January 23, 2020, Buenos Aires.
One year ago, my dollar would buy just under 38 Argentine pesos. Today it buys somewhere around 62 at the official rate and 80 on the black market. Argentina has undergone massive inflation and devaluation. When this happens most (but not all) people suffer. We had two examples of that today.
Much of the currency collapse happened at the end of July. Presidential elections were in October. Argentina had a lot of infrastructure projects underway, including a remodel of the Iguassu airport. When the peso collapsed international financing dried up and it became difficult for contractors to buy supplies from abroad with devalued pesos. But president Macri calculated that cutting ribbons before the election could get him reelected. So, he continued the projects and lost. Workers are at the bottom of the list when it comes to getting paid. The construction workers at Iguassu have not been paid in months. (To be fair to Macri, he did what many economists thought he should do to bring the country out of the mess it was in when he took over in 2015, but four years was not enough to turn the country around and now it is back in the arms of the neo-Pronists.)
At the hotel we heard there was a blockade at the airport. Construction workers who had not been paid were blocking vehicle access. We learned we may have to walk a mile or more with our baggage. They’d done this once before, were promised back pay, went back to work and weren’t paid. Our taxi would take us as far as he could. We set off in the rain and soon encountered a big traffic jam. Big busses were trying to do 3 (or rather 33) point turns on a narrow two-lane road made narrower by cars lined up along the right. The driver told us that the blockade was 200 meters ahead. After passing the blockade we should continue to walk until we found cabs stuck inside to take us the rest of the way.
We started trudging up the hill in the rain, dragging our bags across a muddy and slippery film of red clay covering the blacktop. When we got to the strikers’ tent blocking the road the leader told us to wait under the tent and not get wet and he would get us a car to the airport. I guess it was my white beard. He was very kind and concerned for our welfare. He didn’t like it but he had a family. He was able to direct a car through the scrum of vehicles to the tent and we were off. I wondered how he was going to handle two busloads of people, many of whom were more elderly than us, in about a half hour from the Holland America tour. Most got rides, some walked, but everyone made it to the plane.
That evening we went to a tango show. We met some friends from the ship. The dinner and show were advertised at $100 a person. At the official exchange rate that would be around 6,000 Argentine pesos. However, when the bill came it was 7,000 pesos for each person. That’s what would go on the credit card and to the credit card company that was $119. For the five of our friends that was almost US100 more than the group had planned. They asked for the manager who explained that there was the official rate, the “white market” that banks published but no one believed (except the ATM machines that dutifully exchanged our dollars at the 6000 peso rate, plus a huge commission. We got 1500 pesos, about $25. At the official rate and were charged an additional 600 pesos in bank fees!) there was the black-market rate, which more truly reflected real value of the currency and there was the blue market rate, somewhere between 70 and 75 to the dollar that most businesses informally accepted. They were giving us the best “blue market” rate at 70 and we should be happy. We were not. Our friends said that the dinner and show were advertised at $100 and their credit card was going to charge them about $119 each. The manager said that was a problem between them and the bank, that from the manager’s point of view they were giving us a good deal.
I spoke with others at the show who were also unhappy. My guess is that TripAdvisor will get a lot of poor ratings for this venue. My guess is that a number of credit card charges will get disputed. Suzi and I had to ask ourselves “is the show and dinner worth it?” The answer was yes. “If we got angry would we enjoy the show less?” The answer was yes. Don’t let inflation spoil a good show with a fine tango orchestra, dancers, a moderately famous 77 year old tango singer (Hugo Marcel if you follow the sport). Everyone on stage has it worse off than we do. We will not dispute our credit card charge.
Nobody wins with this type of currency collapse — except George Soros – who’s done quite well on a couple of them. But the folks I’m worried most about are the workers at the airport and the waiters at the show. Some folks were not adding tips onto their credit cards bills and we didn’t see a lot of cash on the tables. I left our tip in Argentine pesos — at the black-market rate.
I wrote about the situation in Argentina 5 years ago in my cruise blog. Click here,
And oh, there was an Andean pan pipe band at intermission. Suzi and I broke up laughing because it sounded exactly like the band that busked outside our office in Belgrade, they played the same songs, including a the theme from a spaghetti western, the Good the Bad and the Ugly, which was also B-92’s news theme in Belgrade, we felt right at home.
