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Economy
In reply to the discussion: STOCK MARKET WATCH - Wednesday, 22 February 2012 [View all]Demeter
(85,373 posts)18. Economic Recovery Without the Pain of De-Leveraging By Bill Bonner
We left Baltimore about 10 days ago. Weve stopped in Miami
Managua
San Jose and Panama City. Now, were on the Rio Plata
in the Palermo Soho section of Buenos Aires.(ARGENTINA)
Did you see the Dollar Sniffers at the airport? asked a friend.
The what?
The dogs. The police have trained dogs to be able to detect dollars in your luggage.
Why would they do that?
Weve heard about the risk off trades in Europe and America. Fearful investors forsake their Portuguese bonds and Chinese stocks for the relative safety of US dollars. But here, the safety of the dollar is a more tangible and more immediate concern.
People are getting nervous again. The inflation rate is increasing. Nobody knows for sure. The government lies. And they threaten to put you in jail if you publish an alternative number.
So people watch the prices for pizza and hamburgers. Theres a pizza chain that sells the cheapest pizzas in Argentina, called Uggi. Its so cheap you have to pay extra if you want a cardboard box. They put their prices right on the front of the store. So you can see immediately how much prices are going up. I think theyre going up at about a 25% rate. More than 3 times faster than the government claims.
We used to watch the price of a Big Mac combo, too. But the government put pressure on McDonalds to hold down the price in exchange for some tax benefit or something.
The Argentine economy is really very robust. It has to be. People have to find ways around all these stupid laws. They pass a law to prevent you from importing something because they want to protect some local industry that the politicians have an interest in. Or they pass a law to prevent you from exporting something because they want to force you to sell it to local people at a low price.
Those dollar-sniffing dogs, for example, are another way they try to keep people from protecting themselves from the governments inflation. They dont want people to convert their pesos into dollars and then take them out of the country.
They also make it hard for you to spend money. You have to show where you got the money. Otherwise, the seller is likely to denounce you to the police. So people are careful. They dont want to buy. They dont want to spend. What a way to run an economy!
Ive got a friend who sells Harley Davidsons. He has customers who want to buy them, but he cant get them. Because the government is trying to favor some other industry. And then they stopped you from importing tires so you couldnt get tires for your car. Thats why you see so many trucks with bald tires. Its dangerous. But its just what you get when you start monkeying with an economy.
Read more: Economic Recovery Without the Pain of De-Leveraging http://dailyreckoning.com/economic-recovery-without-the-pain-of-de-leveraging/#ixzz1n7Bvc1n7
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