.

More and more restrictions went on. So many that they basically destroyed the economy trust, that is pretty much everything in economy.

It's incredible that this distortions led to a country with few dollars, expensive for forgings, with no foreign investment. And it's also cheap for Argentines to travel abroad!

I have no idea how the hell they did that mess so quickly.

Argentina restricts online shopping as foreign reserves drop

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