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Guest Post: This Entire Country Has Become A Giant Offshore Bank Account

Tyler Durden's picture




 

Via Simon Black of Sovereign Man blog,

“Charming” is, I believe, the word most often used to describe Uruguay. People tend to make a lot of parallels to the United States in the 1950s – a much slower pace of life, less government intrusion, and family focused.

The capital city of Montevideo is notoriously sleepy and provincial. It feels in many ways like a small town despite having 1.3 million inhabitants, about a third of the country’s population.

There’s very little going on in Montevideo, and this point is soundly driven home if you’re wandering around on a Sunday afternoon.

Then there’s Punta del Este, the resort town roughly 90 miles east of Montevideo. I lived here for a spell several years ago. I enjoyed it… but Punta is definitely a different animal altogether.

For six to eight months out of the year, it’s completely dead. The local governments even shut off most of the stoplights. The majority of restaurants are closed, and in the dead of winter (July) it can feel like an eerie zombie flick.

In the summertime (late December through mid-February), however, hotel rates go sky-high. Restaurants are booked solid. Traffic becomes gridlocked. And the population swells 20-fold with legions of thong-clad Argentine tourists roasting in the sun.

punta1 This entire country has become a giant offshore bank account

This is an important thing to understand about Uruguay– it is heavily dependent on Argentina.

Long ago, Uruguay’s generous coastline became the playground for well-heeled Argentines. Yet as the nearby Rio de la Plata can often wash murky, brown sediment along Montevideo’s beaches, they sought more pristine views further east towards Punta.

Over the years, Argentines began using this country as a sort of bank account. They stashed US dollars in Uruguayan banks and bought up all the high quality agricultural and beach property they could as a means to hold assets outside of their home country.

Argentines have wisely learned through experience not to trust their government. Fool me once, shame on you. Fool me twice, shame on me.

It makes perfect sense. Instead of depositing cash in their home country which has a history of confiscating bank balances, they buy property that will hold its value in neighboring Uruguay. At least they’ll be able to enjoy it from time to time and have a place to stay if needed. It’s a great strategy.

For Uruguay, though, it means the property sector is dominanted by Argentine buyers. The banking sector is dominated by Argentine capital. The toursism sector (Uruguay’s mainstay) is dominated by Argentine vacationers. It’s a precarious dependency.

Today, Argentina is imploding... the product of years of disastrous government policies heading for yet another full-blown currency crisis. And as the Argentine economy suffers, it is bleeding into Uruguay.

One of the chief consequences is inflation. As Uruguay imports inflation from both Argentina and United States simultaneously, retail prices from food to fuel to electricity have soared.

And as charming as it may be, this is a major downside to living in Uruguay.

The best part about being here, however, is the people. The local Uruguayans are nice enough… but a thriving community of expats has moved down to Uruguay over the past few years, and they are some of the friendliest, most interesting people I know. Very close knit too.

I suspect that, if price inflation ever gets under control, more people will move to Punta del Este in the coming years, and the city will end up as a thriving, year-round expat hotspot.

Personally, I think it’s hard to beat Chile– modern, advanced, civilized, and booming. Chile has great healthcare, better education options for the kids, and things just… work. Many expats living in Uruguay are starting to realize this and are gradually relocating across the Andes.

But the bustle of Santiago and the quiet charm of Punta are definitely worlds apart. Either option may be worthy for you to consider.

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Mon, 02/11/2013 - 18:01 | 3234833 falak pema
falak pema's picture

the second coming of americans, now to S america...what a cavalry charge that will be.

Run, run from those drones. 

I'm not sure a giant off shore bank account is the right formula for happiness. More like Deadwood or Dodge on the make. 

Mon, 02/11/2013 - 18:40 | 3234932 mmanvil74
mmanvil74's picture

Uruguay is indeed a pretty good spot, all things considered.  I've been there a couple of times recently.  However, as Simon suggests, inflation is an issue, and the cost of living is no bargain by any standard, especially in Punta Del Este.  Also, it gets down right cold in winter, which is why it is completely dead most of the year as far as tourism goes.  Punta does have potential to become a livable city year round, but for now and the forseeable future, it is basically a tourist village with a lot of empty condo towers and not much going on in the off-season.  The throngs of thonged crowds in the summer make it intolerable in a different way.  Montevideo might make for a better year round option if you are a city person, but it leaves a lot to be desired when compared to Buenos Aires.

