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Argentina's 64K Peso Question: What Hits The Bottom Of This Chart First

Tyler Durden's picture




 

With Argentina's black-market peso (blue dolar rate) trading over 12, it would appear that the market is rapidly realizing the Central Bank's ammunition in its currency defense is likely to run out sooner rather than later. Perhaps it is time to get out that Soros' British Pound playbook?

 

 

Charts: Bloomberg

 

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Fri, 01/24/2014 - 18:38 | 4364680 ArkansasAngie
ArkansasAngie's picture

Ooops.  That's going to hurt.

 

There's some hurting going in quite a few places this weekend.

Fri, 01/24/2014 - 22:59 | 4365438 spine001
spine001's picture

Mentions of Argentina as being a trigger reminds me of the way the Dutch CABAL's of the 1700 worked. Why you may ask? Well for one thing the run on the peso was teiggered by a huge (for the local market) purchase of dollars by Shell. On the flip side the Shell CEO has a lot of criminal causes in Argentina and there is reciprocal hatred between him and the current government. On the other side the official peso market has nmot been real for m,ore than two years and the overheating of the dollar is NOT news there specially in January when even a taxi driver goes to Brazil with his whole family to vacation for a month, all buying dollars at the artificial government official price.TThe whole market down and the change in the way the pundits talk seems grossly orquestrated to me. This doesn't smell like the real thing.

 

 

Sat, 01/25/2014 - 00:25 | 4365657 LvMises
LvMises's picture

Wow, I can't believe the K cyber choripaneros have reached ZH. You do realize that Aranguren bought a mere US$3.5M? Then the KaKa government accused him of destabilizing the currency? Let's be honest: if US$3.5M is enough to cause a 15% devaluation in one day then either the Argentine gov't is lying about the central bank's reserves or Argentina is closer to Haiti than we thought.

Fri, 01/24/2014 - 23:24 | 4365494 BTFDemocracy
BTFDemocracy's picture

I think Argentina is fit to be the first country to implement a Bitcoin-like crypto currency as their own. A currency with limited issued coins, by a centrally managed system. At least then they can't print themselves into oblivion.

Fri, 01/24/2014 - 18:43 | 4364694 LawsofPhysics
LawsofPhysics's picture

That is what you get for holding on to the bullshit paper promises of others. (hint; sell those reserves for something, anything, fucking real, although it might be too late).

Fri, 01/24/2014 - 18:48 | 4364711 Fuh Querada
Fuh Querada's picture

Absolutely... the idea of exchanging 12 (or whatever) pieces of stained toilet paper (pesos) for one flecked, crumpled piece of toilet paper (a FRN) defies credulity.

Fri, 01/24/2014 - 19:05 | 4364753 aVileRat
aVileRat's picture

Can't comment on Ukraine today but I think Singer would agree when I say: Christina deserves everything that is going to snowball down on her US$400/perm head.

Her VP should be in jail for moving a cool 2 million USD out of the country every second week. She should have been impeached for trying to restart the Falkans conflict. She should be in jail for looting the worker pension funds. Not sure what sort of penal code fits the scheme of nationalizing half the oil shales, giving herself a 5x promote on the nationalized company and then trying to unload the government (and her) stake to CNPC. Insider trading ? Chavez was not even this stupid.

Her organs are not even donor tissue quality.

 

 

Fri, 01/24/2014 - 20:41 | 4365000 Emergency Ward
Emergency Ward's picture

Kirchner is so repulsive a rabid dog wouldn't bite her....

Fri, 01/24/2014 - 18:54 | 4364721 bilejones
bilejones's picture

They need a new real physically based currency. I suggest a pound of steak as the basic unit.

Fri, 01/24/2014 - 18:55 | 4364730 El Vaquero
El Vaquero's picture

Looking at that dollarblue site that was posted yesterday, it appears that there is some volitality in the peso.

 

http://www.dolarblue.net/

Fri, 01/24/2014 - 18:56 | 4364731 kaiserhoff
kaiserhoff's picture

Damn Tyler, you can't be old enough to remember the $64,000 Dollar Question.

  That silly old thang went off the air in '58;)

Fri, 01/24/2014 - 19:06 | 4364755 Atomizer
Atomizer's picture

Argentina's Financial Collapse -- Documentary -- FULL MOVIE

2001 to 2014  RIP

Fri, 01/24/2014 - 20:06 | 4364916 smacker
smacker's picture

I think that Argentine documentary will have to be renamed to "Part 1".

