Why Argentina Will Never Dollarize

If Argentina possessed the dedication to logic and collective will to do something so drastic, they would not be in this predicament in the first place.

By Bianca Fernet, Argentina, The Bubble:

Bianca Fernet was “born” in 2011 out of my frustration with coverage of Argentina’s economy that I felt missed the point and demonstrated a vast chasm between reality. Frankly, everyone else didn’t know what they were talking about so I felt a moral obligation to jump into the fray.

It is perceived moral obligation that has lured me back behind my cheeky pseudonym to opine on Argentina’s current economic malaise. I’m going to start with the idea that Argentina will replace the peso with the US dollar, which is making the rounds in the Wall Street Journal, this article on Forbes, and pretty much every think tank whoring themselves around for a slice of the action.

Let me be clear – anyone who holds this opinion has zero idea what they are talking about and may have never met an Argentine in their lives.

Argentina will never ever dollarize despite there being a strong economic case in favor of doing so because it is run by Argentines. If Argentina possessed the dedication to logic and collective will to do something so drastic, they would not be in this predicament in the first place. Again. Argentines are neither swayed nor convinced by strong logical cases.

To understand Argentina’s economy, you first must understand Argentines, and let’s not delude my feminist self, this means getting into the heads of Argentine men. Chalk it up to Latin passion if you want, but Argentine men make decisions based on their feelings in the moment

And listen IMF and Wall Street – we have all been there. They seem so cute with those little Italian suits and shiny shoes, with borderline mullet haircuts and just a bit of fashionable stubble. We know how you must have felt the sincerity emanating from Nicolas Dujovne’s impossibly clear blue eyes as he promised you that this time, Argentina was ready to be a grown up and make responsible economic decisions. I too may have fallen victim to Guido Sandleris’s soft golden curls while he regaled me with the promise of tight monetary policy. So we can appreciate that your head is spinning and you can’t wrap your mind around why things fell apart so fast, and how reality could possibly be something so totally different than what you perceived.

But listen Wall Street, rather than turn to a bunch of grumpy opinion shills who make their livings pontificating about countries they’ve visited maybe a few times, in this instance you have a veritable gold mine of insight at your fingertips. Reach out to someone who actually understands Argentine men. The IMF and Wall Street should seek the council of women who have fallen prey to dating one or more Argentines.

I moved to Buenos Aires in my 20s, where I was surrounded by a group of dynamic, brilliant, cosmopolitan women, each living in Argentina for her version of Santi or Nico or Guille or Fede or Martin. Zero of these women are still here, because once you’ve known a handful or so of Argentine men you realize a few things.

Your exotic Argentine novio may be cute in your 20’s, but unless you want to age prematurely from anxiety born out of suppressing rage and interpreting erratic and ultimately illogical behavior, it’s time to grow up and move on. At the end of the day, that’s just how Argentine men behave in both life and economic decision making.

Every Argentine will tell you that he’s different, and he’s not really like other Argentines.  Many will claim to not even be from Argentina, and rather insist they are in fact European. I am willing to wager that the best way to identify an Argentine in the wild is their insistence that they are not Argentine.

When Macri’s administration came to Wall Street promising change and reform, he believed himself to be capable of engineering an economic about face. But it’s not the economy, stupid, it’s the culture. Argentina’s proclivity to over-borrow, over-spend, and then act like bewildered victims of some complex plot has nothing to do with the economic theory. All the austerity in the world is not going to magically transform Argentines into logical decision makers.

So to the IMF and Wall Street, let me offer you a jewel of wisdom. Think of the current administration and Alberto Fernandez as your versions of Fede, Martin, and Nico. When he says he loves you will pay back loans and not enact currency controls, he’s not lying – exactly. He’s simply Argentine, and thus bewilderingly capable of holding multiple opposing and incompatible ideas in his head, and simultaneously believing they are all true.

Argentina is on an inevitable path back to currency controls. Argentina will never dollarize. And Nico does love you, he just loves himself more. Just remember that Argentine promises – like a juicy cut of steak – are best consumed with a healthy pinch of salt. By Bianca Fernet, Argentina, The Bubble.

They had it coming. Read…  Brain-Dead Investors Get Crapped on Again by Argentina

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  44 comments for “Why Argentina Will Never Dollarize

  1. Crazy Chester
    Sep 11, 2019 at 2:28 pm

    Ah, Bianca. Tell me more! But first, let’s dance.