Santiago de Chile is very westernized (aka. boring), especially compared to Buenos Aires, any large Brazilian city, or any other large city in Central or South America.  It is neither coastal nor mountainous, it lacks any sort of historical charm, and does not offer the high density it would need to become a great global city.  It sprawls like an L.A. or Phoenix, which really subtracts from the charm of living in South America.  I haven't found a decent alternative other than Santiago in Chile... the smaller cities are either too remote, too small, or too cold.

Mon, 02/11/2013 - 18:49 | 3234957 falak pema
falak pema's picture

nice résumé thanks.

Mon, 02/11/2013 - 21:26 | 3235352 Buck Johnson
Buck Johnson's picture

I know.

Tue, 02/12/2013 - 09:34 | 3236266 IrritableBowels
IrritableBowels's picture

Any comment on Ecuador?

Mon, 02/11/2013 - 19:41 | 3235069 EvlTheCat
EvlTheCat's picture

I love your posts.  Keep them up.

South America is the second coming that has been coming for at last the last 100+ years.

Mon, 02/11/2013 - 18:04 | 3234845 Buckaroo Banzai
Buckaroo Banzai's picture

Obligatory Simon Black hate comments in 3...2...1...

Mon, 02/11/2013 - 18:16 | 3234870 redpill
redpill's picture

So in closing, if you don't care about your close friends and family, please move to another hemisphere on my advice alone, and if it so happens that I was totally wrong and things implode (like everyone who moved their bank accounts to Panama on my assurance of privacy directly prior to the US government compelling Panama to turn over all their information) well then you can just pick up and move again.  What?  You have a wife & kids?  Oh well, guess this newsletter isn't for you.  Can you please forward it to anyone that you know that is rich, single, and doesn't give a shit about anyone else in their life?  Thanks.

P.S. Apparently things were quite different in Chile a couple decades ago, something about pinochle.  Or was it Pinochet?  I don't know, sounds like a card game or type of wine.  Just trust me.  Love, Simon

 

 

Hey, you asked :)

 

Mon, 02/11/2013 - 18:31 | 3234924 jballz
jballz's picture

Holy fu king whine fest. I am rich (ish), single, and don't give a shit about anyone else, which is mostly why I have not left the USA. I fit right in here. But I may go, and here is a huge idea to consider. Awhile back they invented these amazing things called fuckin airplanes. If you are poor you might as well stay put because life sucks anywhere you are poor. Otherwise, you move to chile and don't like it, get on a fucking airplane. it ain't like you have to leave the old country on a schooner and wagon train it down there.

Americans are such pussies.

Mon, 02/11/2013 - 18:37 | 3234937 redpill
redpill's picture

Sorry to hear you're lonely.  Good luck!

Mon, 02/11/2013 - 22:57 | 3235515 jballz
jballz's picture

 

How could I ever get lonely with all my friends at zerohedge comment section?

It's like a big happy family but without the incest.

But thanks for the sympathy. 

Now stop being a pussy.

Tue, 02/12/2013 - 00:58 | 3235825 redpill
redpill's picture

I don't have time to be a pussy.  I have actual responsibilities.

Tue, 02/12/2013 - 04:43 | 3236029 Parrotile
Parrotile's picture

"Incest is Best" - check out Tasmania!!

(all the down arrows will be from disgruntled Taswegians!!)

Mon, 02/11/2013 - 18:57 | 3234970 Never One Roach
Never One Roach's picture

Chile is too expensive for me. Their apartments cost more psf then San Francisco right now...incredible! I don't know how they can afford them. It's  a beautiful country ...Chile is, but out of my league.

You can live very well very poor in America with all the 'Freebies"-- food stamps, EBT, SNAP, CHIP, free housing seciton 8, health care, cell phones (with free mintues!!) and so on.  The poor and refugees of the whole are all flooding into the good old USA for all the 'free stuff.' 

 

Why leave? In fact, why work?

Mon, 02/11/2013 - 19:16 | 3235020 Whiteshadowmovement
Whiteshadowmovement's picture

Yeah you are absolutely right about the why ever leave, if anything you can expect benefits to increase from here on out. Remember when they posted that "how to get welfare guide" ipad edition here as part of friday humor?

