Tuesday, March 12, 2013

Credit Where Credit Is Undue?


Over the past couple decades, for all their shortcomings, credit cards have made foreign travel easier, eliminating or at least reducing the need to carry quantities of cash and helping avoid the need to convince immigration officials of “sufficient funds.” If Argentine domestic trade secretary Guillermo Moreno has his way, though, MasterCard and Visa may lose much of their utility for Argentines and perhaps even foreigners.
That’s because the combative Moreno, who once began a meeting with angry Argentine businessmen by laying a pistol on the table, appears to have unilaterally decided that bank commissions on credit card purchases in supermarkets are too high. Known for capricious policies such as prohibiting companies from importing any more goods than the value of their exports, he believes they contribute to annual inflation figures that probably exceed 25 percent, though the government admits less than half that. He has also instituted price controls on many items in an attempt to keep the rate down, but such measures often backfire into shortages and a growing black market.

In Moreno’s world, reducing the banks’ three percent commission to one percent, through a supercard sponsored by the government-run Banco de la Nación, would get matters under control. Should his caprice become obligatory, travelers spending any extended period in the country – it’s common, for instance, to rent a Buenos Aires apartment instead of staying at a hotel - might find themselves unable to purchase quantities of food at the supermarket without cash. Nobody really knows what the details might be, but it could conceivably extend to gasoline purchases from YPF, the state-owned oil company whose stations are the country’s most numerous.
Other things being equal, of course, credit card purchases make relatively little sense for those who can sell their dollars on the informal “blue” market, where the exchange rate is now closer to eight pesos than it is to the official five-plus.

Plenty of Argentines are skeptical about this – former economy minister Roberto Lavagna thinks it could lead to rationing and called it “absurd,” while Banco de la Ciudad president Federico Sturzenegger said it  was “crazy.”  Some of the most creative opponents produced the satirical spot above to portray the realities of the “Morenokard.” Even if your Spanish is non-existent and you don't catch some of the topical references, the spot will give you an idea that Argentina can be a challenging country.

And Now For Something Completely Different
On another topic entirely, I have recently opened a Twitter account to inform readers about potentially interesting topics that I may not have the time to analyze in detail in this blog. Feel free to follow me there at @southernconetrv.

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