    • Joan of Arc
      Sep 11, 2019 at 6:02 pm

      See, that’s what Bianca was trying to tell you. Dance first and then pass out on the floor full of wine for the 2nd encore. Oh Argentina, the days of the roaring 1920s with the likes of Carlos Gardel, the actor and tango singer,…and Luis Angel Firpo, who fought Jack Dempsey for the heavyweight championship title at the Polo Grounds in NYC in 1923 and retired a multi millionaire are long gone.

  2. 2banana
    Sep 11, 2019 at 2:32 pm

    So basically, bigger and bigger government, more and more taxes, higher and higher deficits leads, eventually, to misery, ruin and bankruptcy.

    And men acting illogical and not wanting to grow up.

    Maybe one day, someone, somewhere will try smaller government, lower taxes and a budget that actually lives within it tax collections means.

    I know. Hard to buy votes that way and make things more “fair.” Plus it would racist, misogynistic, homophobic and probably a bunch more -isms.

    • Dave B.
      Sep 13, 2019 at 6:33 am

      That would make sense………….. Never happen with the Puppets in control !

  3. raxadian
    Sep 11, 2019 at 2:53 pm

    The 90s was the closest Argentina came to dollarise, but instead they had a fixed parity with the dollar, one peso = one dollar.

    There are several books out there about what happened, even a few documentaries. So look them up.

    Argentina doesn’t have a clue of what to do with “Inflation” and they think their peso is worthless and get dollars when they can. Wanna buy a house or a car there? Good luck getting it in pesos.

    Even right now when the current government could force people to buy cars and houses in pesos, because they are leaving in December so who cares? They flailed like wet noodles and are gonna let houses be bought in dollars.

    That also includes the nasty habit, that comes from the start of the country over 200 years ago, of borrowing money just because they can no matter what.

    And of course the more money they borrow; the less the peso us worth; the more Argentines want to get dollars.

    Is basically a never ending story.

  4. robert scheetz
    Sep 11, 2019 at 2:59 pm

    And the lovely CFK? Hebe Bonafini? …Isabelita? Is it at all conceivable your gender are less than angels?

    • KFritz
      Sep 11, 2019 at 3:05 pm

      Here’s an indirect answer. Argentine men are reared entirely by their fathers after the age of 5. Their mothers have no input into their character.

  5. robt
    Sep 11, 2019 at 3:24 pm

    Black market dollar use is de facto dollarization, no matter what a country’s government pretends.

    • char
      Sep 11, 2019 at 8:07 pm

      Not really. The big purchases are in dollars but the daily costs are in peso. Makes a big difference for a country without stable dollar export income

      • robt
        Sep 12, 2019 at 8:29 am

        Just don’t get your pesos from the bank … , but then, that’s what the black market is all about.

  6. Norma Lacy
    Sep 11, 2019 at 3:36 pm

    Well said Bianca. Tell me what you think of Cristina? And BTW, Macri must have some very very pretty blues eyes to get the clothes horse from IMF to tumble. Of course, at the time, he was O’Bomber’s golf buddy.
    I’m sure that helped.

  7. David Hall
    Sep 11, 2019 at 3:43 pm

    In the 1960’s my dad was with the Air Force in SE Asia. I was in second grade. I got a 25 cent weekly allowance. A Hershey chocolate bar cost five cents back then.

    Recently I took a photo of convenience store Hershey bars 10 for $10.

    Argentina might need a better form of fiscal policy. People are earning more dollars, but the price of a home is rising.

  8. Sep 11, 2019 at 4:50 pm

    Bianca
    Terrific info and a fun read.

    • Bianca Fernet
      Sep 12, 2019 at 8:34 am

      Thanks Bob! I had fun writing it!

  9. Old Engineer
    Sep 11, 2019 at 5:22 pm

    An amusing and accurate assessment of Argentine culture but is the culture really that much different that the present cultures in the U.S. and U.K.? Cynical, self-serving, and frequently deluded to the point not just of national destruction but of self destruction as well?
    I think your otherwise excellent article is inaccurate in ints implication that this culture of self delusion is all that different than ours.

    • Bianca Fernet
      Sep 12, 2019 at 8:38 am

      Hi Old Engineer!