Cape town is fairly affordable with the current exchange rate:

-A top penthouse downtown will cost about $5,000/m
http://capetown-westerncape.gumtree.co.za/c-Real-Estate-houses-flats-for...

-Similar for a nice villa in the burbs (many have tennis courts + pool)
http://capetown-westerncape.gumtree.co.za/c-Real-Estate-houses-flats-for...

-A nice 2 bedroom flat is about $1700/m
http://capetown-westerncape.gumtree.co.za/c-Real-Estate-houses-flats-for...

-around the same for a nice small home:
http://capetown-westerncape.gumtree.co.za/c-Real-Estate-houses-flats-for...

Its a very appealing lifestyle to a lot of retirees who come here from Europe (many from the UK) because they can really stretch their pension checks here. Also retirees because live in help is very cheap ($300-500 per month for a live in nurse/housekeeper).

Also a lot of formerly wealthy europeans come here who used to be very wealthy and just scraped by with a million or 2 left after the crash, they can start over here and that money goes much further here to maintain close to their former lifestyle

Tue, 02/12/2013 - 02:19 | 3235950 Oldrepublic
Oldrepublic's picture

Capetown is ok if you like the occasional mugging.

Tue, 02/12/2013 - 04:48 | 3236033 Parrotile
Parrotile's picture

Depends where you are.

There are rough areas and nice areas everywhere. Used to live in Plumstead which is quite Des. Res., no muggings / break-ins / violence, then moved to Hout Bay which was nicer (but much older property so cold & damp in the winter)

No matter where you choose to live in Kaaptoun, it definitely beats Joburg - now THAT is a City with quite a civil violence problem.

Tue, 02/12/2013 - 04:57 | 3236037 Parrotile
Parrotile's picture

Dup. post (user failure)

Tue, 02/12/2013 - 06:02 | 3236075 o2sd
o2sd's picture

Victim or perpetrator?

 

Mon, 02/11/2013 - 19:24 | 3235037 Doña K
Doña K's picture

Yes! But things can change rapidly. Thus.. as the financial gurus say: You should diversify and/or don't put all your eggs in one basket. That is if you can. 

Bottom line: The upper classes and the rich already know what to do and doing it. 

Mon, 02/11/2013 - 21:26 | 3235348 toady
toady's picture

Exactly!

In fact, anybody who is NOT in the US better be making plans to get there real fast.

If good ol' unkle Sam decides he has a problem with Uruguay, or anywhere in the solar system, well, might makes right!

Mon, 02/11/2013 - 19:56 | 3235097 Matt
Matt's picture

So, you've never been through social collapse before, I take it. When things go bad, sometimes the airport isn't open. Unless you can afford a private plane and runway, you could be stuck.

Mon, 02/11/2013 - 19:51 | 3235090 jimmytorpedo
jimmytorpedo's picture

You're thinking of Pinnochio.

Keep an eye on his nose.

Mon, 02/11/2013 - 18:14 | 3234871 Motorhead
Motorhead's picture

You mean that "up and coming officer from West Point"?

 

Mon, 02/11/2013 - 18:15 | 3234880 francis_sawyer
francis_sawyer's picture

Why is it that Simon Black never happened to "live a spell" in Punxatawney?

Mon, 02/11/2013 - 18:19 | 3234886 Motorhead
Motorhead's picture

Does he have something against Phil?

Mon, 02/11/2013 - 18:24 | 3234903 redpill
redpill's picture

Well, what if there is no tomorrow? There wasn't one today. 

-Phil Conners

Mon, 02/11/2013 - 18:29 | 3234915 The Gooch
Mon, 02/11/2013 - 18:59 | 3234978 diogeneslaertius
diogeneslaertius's picture

don't drive angry

don't driiive angry

Mon, 02/11/2013 - 20:10 | 3234857 Shell Game
Shell Game's picture

{This space for rent}

Mon, 02/11/2013 - 18:12 | 3234868 Sudden Debt
Sudden Debt's picture

WELCOME TO SOUTH AMERICA!
Anything to declare? fruits or vegetables?
Passport please?
AMERICAN? HA!!! WE DON'T NEED YOUR ALIEN KIND!
WE'VE GOT ENOUGH POOLCLEANERS ALREADY!

