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  1. #991

    Re: The Failing Economy

    Chile's GDP is smaller than Colombia (according to Wiki). And informal conversations with friends that keep an eye on Chile tell me that social unrest is hitting a peak. Bailing out a company that is half Brazilian (Latam is the merger between LAN and TAM, the latest brazilian) may not go down well with the general public right now.
    As I said before, Avianca is currently a Panamanian Holding, which they did precisely to avoid a lot of taxes in Colombia. So there is also a political component to this.
    About bailouts: Colombia issued a one time bonus to help people. About $100. So they are not looking at this pandemic from the economic point of view.
    What can I say? Hooray for Latvia. When Avianca goes down I will lose about 180,000 miles accrued with them. There goes my GF's trip to Paris!
    Face it. It's the apocalypse.

  2. #992
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    Re: The Failing Economy

    Quote Originally Posted by suliso View Post
    I guess, but even Latvia found 250 million euros for our small airline and also seemingly nothing happened. Chile is supposed to be similarly well off, isn't it?

    Before the epidemic Chile was going through a period of social unrest, driven by economic factors.


  3. #993

    Re: The Failing Economy

    As with personal history, where previous conditions might may you more vulnerable, the state of your economy prior to this pandemic will play a role in how you do:
    Debt-Ridden Argentina Can’t Stop Precious Dollars Draining Away

    Argentina is going through the consequences of defaulting NINE TIMES to international credit agencies. Added to the fact that you elected the same people that sent you on that track 5 years ago and, well....
    Paging Drop, for a more in depth explanation.
    Face it. It's the apocalypse.

  4. #994

    Re: The Failing Economy

    Argentina always defaults, doesn't it? Or at least significantly more often than any other middle income country...
    Roger forever

  5. #995

    Re: The Failing Economy

    I tried to have that conversation in Buenos Aires when I was there early this year. I stated "if you were to lend money to a person that never pays you back, wouldn't you eventually stop?"
    The response was that the IMF and the World Bank are nothing but MF's and they have really hurt Argentina always, so...
    I was able to steer the subject to how pretty Buenos Aires women are. It was a much safer talk.
    Face it. It's the apocalypse.

  6. #996

    Re: The Failing Economy

    Ponchi, I loved the comment about changing the subject in B.A.

    It made me think of a fun little story: When I was studying in Germany, I had a part-time job for about 3 months to help with expenses. By coincidence almost everyone I was working with was male and mostly in the 40-60 year-old range. This was 1974, so I couldn't help but realize that almost all of them had to have been young men or at least teenagers between 1939 and 1945. I had become great friends with the lady from whom I rented a room the whole time I was there. I asked her if it would be safe to ask these men what they did in the war. Her answer was the most resounding and definite "NEIN" in the history of negation. She told me the reasons, basically saying: "You are an American, which would almost immediately make them resent the question immensely, but also, if they were to answer your question, they wouldn't tell you the truth." She proceeded to tell me subjects that would be safe...such as how beautiful the German women were.

    GH

  7. #997
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    Re: The Failing Economy

    Quote Originally Posted by GlennHarman View Post
    When I was studying in Germany...
    Just for clarification, this was right after Glenn hand-glided around the world using nothing more than an ironing board and a bed sheet and shortly before he began a torrid love affair with Andy Gibb.
    Winston, a.k.a. Alvena Rae Risley Hiatt (1944-2019), RIP

  8. #998

    Re: The Failing Economy

    Quote Originally Posted by ponchi101 View Post
    As with personal history, where previous conditions might may you more vulnerable, the state of your economy prior to this pandemic will play a role in how you do:
    Debt-Ridden Argentina Can’t Stop Precious Dollars Draining Away

    Argentina is going through the consequences of defaulting NINE TIMES to international credit agencies. Added to the fact that you elected the same people that sent you on that track 5 years ago and, well....
    Paging Drop, for a more in depth explanation.

    Let me start by saying that the whole lockdown and COVID thing has come in handily to make people and the media look elsewhere instead of the debt/default. Another reason as to why I'm against such a strict lockdown here, but I digress...

    I'll build upon a previous post of mine:

    I want to expand on the currency issue. Argentina goes through cycles that roughly go this way since the return of democracy. A peronista, aka a demagogue, gets elected since they have been the predominant force since the 1940's. He throws an expensive party that expands welfare, govt jobs and subsidies. If the world economy does fine and the stars align (see Nestor Kirchner) they can sort of pay for the party. But this sooner or later is not the case and the economy starts to break down. When things get bad enough (after 8 years = two terms) enough people get fed up with the corruption, the peronista's attempts to obtain an unconstitutional third term, etc and vote a party different than the peronistas to power.

    Here comes phase 2. The peronistas start undermining the govt to return to power (with the help of the unions, which are led by very corrupt people intimately connected with politicians). This erosion comes easy as the new govt has to pay for the party that the peronistas threw over the better part of the last decade and to do this they have to take unpopular measures in a depressed economy and these measures affect the hardest those who have the least (that coincidentally are the base of the peronistas vote). To illustrate this, Macri is about to become the first non-peronista president to finish his term in office without being kicked out / quitting in decades.

    Phase 3 is the return of the peronista savior that is here to undo all the damage the previous president did. They generally get off to a good start and as soon as things are navigable, the demogoguery begins again restarting the cycle.

    So while this cycle goes on, the peso or currency of the time, suffers various devaluations eating at people's ability to buy, pay and most importantly to save. So to protect yourself you turn all your pesos to dollars to avoid losing your saving's worth when the devaluations come. For example, if you want to buy real estate, all the prices are in dollars. You can pay the equivalent in pesos, but the seller wants dollars. So as a saving currency the peso has no value. It's only used for day-to-day transactions.
    So after decades of these cycles, the world and the population have caught on to how things "work". The world knows the country overspends and the argentine knows that that catches up with the economy (although not few prefer to place the blame on the USA/IMF/other foreign powers instead of taking responsiblity). Therefore, the main issue assailing Argentina is not the debt. As mentioned in previous posts many countries have a large/er debts. The REAL issue is that of CREDIBILITY or TRUST. No one trusts the country -the inhabitants first and foremost- and so there is no way to finance the debt. Why did Macri suffer his run on the peso last year? Nothing special had happened; it was that lack of confidence.

    So now we have a second element (a consequence that has taken on a life of its own) that interplays with my previous post. The third element is the lack of a competitive industry that can produce and sell to the world anything in quantities that would bring in the much coveted dollars. Instead, they have always and still rely on agriculture and cattle.

    Overspending country + No Industry + No confidence (companies and citizens flock to the US dollar) = lack of USD
    Meet again we do, old foe...

  9. #999

    Re: The Failing Economy

    Dry, thanks for mentioning Andy Gibb...ah, there was a time that would have been such a dream!!! GH

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