      Actually I think that Donald Trump very much resembles Juan Peron. Populism does bad things to a society and that ours is going the way of Argentina. I just thought it would be a spot of fun to point out that Argentina is not going to import self restraint in the form of someone else’s currency. Also and actually as an economist, I don’t think that they should, but the point of this article was to give folks a smile and also teach interested parties that they can feel free to ignore the “Shold Argentina Dollarize?” articles.

      Love,
      Bianca

  10. Michael Gorback
    Sep 11, 2019 at 5:33 pm

    I’m a US citizen born and bred. I don’t want to dollarize either.

    Got gold?

  11. Javert Chip
    Sep 11, 2019 at 8:25 pm

    So I read thru Bianca Fernet’s (whomever, whatever that is) drivel about (perceived) Latin lovers plus other psycho-gunk, and I’m still no closer to enlightenment regarding why Argentina won’t dollarize. The author doesn’t even define “dollarize”. For the record: the Argentina peso was “pegged” to the US dollar from 1991-2002.

    Simply put, Argentina doesn’t have a culture allowing it to behave as an “adult”. One of the most beautiful & formerly wealthy countries in the world, and their dictators, or latest Army junta, stays up late figuring out how to screw things up.

    Sounds like it’s about time to whip up patriotism by another run at the Malvinas (aka Falkland Islands, which Argentina has never occupied or owned).

    My grandkids could write a more cogent article.

    • 2banana
      Sep 11, 2019 at 8:35 pm

      The 1980s called. They want their junta back.

    • Sep 11, 2019 at 11:54 pm

      Javert Chip,

      Dollarize would mean abandoning the peso. Panama has dollarized, and its local paper money is US currency (they do have coins).

      A peg is very different. You maintain your currency but you try to manipulate its value to remain at a fixed exchange rate. A peg can be broken, as Argentina has shown. If Argentina dollarizes, it would no longer have a currency of its own, meaning no money printing, no paying for things with freshly printed currency, no borrowing in its own currency, no monetary policy… This is forced discipline. And it cannot be broken.

    • p coyle
      Sep 13, 2019 at 12:57 am

      i, for one, wholeheartedly encourage you to enlist your grandkids to produce a “more cogent article.” if one of them does, perhaps wolf will post it.

    • Dave Chapman
      Sep 14, 2019 at 12:32 pm

      Javert Chip – Dollarize means that they no longer have “Pesos”. It means that, when you go to the grocery store, they expect to be paid with paper that says “Federal Reserve Note” and “E Pluribus Unum”. You would then receive change in US dollars.

      Many islands in the Caribbean are on this system.

      Dollarization is serious because the people hold physical dollars, which means that it becomes difficult for the government de jure to go back to a “local currency” system.

      And yes, no way Argentina is going to dollarize.

  12. bungee
    Sep 11, 2019 at 8:42 pm

    The average argentine male is not going to be deciding anything…unless it is to use his surplus earnings to purchase physical gold in which case he jas chosen wisely. Argentina will peg to the dollar if they have to. But so far the world has lent them money so whats the hurry? Zimbabwe had no intention of “dollarizing”… But they had to. Bankers don’t act in the heat of the moment with crazed passion no matter what their nationality. And if they do then decisions are forced upon them.

  13. d
    Sep 11, 2019 at 10:24 pm

    Bianca

    you need to take off your stilettos and explain fairly, how only the men of Argentina are responsible, when the devils handmaiden

    https://en.wikipedia.org/wiki/Cristina_Fern%C3%A1ndez_de_Kirchner

    Ran Argentina further into the ground than ever, with and after her husband.

    It is the threat of her return. ln a possibly diminished capacity, if not as puppet master, that has prompted the current financial terror in Argentina.

    As anybody who can, is sprinting of the exits, with all the FX or assets they can muster, in hand.

    Fairly should not the “Argentine man” you write of be the “Peronist leftist” which includes among others, Evita??

    You are always enjoyable to read but your return is indicative of another period of financial anguish with much pain for the ordinary peopel of Argentina.

    Leftists in Argentina remind me of. iranian, ayatollahs, mullahs, and their supporters, you know they are lying, when their lips are moving.

    • Bianca Fernet
      Sep 15, 2019 at 4:16 pm

      Don’t worry, d.

      As soon as Cristina is (vice) president, I plan to write about what it’s like to be married to an Argentine.