Mon, 02/11/2013 - 18:15 | 3234879 Motorhead
Motorhead's picture

If they have St. Feuillien Saison beer, I might have to consider a move....

Mon, 02/11/2013 - 20:13 | 3235125 Super Broccoli
Super Broccoli's picture

if St Feuillien is the only thing you need then come in Belgium ... except you're not going to have any sunshine, have crazy government regulations and taxes, flemish people, the coast is all about concrete buildings, we've got holes in every square feet of every road, companies goes bankrupt, politicians are pure bozos ... BUT we have plenty of beers !

Mon, 02/11/2013 - 22:18 | 3235440 willwork4food
willwork4food's picture

If you've got classier women than Hollywood,-I'm already on the plane.

Mon, 02/11/2013 - 23:22 | 3235564 Redhotfill
Redhotfill's picture

I hear the FLemmish and Walloons smell of Elderberry!

Tue, 02/12/2013 - 00:32 | 3235760 willwork4food
willwork4food's picture

OK, but do they have a nice ass AND good beer?

Mon, 02/11/2013 - 18:21 | 3234894 Motorhead
Motorhead's picture

OT - Liverpool got spanked by West Brom 0-2.  Time for a night cap.

Mon, 02/11/2013 - 18:22 | 3234896 A Lunatic
A Lunatic's picture

Short version: Uruguay is heavily dependent on Argentina, therefore fucked, so move to Chile.

Mon, 02/11/2013 - 18:24 | 3234904 Mark123
Mark123's picture

"Go west young man"

Tue, 02/12/2013 - 00:48 | 3235797 Midas
Midas's picture

Considering he is "farmer" in Chile, it is interesting Simon didn't notice there is expansive land in Uruguay outside the capital city and main resort town. 

Mon, 02/11/2013 - 18:23 | 3234898 Mark123
Mark123's picture

Plain and simple, I don't trust South American governments any more than I would trust USA, Europe, Africa etc...I would rather take my chances in a small town in USA somewhere (even with the bothersome noise of Drones prowling in the night).

Mon, 02/11/2013 - 18:23 | 3234899 JonNadler
JonNadler's picture

Argentines have wisely learned through experience not to trust their government. Fool me once, shame on you. Fool me twice, shame on me.

 

Argentines have been fooled over and over again, the life span of a paper currency there is about 15 years,tops, they 're due for a NEW peso soon

Mon, 02/11/2013 - 19:35 | 3235060 Harbanger
Harbanger's picture

Their memory has the lifespan of a fruitfly.  Time for a new politician that will make things right.  Rinse and repeat until they lose all their personal property and liberty.

Mon, 02/11/2013 - 20:35 | 3235193 espirit
espirit's picture

I was wondering where the old Nads would end up after being canned.

Mon, 02/11/2013 - 20:43 | 3235222 JonNadler
JonNadler's picture

am just here as a visitor, but if Tyler would like to pay me to bash ZH all day, I think I can do the job

Mon, 02/11/2013 - 20:55 | 3235253 Harbanger
Harbanger's picture

It wasn't bashing ZH.  That statement referred to the more awake Argentines who take their money out of the greedy socialist Govts reach.  They keep getting the same Govt because the takers outnumber the makers, the same problem the US now has.  Short of a catastrophe, we're not getting anything different going forward.

Mon, 02/11/2013 - 22:16 | 3235438 JonNadler
JonNadler's picture

you missunderstood me

Tue, 02/12/2013 - 04:48 | 3236034 TNTARG
TNTARG's picture

It's not us loosing properties and liberties.

Mon, 02/11/2013 - 22:57 | 3235516 Mr. Magoo
Mr. Magoo's picture

I think they meant the quote from ole George W.

"There's an old saying in Tennessee — I know it's in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can't get fooled again."

Tue, 02/12/2013 - 04:47 | 3236032 TNTARG
TNTARG's picture

So you're doing so well because you've been using the bloody "In God We Trust" painted paper?

I bought properties with several different argentineans painted papers. All but one are gone (the painted papers) but real-estate still mine. Land is mine. I took possession.

Which leads me to a question. When buying gold do they give u the real thing or just another printed paper?

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