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Argentina not-fun facts
How bad will it get?
Argentina is one of the most fascinating countries in the world from an economic perspective. It is widely regarded as one of the only countries that’s transitioned from high-income to medium-income. That isn’t a typo. While the rest of the world has developed and become more prosperous over the last 100 years, Argentina has slowly sunk. The last century has been a litany of missed opportunities and own goals. I’ve previously written about some of Argentina’s multiple currency exchange rates and debt.
Since then, things have only gotten worse. I wrote the article about multiple currency exchange rates in February. At the time, the official exchange rate was 190 Argentine Pesos to the US Dollar, but on the street, one could get 380 Argentine Pesos to the US Dollar. Ah the good old days. Today, the official exchange rate is 350 Argentine Pesos per Dollar, and the black market rate has hit an astronomical 1,050 Pesos per Dollar. As a tourist, your options are to either bring thousands of dollars in cash with you and risk being robbed or withdraw money from banks and pay triple the price.
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Think inflation is bad in the United States? It’s over 100 percent in the Argentine Republic. The currency has lost 95 percent of its value over the last four years. To put that in perspective, that would be as if $1,000 in 2019 had the buying power of $50 today. What do people do? They convert any Pesos into Dollars as fast as humanly possible and pray their house doesn’t burn down with their life savings hidden in the mattress.
Some other Argentina facts:
In 1900, Argentina was wealthier than most of Western Europe. Similar to the United States, Europeans immigrated by the millions to Buenos Aires and the surrounding areas. There was even a phrase in French, “He’s as wealthy as an Argentinian.” Today, Argentina would be the poorest member of the European Union by a significant margin.
Since 1950, Argentina has been in a recession about one in every three years. In a healthy economy the expectation is that a recession occurs roughly every seven years.
The economy has stagnated for as long as most Argentinians have been alive. Not a lost decade, but a lost half century; Argentina’s GDP per capita is roughly the same today as it was in 1973.
Argentina has had 22 bailouts, six military coups, and three World Cup victories since 1950.
Over two weeks in December 2001, Argentina had five different presidents. How’d you like to be Ramón Puerta? He became Argentina’s third president in 12 days on December 21, 2001, as his position of President Pro Tempore of the Senate made him next in the presidential line of succession. He resigned the job on December 23. Then, when his successor stepped down, Puerta resigned as President Pro Tempore just so he wouldn’t have to be president again.
This week, Argentina voted for their next president. They have a two-round presidential voting system, where a candidate has to receive at least 45 percent of the vote to win in the first round. If no candidate receives 45 percent, then the two candidates with the highest vote share go to a second-round runoff election. This guy was leading the polls going into the first round (just watch a minute to get a sense of Javier Milei):
Will Argentina be able to turn things around? Milei was upset in the first round by Sergio Massa, the current minister of the economy. Neither candidate polled over 45 percent, so the two will head to the runoff election in November. So Argentine voters now have to choose between the economy minister who worked for a government that drove the economy into the ground and an untested radical who refers to his cloned dogs as his closest confidants. Bummer.