Judging by the new sinking feeling, Part 2 is just getting started.

The fall has spread to the Brazilian BRL: http://www.xe.com/currencycharts/?from=GBP&to=BRL&view=1W

Fri, 01/24/2014 - 19:10 | 4364765 Flying Wombat
Flying Wombat's picture

Dave Kranzler wrote a great article today on Argentina (and more):  http://thenewsdoctors.com/something-ominous-may-be-coming-at-us/

I think he's right about the contagion spreading, and that we'll even see trouble in Southern Europe.

Fri, 01/24/2014 - 19:18 | 4364785 Atomizer
Atomizer's picture

IMF's Lagarde on The Global Economy in 2014

 

Lagarde is shitting SDR anal beads. Encourage you to watch the whole video. If you don’t have the time, forward to Q & A session. Observe the awkward replies & facial expressions.

Fri, 01/24/2014 - 19:41 | 4364850 Spigot
Spigot's picture

So, if the black market will give you 12 peso for the dollar, and the white market will give you 1 dollar for 7.5 of those pesos ... am I seeing a problem for those inclined toward enterprise??

Sat, 01/25/2014 - 00:37 | 4365677 LvMises
LvMises's picture

Yes, big problems. See my conversation below.

Importers have no price reference.

Exporters have no price reference.

Supermarkets withdraw items from the shelves and mark up 20% what's left.

The problem goes way beyond enterprise. That has been a problem since the Kirchners took power. The current currency problem affects all 40 million of us.

Sat, 01/25/2014 - 13:55 | 4366862 Atomizer
Atomizer's picture

missed this last night. [V] below. Thank you for posting.

vvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvv

Fri, 01/24/2014 - 20:33 | 4365026 LvMises
LvMises's picture

I live in Argentina since 2001. Here is a Skype conversation I had with a buddy today:

 

Argentina is all over the news up here today

[6:54:23 PM] Me: Things are out of control. Auto sales halted. Frávega, Musimundo, etc... raising prices by the hour.

[6:54:35 PM] Me: I had a real estate deal anulled yesterday.

[6:54:36 PM] Buddy: No way

[6:55:01 PM] Me: There are no price references so no one is selling anything until things calm down.

[6:55:20 PM] Buddy: dang

[6:55:26 PM] Buddy: It is 2001 all over again

[6:55:32 PM] Me: x10

[6:55:40 PM] Buddy: really?

[6:55:43 PM] Buddy: why worse?

[6:55:46 PM] Me: The Kirchers have stolen absolutely EVERYTHING

[6:56:30 PM] Me: And in 2001 there were not many poor people. The K's have set up half the population on welfare. There is going to be social chaos.

[6:56:52 PM] Me: Private estimates put the real central bank reserves in gold and dollar bills at only 7B

[6:57:09 PM] Me: The other 22B are useless paper and IOUs

[6:57:25 PM] Buddy: what will you do? Are you sitting tight?

[6:58:02 PM] Me: I'm trying to buy some land that is quoted at the official rate but it's hard to concrete the operation because of all the craziness in the exchange rate.

[6:58:26 PM] Me: Yesterday I was sitting in ReMax ready to sign and we couldn't agree on the price. The land was fluctuation US$500 every 5 minutes.

[6:59:05 PM] Buddy: that is truly unbelievable

[6:59:20 PM] Buddy: you can't do the deal in USD?

[6:59:35 PM] Me: No because it's by bank deposit, pesos only, at official rate.

[6:59:38 PM] Me: It

[6:59:55 PM] Me: It's an American country club in xxx.

[7:00:12 PM] Buddy: what do you mean?

[7:01:24 PM] Me: YYY have a country club here and are selling lots.

[7:01:57 PM] Me: Since it's a Yanqui company, they do things by the book, no under-the-table dollar transactions allowed. Pesos at official rate which makes the lots cheap.

[7:02:12 PM] Buddy: big time

[7:04:43 PM] Buddy: Are you sticking around for the collapse, or is it time for a family vacation?

[7:05:56 PM] Me: We're sticking around, it's opportunity time!

[7:07:22 PM] Me: But most Argentine companies don't have access to dollars.

[7:11:06 PM] Buddy: do you see property prices coming down post-crisis

[7:11:21 PM] Me: 20-40%

[7:11:24 PM] Me: My estimates.