      I am equal opportunity hilarious

      • d
        Sep 16, 2019 at 8:26 am

  14. van_down_by_river
    Sep 11, 2019 at 10:35 pm

    Meanwhile the U.S. is on a path to peso-ization (or perhaps cruzeiro-ization, or Zimbabwe-ization)

    Our leaders sold the country for a minimal short term gain, will be so happy to get our of this place.

  15. Klaus Kastner
    Sep 12, 2019 at 12:49 am

    Can anyone imagine an Argentina without a currency which it can print on its own?

  16. Old-school
    Sep 12, 2019 at 3:21 am

    I stole it but ‘every woman is looking for the perfect man to change’.

  17. Old-school
    Sep 12, 2019 at 3:27 am

    I like Stockman’s analogy that a free enterprise system is like the old style watch with a lot of fine movements that over time make society richer by 2 or 3% every year. It doesn’t take too much mucking around by politicians to screw up the wealth creation machine. If society is getting poorer you know a politician has been ‘fixing’ the watch.

    • fajensen
      Sep 12, 2019 at 5:00 am

      What, then, do we make of people like Boston Consulting Group (a private company) and McKinsey (another private company) advising politicians on how to screw up the ‘wealth creation machine’ more effectively than they would be able to do on their own initiative?

      Or central banks? Totally private enterprises running everything into the ground with ZIRP and NIRP stupidity?

      • Old-school
        Sep 12, 2019 at 5:59 am

        The central bank is just an agent of Congress. They created it; they could eliminate it. It is there to allow Congress to have a welfare and warfare state. It would be impossible without it. Funding would have to be done with honest taxes which gets politicians kicked out. Better to use a central bank to slip the resources from the public by deception.

      • Petunia
        Sep 12, 2019 at 8:23 am

        You left out Bain, Romney’s playground. All these management consulting groups are really undercover hedge funds.

        • p coyle
          Sep 13, 2019 at 1:13 am

          every time i hear tales of bain capital’s malfeasance, i can only be reminded of rMoney’s dog, strapped to the roof of the family car, cuz vacation.

  18. QQQBall
    Sep 12, 2019 at 7:36 am

    Turn off the credit spigot to Argentina?

  19. plata
    Sep 12, 2019 at 11:34 am

    I love Argentina. And I’ve been there many times. BA has the feel of Paris in the 50s ( I was born in the 70s, mind you).
    But there’s a brain disease in there. A form of Socialism mixed with its twin Corruption. Spend and spend and take the savers the prudents the entrepeneurs money away. All in the name of Good.
    And stash it abroad or in land or in Gold somewhere (though technically argent/argentina means silver), to become fabulously rich while your electors lose it all. It’s the African model of sorts.
    It will never be a shithole though.
    We love it.

  20. Sep 12, 2019 at 12:38 pm

    Manuel Puig

  21. BearDawg
    Sep 12, 2019 at 2:57 pm

    Thought provoking article which, in my feeble mind, equates “leadership of the day” in Argentina to USA Fed govt (and some state govts) kicking the can with uncapped borrowing to avoid making actual payments on debt. Argentina has completed this cycle 2 or 3 times already ? No wars / killing, no one loses food/clothing/shelter. Some say Dubya, then BO and now Trump, all pawns (along with congress) care not about the debt – why worry – there may be some lifestyle changes, but in the end, everyone gets their daily bread.

  22. Don Rogelio de La Pampa
    Sep 12, 2019 at 3:30 pm

    That article was a fun read. It reminds me of my Argentine wife. She claims that by the time she was 10 years old, she swore that no matter what, she’d never marry an Argentine.

  23. Mean Chicken
    Sep 13, 2019 at 2:19 pm

    We’ve been heading the same direction. I still cannot locate a decent gas can to refuel my yard machines since our 44th president took office.

    • Raymond Rogers
      Sep 18, 2019 at 2:18 am

      You have to buy the conversion kits that come with the plug and the old spigot.

      Whoever thought that idiocy was a good idea, along with less efficient freon is a grade A moron.

  24. Harvey Cotton
    Sep 14, 2019 at 1:35 am

    Forgive me, but I do not get the meaning of this nom de plume.

    • Sep 14, 2019 at 1:38 am

      Fernet is an Argentine (Italian) drink. Particularly Fernet-Branca, hence Bianca Fernet.

  25. Raymond Rogers
    Sep 18, 2019 at 2:15 am

    Why should they be responsible when idiots are so willing to lend to them time and time again?

Comments are closed.