Argentina's Economic Crisis Can Teach Us

Jan. 27, 2016 10:39 AM ETSPY, DIA
Jim Mosquera profile picture
Jim Mosquera
318 Followers

Summary

  • What can Argentina's economic woes teach us?
  • Are U.S. debt metrics any different than other troubled countries?
  • Politics and economics will collide.

Argentina noneySeven years ago, I found myself in Buenos Aires, Argentina on a long-awaited vacation to the South American country. This is a country settled by European immigrants (97% of population has Euro roots) that is rich in natural resources. Specifically, there is a concentration of Italian and German surnames. Those with Italian names include Manu Ginobili of NBA fame and Gabriela Sabatini from the world of tennis. The former ruling family, Kirchner, has German origins.

Always one to try to understand the relation of economics and politics, I asked our Argentine contact what life was like for the Argentinians in Buenos Aires. She related how expensive it was for the average person to purchase imported items. This resulted from the economic crisis of 2001-2002. When I asked if she traveled overseas, she looked at me cross-eyed. There was no way this was possible for her without saving for quite some time, not at their currency's exchange rate.

In 2008 the exchange rate was 3 Argentine Pesos to 1 U.S. Dollar (NYSEARCA:USD). While the USD was not universally accepted, convertibility into Pesos was no problem. What I immediately noticed was how cheap certain things were like beef and public transportation. I could get a substantial meal with wine in a restaurant for a very reasonable price, and this was in a big city. Prior to their economic problems, the exchange rate was 1:1.

I had a conversation with a cab driver who told me things were indeed tough but that people were making it. One question I had for him were the signs I saw at gas stations saying "GNC". The GNC price was comfortably less than the price for gasoline. He said that was the "salvation" of the country a few years back. GNC is more commonly known in the U.S. as "CNG" or Compressed Natural Gas. It seemed like most

This article was written by

Jim Mosquera profile picture
318 Followers
Jim Mosquera is the author of the books Escaping Oz: An Observer's Reflections, Escaping Oz: Navigating the crisis and Escaping Oz: Protecting your wealth during the financial crisis.The books discuss how the public will greatly misinterpret the capabilities of our financial Wizards and what they should do to shelter their investments. The latest release, An Observer's Reflections, also presents a non-political viewpoint on today's challenging social and economic issues.He is also the author of a novel series (2020, Rebellium, Division, HOPE) featuring politics, financial crisis, cyber terror, and the media. These realistic thrillers will make the reader reflect on current events.His investing experience ranges from trading commodity futures to stocks, bonds, ETFs, and cryptocurrencies. He leads the Entrepreneurship Center at within the Plaster College of Business at Lindenwood University.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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