ITS HARD TO FIND A COLLECTOR...THE BUYERS JUST WANTS TO BUY cheap.

 

Seems it does not make sense to keep money on the bank. Banks will just close like in Cyprus to prevent a bank run.

Much to my surprise, what we had in 2001, which was globally criticized (first of all by us, obviously ) repeated later in other parts of the world.

I believed that our messy system was close to unique.

 

Can you give us your personal account of how that affected you, how it was handled and how it was resolved?

 

Can you give us your personal account of how that affected you, how it was handled and how it was resolved?

By 1999 the inflation rate was extremely high. The (initially successful) solution to that was to tie somehow our peso to the US dollar, by decree, making the exchange rate 1:1. We call that period "el uno a uno".

It activated the economy and created a national feeling of confidence and I would add, real relief.

The whole thing worked for many years but for reasons I actually do not recall in detail, on 2000 the economy started to deteriorate. The big investors started to bring their money out of the system.

I believe that the most basic mistake probably was to insist in the recipe that 10 years before cured the problem. For exports the rate was not competitive.

Instead of gradually open it up, the government insisted until December 2001 when, in the middle of extreme social / political turmoil the restriction to dispose freely of the money in the bank was decided. (And yes, on the 21st (?) the President resigned).

In less than 12 hours the rate went from1:1 to 1:3!! That day, the banks remained open until 18.00 hours. Imagine foreigners coming here trying to exchange their dollars...

In fact, three things happened that affected common people in different ways:

You were allowed to withdraw a certain amount of pesos per day no matter how much you had in your account.

For those with accounts in USD, it was not possible to withdraw them in actual notes and it was told that the actual new rate would be not honored even if taking pesos instead of USD. Go figure.

Finally, what added to the confusion inside the banks was the people that was not used (or even did not know how) to use debit cards. Like me, lot of people always paid everything in cash.
Just for you to know I never had (yes, never) credit card and my debit cards (two) I used them just to know about my saving accounts.

Sure there was people using credit cards (LOT of them, of course) as everywhere around the world but they had different problems...

Since my previous financial situation was not good, I had little money in the bank.

So, after three months we had: people very happy because the exports skyrocketed in 1 or 2 months after the crisis. Myself I started to work crazily (vessels, always vessels).

Lot of jobless in other areas.

Many hundred thousands of account holders that never recovered their USD but a ridiculous amount in local currency.

The restriction, called "corralito" (little corral ), lasted until somewhere in 2002.

If I am still around, in 10 years time I will tell you about our current situation. Sure it will be in another thread.

Had I told the above in Spanish I could have made it in a more colorful way but I would be banned on the spot.

 

Muchas gracias Agustín.

I would be happy to hear the Spanish version. I can read Spanish. You can send it to me via pm.

 

Similar to Brazil in the 90s. http://en.wikipedia.org/wiki/Plano_Collor

It affected people badly I heard.
The worst was when the gov decided to freeze saving accounts. People who sold their house for example and all their money on the bank lost everything from one day to another. People commited suicide.

But Brazilians did not revolt. I heard in Argentina people were less calm...

 

Similar to Brazil in the 90s. http://en.wikipedia.org/wiki/Plano_Collor

It affected people badly I heard.
The worst was when the gov decided to freeze saving accounts. People who sold their house for example and all their money on the bank lost everything from one day to another. People commited suicide.

But Brazilians did not revolt. I heard in Argentina people were less calm...

I entered port (Santos maybe) the very first day of that. The same mess with a mix of uncertainity, anger and dissapointment.

No matter what, money, in the end, is paper (or its horrible equivalent, virtual something) and you loose.

I always felt of all this as a wheel spinning very fast. The day anything / anyone stops it, all aboard go overboard. And the weakest are the loosing ones.

Tell me about being optimistic.... Sorry.