Every so often, Argentine politicians must feel that they, like their newly crowned Queen Máxima of The Netherlands, are facing the fury of North Sea storms. At increasingly frequent intervals, they use their metaphorical fingers to plug the dikes of ill-conceived policies such as the “currency clamp” that keeps ordinary Argentines from purchasing dollars (or other foreign money) as a hedge against inflation (officially at 10 percent, but in reality nearly three times that).
That’s why so-called “blue dollar” (to use the current phrase for the black market currency) has, as of today, more than doubled the official rate of 5.21, with no short-term ceiling in sight. This is what local wits are calling the “Messi dollar” because Argentine soccer star Lionel Messi, widely regarded as the world’s best player, wears No. 10 on his jersey for Spain’s Barcelona franchise.
Part of the reason for currency controls is to maintain the reserves to allow the country – which is widely regarded as a deadbeat – to pay its international debts. Those reserves, though, have been declining and, in response, the government has announced a tax amnesty to allow Argentines with money in overseas accounts to repatriate their funds in exchange for bonds that will pay them just a four percent return by 2016 – an eternity in Argentine politics - when the current government may no longer be in office. To quote former economy minister Martín Lousteau, “As far as you put patch over patch all you are doing is creating a Frankenstein economy,” and even those Argentines not engaged in money laundering will likely prefer to keep their dollars under the mattress.
At the same time, as inflation rages, the Argentine Congress is considering yet another short-term fix, for the fact that the largest banknote, with a value of 100 pesos, is now worth barely US$9.50 on the open market. Yesterday the government authorized a debate over creating new bills of 200 and 500 pesos which, at the very least, could minimize the inconvenience of overstuffed wallets. Plenty of Argentines, though, remember the hyper-inflation of the 1980s, when million-peso notes flew off the treasury’s printing presses.
Moon Handbooks Chile Plays Saratoga
In a little more than a month – Monday, June 17, at 7 p.m., to be precise – I will offer a digital slide presentation on travel in Chile at Santa Clara Country’s Saratoga Library (13650 Saratoga Avenue, Saratoga CA 95070, tel. 408-867-6126, ext. 3817). Coverage will also include the Chilean Pacific Islands of Rapa Nui (Easter Island) and Juan Fernández (Robinson Crusoe), as well as southernmost Argentina (Tierra del Fuego and the vicinity of El Calafate) that appear in the book. I will also be available to answer questions about Argentina and Buenos Aires. The presentation is free of charge, but books will be available for purchase.