[7:12:26 PM] Me: ReMax laughed their asses off when I said that but it's gonna happen for anyone who wants dollars and wants to sell. Of course there will always be the dickheads that have their property published for 20 years and won't budge a dime and won't sell, but when things get desperate and someone needs to sell something a wad of dollars will get you good stuff.

[7:13:06 PM] Buddy: amazing, isn't it?

[7:13:12 PM] Buddy: No one in the states wants dollars

[7:13:30 PM] Me: Argentina is #2 holder of cash dollars after US. All in mattresses.

[7:13:41 PM] Buddy: amazing

[7:13:42 PM] Me: The dollar is basically gold here.

[7:13:49 PM] Buddy: terrifying

[7:14:21 PM] Me: Gives you an idea of what gold will be in the US when TSHTF.

[7:14:29 PM] Buddy: seriously

[7:14:47 PM] Buddy: it will be insane

[7:16:19 PM] Me: The bitch is going to Cuba tonight. Might never come back!

[7:17:44 PM] Me: Argentina hit the iceberg last year. We're in lifeboats and they're taking on water. Every morning at 8AM Capitanich makes some dumb announcement in a press conference that is a wave that fills the lifeboat with a little more water. And we are VERY far from the shore.

[7:18:25 PM] Buddy: Your perspective is interesting because you and Buddy#2 lived through the 01 crisis

[7:18:53 PM] Me: "El que depositó dólares recibirá dólares" That was the famous phrase that kicked off the 2001 revolution.

[7:19:05 PM] Me: I'm waiting to see which one-liner brings the house down this time.

[7:20:18 PM] Me: And believe me, the fucking KaKa's are full of empty and contradictory one-liners. The daily press conferences from Capitanich are better than SNL.

[7:20:33 PM] Buddy: ha!

[7:20:43 PM] Buddy: Argentina is all over the news here. It is amazing

[7:20:59 PM] Buddy: classified as one of the emerging markets bringing the dow down 300+ points

[7:21:26 PM] Me: Yes, they slammed Spain today, too. YPF plunged today locally and internationally.

[7:21:39 PM] Buddy: fill up your tank while you can

[7:21:57 PM] Me: Just look at the fucking commie Economy Minister Axel Kiciloff to see what a dire situation we are in.

[7:22:15 PM] Me: Filled up yesterday and maxed out the credit card in the supermarket on Wednesday!

[7:22:20 PM] Me: Bring it on!

[7:22:35 PM] Buddy: Ha!

[7:24:05 PM] Me: There are two things that are concerning me about Argentina mid/long term.

[7:24:41 PM] Me: 1) Drug cartels. Argentina is turning into Mexico (or Colombia before Uribe). Rosario is a fucking druglord warzone.

[7:25:04 PM] Buddy: 2?

[7:25:28 PM] Me: 2) An entire generation of poor reproducing with welfare.

[7:26:18 PM] Buddy: Kyle Bass is bullish Argentina and thinks all the problems can be solved in 2 years

[7:26:38 PM] Me: I honestly think we might see a military government when this thing blows up.

[7:27:37 PM] Me: There are 10 million people who don't work and were fed all the lines about equality and the farmers are evil and the rich are evil and the KaKa's are Gods because they give you handouts. Those people will have to be controlled or exterminated.

[7:28:09 PM] Me: If they are not controlled or exterminated then Argentina will be a write-off.

[7:28:17 PM] Me: We will have to flee to Chile.

[7:29:39 PM] Me: That's why this economic collapse is important. Either the country rids itself of the KaKa's ten years of communism or the country sinks further into a crime-ridden socialist abyss.

[7:52:11 PM] Buddy: It is a wait and see game

[7:52:16 PM] Buddy: CHile is always an option

[7:52:24 PM] Buddy: but Chile may close the border if it gets that bad

[7:52:38 PM] Buddy: Buddy#3 says the blue dollar is going away on Monday

[7:52:51 PM] Buddy: that the government has lifted the prohibition on the dollar

[7:53:20 PM] Buddy: http://www.buenosairesherald.com/article/150435/govt-lifts-restrictions-...

[7:55:16 PM] Me: No they didn't. They moved one step back, where you fill out a form for the IRS requesting dollars. IF they approve, you can buy like $100 per month. It's just smoke to buy themselves a calm weekend. Next week the shit will continue to hit the fan.

