Archive for the 'Banking' category

The Ghost of Argentina…

…What Happens when Countries Go Bankrupt?

There is a very interesting article in Spiegel Online from November 4th that I didn’t notice until today. It talks about the myriad challenges that bankrupt nations now face and uses the 2001 crisis in Argentina as an example of what happens when a country goes bankrupt.

They also discuss Argentina’s current economic prospects:

“And the sound of pots and pans being banged together is back. President Cristina Fernandez, who succeeded her husband Nestor Kirchner in 2007, increasingly resembles the hapless de la Rúa. Last week, she presented her version of the “Corralito” — the term used to describe the freezing of bank accounts in 2001 — when she ordered the nationalization of private pension funds, allegedly to prevent the funds from going bankrupt.

But economic experts believed that Fernandez’s true objective in nationalizing the private deposits, which are worth $30 billion (€24 billion), is to avert a government bankruptcy. Columnist Mario Grondona criticized the president, likening her to “a captain trying to save a sinking ship by bailing it out with a bowl from the kitchen.

Interesting and relevant reading no matter where you are.

Apartment Agency–How It Works

This is dedicated to those of you contemplating a move to Argentina, or those of you who want a reason to appreciate Craigslist rental listings in the United States.

Here in Buenos Aires, if you don’t have a great personal network and a native command of the language, you will have to use an agent to gain access to rental apartments. If you want to secure a furnished apartment (temporary rental), then the need for an agent increases.

When you call an agent, they will pretty much show you only their listings. So, you need to contact as many different agents within your market area as you can. If you want a long-term rental, walk the neighborhood you are interested in and write down sign names and numbers for buildings you like and then contact those agents. If you want a temporary rental, search for furnished apartments online and email them with your interest.

Here comes the confusing part…rental listings often are not exclusive. That means that the agent you contact will not know the status of the apartment until they talk to the owner…it could be rented by someone else for all they know.

And, the final kicker, the renter pays commission.

(Note, all the agents we have talked to and worked with as we search for a temporary apartment have been wonderful.)

Lurking at the ATM

Unlike many other countries, an expat without a national ID number — which here is called a DNI (Documento Nacional de Identidad) — will have a very hard time opening a bank account in Argentina. (You cannot get a DNI without having some sort of resident visa.)

I have read tales online of a few rare expats who have managed to open a bank account without the DNI, but it appears to be exceedingly difficult. We considered trying to go that route, but the funny thing is, even if you can swing an account, everyone tells you not to put any money in the Argentinian bank because the government could seize the money and devalue it at any moment, a la 2001 (“the crisis,” as it is called here). We decided not to bother.

Most expats here without a DNI just lurk by the ATM machine, gathering cash every day and hoarding it to pay for rent and other bills.

It works like this: a) You can take out about 600 pesos per transaction at an ATM machine; and, b) You can only take out the equivalent of $US 500 per day total from all ATM transactions in a 24 hour period (about 1,680 pesos by today’s exchange rate).

Cash economy baby.

More on My Favorite Coin Crisis!

The International Herald Tribune has this interesting article on the coin crisis.

A kiosk owner bribes a bank worker with cookies to break bills. Subway workers let commuters ride free because they can’t change their cash. Bus companies resell the coins they collect at a steep black market markup.

Argentinians are increasingly scrambling to get their hands on pocket change for everyday transactions, as soaring inflation makes the copper and aluminum that coins are made of worth more than their face value. Many suspect profit-seeking hoarders are scooping them up to stow away.

The Justice Ministry is meanwhile investigating Buenos Aires currency distributor Maco S.A., for allegedly withholding nearly 5 million pesos in change to resell on the black market. The company denies the allegations.

An anonymous Central Bank hot line has meanwhile received 5,000 complaints about black market coin sales since it opened in February, according to the bank.

There are some cool stats here, but their ultimate link between the coin crisis and recent inflation seems tenuous, at best. The coin crisis has been around for many many years if you talk to Porteños… .

Now I’m Obsessed with Coin Shortage

After doing a little more research, it appears that the minted coin to population ratio is not abnormally low in Argentina, so why the coin shortage?

(I’m sure you’ll be happy to know that I’ll be looking into this more in the future!)

This bears repeating as I wasn’t sure I made it clear on my last post on the subject: “Why is the coin shortage such a big issue?” Because YOU CANNOT RIDE THE BUS WITHOUT COINS. Literally. Period. There is no way to use a bill to ride the bus. They will boot you off if you don’t have change.

As a result, we are often faced with a dilemma when we are with Ian because we either have too many people for a single cab ride (since only four can ride in a cab) or we don’t have enough change for all five of us to ride the bus!! (That would be 4.50 pesos total for all five of us to travel the equivalent of one zone.)

You probably wonder why they don’t institute some sort of bus pass system that would bypass change altogether (such as the money cards they have for the subway in Baires)? Well, here in Good Air, there are about a billion separate city bus lines that are privately owned (I believe they receive some sort of government subsidy), so instituting a centralized pass system is rather complicated–but I believe they are supposed to be working on it.

Yes, that means that our Gollum-like coin hoarding has begun in earnest, as we croon over our coins, “my precious!”

Coin Hoarding

There is a shortage of coins in Baires, which can make life a bit difficult here since you can only use coins in the bus fare machines, and, coins are obviously needed for making change in general.

Even at the pharmacy, if you pay for something with 100 pesos that costs say 90.10 pesos, they will spot you the ten centavos and give you 10 pesos back rather than make exact change because they want to avoid giving out 90 centavos in coins. (Cab drivers have done the same thing. We had a 6.50 peso cab ride last night and Tom gave him 10 pesos. The cab driver gave Tom back 4 pesos rather than break a bill and give him 3.50 pesos in exact change.)

Everyone in the city avoids using their coins and stores hate to give change out.

In doing a minuscule amount of reading, it seems the government needs to mint more coins, but they haven’t, so the shortage continues.

We feel like native Porteños in that we are mimicking this behavior on our own quest to acquire and hoard our own coins! (It’s like quarters for the laundromat when you were in college.)

An Evening with Quicken

Tom and I have 12 or 13 years of muddled Quicken that we sat down to sort through tonight.

After review, we decided to simply create a new Quicken file and start over, from scratch, with everything. It is like being born again, financially anyway, sometime in September of this year. (We dropped into the financial world like Mork…does that date me?)

It is truly delightful to have our accounts be exact–no weird patches and adjustments, like those that we made over the years to account for mistakes, changing relationships (when we kept expenses separated before we got married, for instance), software upgrades and the transition between downloadable statements and hand entering everything.

We are starting with a clean slate–it’s lovely. Perhaps we won’t dread updating Quicken now. (A woman can hope!)

Cash Economy Baby!

I remember my first visit to the American Express office in Taipei, Taiwan.

I was there to receive a wire transfer for a business transaction, which was then converted from dollars to yuan, leaving me with a large bag of dough that I had to transport across town for my transaction.

I was startled to learn that carting around large amounts of cash was not unusual!!

Many people were streaming out of the American Express office with duffel bags stuffed with bills. I never really got used to it. I always felt that I was leaving the bank with a target on my back.

Argentina seems to be much the same. We will show up and pay the balance on our short-term rental with cash. Many Argentines don’t have bank accounts, or they keep limited amounts in the bank after the 2001 financial crisis. Everyone wants Euros and US Dollars (in that order). Cash is king!

*Sigh* It looks like we’re going off the grid! (I will miss the automated Quicken download of all of our expenditures from credit cards. I don’t want to hand-enter cash transactions!)