Currency Crisis
MarketWatch notes a New Record Low in the Peso.
The Central Bank of Argentina has been intervening in the exchange rate by selling dollars and buying back local currency, in an attempt to stem the descent of peso against other monetary units. On Tuesday, Buenos Aires requested a $30 billion credit line from the International Monetary Fund, after expending some $5 billion in currency reserves to curb further declines in the peso. Argentina relies on U.S. dollar funding to keep its economy afloat, so rising interest rates in the U.S. spell turmoil, while every new peso sell off reignites worries that Argentina is headed for a currency crisis.
Argentina is not “headed” for a currency crisis; Argentina is in the midst of a full blown currency crisis.
Major Disorder
JPMorgan says Argentine Peso Risks ‘Disorder’ If Rollover Fails.
What a hoot. This is not a disorder “risk”; This is major disorder.
Argentina Debt Burden
I fail to understand the above chart from the preceding link. The “K” makes little sense and I cannot get any numbers to add up to $111 billion.
Currency Intervention Does Not Work
Despite the numbers not adding up, the chart highlights a major problem with interventions.
Argentina desperately needs dollars to at least make make interest payments. The next three years are the most critical. Squandering currency reserves in a foolish defense of the Peso makes matters worse.
Argentina will now need an even bigger loan from the IMF.
Mike “Mish” Shedlock
Mish i have a question for you. All countries that are having US dollar debt will have issue to repay once interest rate is going high. But in 2008 Fed did something extraordinary by allow currency swaps basically allowing insolvent countries that had to repay US dollar to exchange after printing their currency with the dollar. In other words they allow dollar printing by other countries preventing them to become insolvent. Since they did this for some already where is the morality in not doing it now for all. Second why i did not see any alternative media writer discuss this issue. Is my logic wrong, maybe nobody noticed this or what?
We have already seen record flows into dollar-based assets. With Socialism just beginning to collapse in the periphery, with the popping of the govt bond bubble, can you please explain again how stocks are going to collapse? Where else is the $80 trillion in global investments suppose to park?
The offering of the 100-year bond was the warning. Equally prescient is understanding all the entities desperate for yield that bought those bonds – #1 on the list being govt pensions.
I’m truly mystified by all the talk of honest money, without first addressing the unpenetrable roadblock of dishonest govt. Without first imposing short term-limits, there will be ZERO meaningful reforms.
History is very clear. The solution is more freedom and significantly smaller govt. Luckily, but painfully, Socialism is collapsing under its own weight. Our future will be determined by what rises from the ashes. Based on the establishment’s push to eliminate privacy, cash, and guns, it should be obvious they are not going down without a fight.
A question for anyone who bought those 100-year Argentine Govt. bonds last year with the 8% coupon. How’s that working out for you?
honest money is solution, gold and silver.
free coinage by any one
separation of Deposit and Loan Banking
no fractional reserve
taxes paid only in coins gold or silver
laws to be changed only by referendum ( 99% of all eligible for change )
Can’t resist observing in passing that Argentina is just more Fed road kill. They were doing great until 1929, when the Fed started trying to put out the easy money fire they’d built in the 1920s. The Smoot Hawley idiot’s trade act subsequently brained the fledgling global recovery from our Fed’s folly and led shortly to the rise of Hitler, Mussolini and ,in 1946, Juan Peron in Argentina. In 1982, thirty six years later, Argentine’s military junta head, President Galtieri launched the Falklands War with Britain, mostly to get Argentine minds off their squalor, most of which should be placed at the feet of our helpful Fed and it’s enormously powerful and un-elected FOMC…
I can almost make the nums work if the black is assumed to be total Argentine external debt principal in K millions, USD. It was @$235B y/e 2017 and climbing@$9B/ Qtr. at that time.
Given that Argentina is just one more sign that the fractional reserve banking system is pushing the world to the breaking point, and I hope it is a given that austerity is not the solution to the fractional reserve banking issue, then what is the solution other than changing the fractional reserve system itself?