[7:57:26 PM] Buddy: this is like a soap opera

[7:58:11 PM] Me: They're playing by the hour, knowing it will all end at any time. They're kicking the can to steal as much as they can before everything collapses.

[7:58:35 PM] Buddy: how long can they delay the inevitable/

[8:00:34 PM] Me: M3/reserves at 29B = 12.5/dollar.

[8:00:45 PM] Me: M3/reserves at 7B = 50/dollar.

[8:01:01 PM] Me: They are spending $150M per day to control the dollar. Do the math. Tic-toc

[8:02:07 PM] Me: Plus inflation is out of control because they won't stop printing. Wednesday Krisabelita announced a new plan to give $600 to everyone aged 18-24 LOL

[8:06:58 PM] Me: If they last until March, then March will be the end. That's when unions arrange new contracts. I think the gov't will cede to whatever wage increases they want and just put the printing press into overdrive. Plus that is when kids go back to school, industry starts up again; families and businesses will see that 2014 home/shop budgets will be 3-5 times that of 2013. Everyone will run to the dollar. Game Over!

[8:09:03 PM] Buddy: What amazes me is how fast everything moves

[8:09:34 PM] Buddy: evidence that the only thing holding a fiat currency together is trust. once trust goes, there is nothing left

[8:11:24 PM] Me: Exactly. Argentina is case-in-point.

[8:12:10 PM] Me: There is another wild card here: Kristina's "health"

[8:13:41 PM] Me: She underwent an operation a while ago to take some kind of clot out of here head and has been hiding ever since. I (and many others) believe that it was faked and she is setting herself up as a victim, like "Look what the evil Capitalist speculators have done to a poor, sick old widow". She resigns and leaves the time bomb in the opposition's hands. The bomb explodes and the KaKa's come back in power to "fix" things.

[8:23:45 PM] Buddy: Isn't the election still almost two years out though?

[8:23:52 PM] Me: Not if she resigns.

[8:24:02 PM] Buddy: ahhhh

[8:25:57 PM] Me: What worries me the most about this implosion is: How is the army of welfare recipients going to react to hyperinflation or a new government cutting them off...

[8:28:46 PM] Buddy: crime

[8:32:39 PM] Me: Or civil war.

Fri, 01/24/2014 - 21:19 | 4365136 El Vaquero
El Vaquero's picture

 

Me: What worries me the most about this implosion is: How is the army of welfare recipients going to react to hyperinflation or a new government cutting them off...

Same shit, different country, different timing. 

Fri, 01/24/2014 - 21:32 | 4365176 StychoKiller
StychoKiller's picture

[11:59:59 PM]  Time to bitch-slap the idjuts that are gonna say: "No one could have seen it coming!"

Fri, 01/24/2014 - 21:38 | 4365192 Matt
Matt's picture

Chaos is not a pit. Chaos is a ladder, and there is only the climb.

https://www.youtube.com/watch?v=FG3H9E-B464

Fri, 01/24/2014 - 23:48 | 4365560 BTFDemocracy
BTFDemocracy's picture

Great comment.
Get a Dogecoin wallet (like Bitcoin) and I'll send you some Dogecoins... the new Crypto currency based on a joke.. its a total joke, but it will last much longer than the Argentine Peso.

+/u/dogetipbot 20 doge

Sat, 01/25/2014 - 00:02 | 4365598 LvMises
LvMises's picture

Maybe a joke, yes, and you would be amazed what can double for currency in Argentina (or anywhere) during a currency crisis. I remember in 2002 exchanging packs of cigarretes for beautiful hand-made vases or a lunch in a restaurant.

BitCoin has pretty much zero acceptance except for a few BitCoin traders in Buenos Aires. Shops do not accept them. The dollar is still king in Argentina.

There is a six-month waiting list for gold or silver bullion and you have to have your tax records "in order" to even be close to qualifying to be on the list.

Sat, 01/25/2014 - 04:16 | 4365987 BTFDemocracy
BTFDemocracy's picture

Argentina looks like the perfect case study for a country to adopt a crypto-currency as main currency, especially one that can't be created out of thin air.

Sat, 01/25/2014 - 13:44 | 4366839 eurogold
eurogold's picture

I am betting  that it will be civil war this time, and then  the military taking over.

Fri, 01/24/2014 - 21:10 | 4365105 AGuy
AGuy's picture

LvMises, Do you know anyone in Venzuela or have any insight into VZ? I can't imagine VZ is too far behind Argentina! Thanks for posting your conversation!

 

 

Fri, 01/24/2014 - 21:27 | 4365163 LvMises
LvMises's picture

Venezuela is way beyond Argentina as far as oppression and socialism are concerned. More control over the media, more capital controls, higher inflation (until this week. Argentina is now the #1 in inflation), higher crime, more draconian anti-business measures than Argentina. However, Argentina is catching up to VZ to the point that the "conservative" forums in Argentina, Argentines already refer to themselves as Argenzuela.

There is one fundamental difference between VZ and AR that I hope can turn the tide in Argentina for resolving our problems:

In VZ the black gold (oil) is owned and operated by the government. That's how VZ has managed to perpetuate its socialist system even with a 900% spread between the official and black market exchange rate. Basically, in VZ there is no-one that can fight back.

In Argentina, the green gold (soybeans) is NOT owned and operated by the government, but highly taxed. In 2009 the Kristina tried to raise export taxes on soybeans and the farmer Atlas Shrugged-style rebellion nearly toppled her government. Argentine farmers will raise arms before becoming complete slaves of the government. The 50% of the population that works and produces wealth can topple a government in a matter of hours if they take to the streets. I just hope that the good decent Argentines still outnumber the mind-fucked Kirchner-dependent Argentines so that when this collapse occurs then Argentina can once again rise from the ashes and begin to heal its wounds.

Fri, 01/24/2014 - 22:11 | 4365293 akak
akak's picture

LvMises, thank you so much for your posts and your insights here!  I found both to be very informative and fascinating.

Fri, 01/24/2014 - 22:32 | 4365363 LvMises
LvMises's picture

My pleasure. I am not a frequent poster on ZH due to time constraints, but given the lack of English on-the-ground commentary concerning the situation in Argentina I am happy to provide some ground zero insights. Also helps me to put everything in perspective. It's amazing how writing organizes your thoughts so much better than your mind running a mile a minute.

Sat, 01/25/2014 - 08:44 | 4366277 smacker
smacker's picture

"It's amazing how writing organizes your thoughts so much better than your mind running a mile a minute."

 

Exactly. I always find that the best way to understand something myself is to document it for others to read.

Thanks a lot for your interesting/informative comments here.

Fri, 01/24/2014 - 22:42 | 4365389 Hedgetard55
Hedgetard55's picture

How ias it the byatch has not had her head blown off by the military yet?

Fri, 01/24/2014 - 22:52 | 4365418 LvMises
LvMises's picture

Because her husband purged the military in 2003 and just two months ago she appointed General Milani as head of the armed forces. He is connected with the dictatorship of late 70s and early 80s (more K contradictions) but has sworn loyalty to the Kirchner cause. I think it's a two-edged sword. If things get out of hand he very well might lop her head off in revenge for 10 years of bashing and degrading the military as an inhuman leftie-killing pro-farmer aparatus.

Sat, 01/25/2014 - 07:19 | 4366178 samcontrol
samcontrol's picture

the military will not do shit, that is over here.

now i also garantee the bitch will leave early.

Sat, 01/25/2014 - 09:44 | 4366355 LvMises
LvMises's picture

I hope to God she stays 'till the end. She deserves the 100% disgrace that she created.

Sat, 01/25/2014 - 11:40 | 4366531 samcontrol
samcontrol's picture

either way is fine..

it's not only in the US we get to sit back and watch with pop corn....

but i use mate...

Sat, 01/25/2014 - 05:40 | 4366048 shawnmike
shawnmike's picture

Because her husband purged the military in 2003 and just two months ago she appointed General Milani as head sydney leather jackets of the armed forces. He is connected with the dictatorship of late 70s and early 80s (more K contradictions) but has sworn loyalty to the Kirchner cause. I think it's a two-edged sword. If things get out of hand he very well might lop her head off in revenge for 10 years of bashing and degrading the military as an inhuman leftie-killing pro-farmer aparatus.

Sat, 01/25/2014 - 09:22 | 4366317 MGA_1
MGA_1's picture

Argentina implodes every 10 years... here we go again...

Sat, 01/25/2014 - 11:42 | 4366535 samcontrol
samcontrol's picture

me das un mate ?

Sat, 01/25/2014 - 11:49 | 4366546 LvMises
LvMises's picture

¿Dulce o amargo?

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