海角大神

鈥淭his country is in a boom,鈥� said the editor of a financial magazine in Buenos Aires. 鈥淓verything is going up. Everything is selling. And inflation is roaring at 25% per annum.鈥�

To hear him tell it, Argentina is everything America wishes to be. Its people shop. Its restaurants are full. Its economy is growing at more than 8% a year.

Why?

鈥淚nflation. Everyone wants to get rid of cash. You hold onto it and it鈥檚 worth less and less. So you buy an apartment.鈥�

Amazingly less than 10% of property transactions in Argentina include mortgages. People pay with cash. Still, prices are not as low as you would expect. The lot next to our office is on the market for $250,000.

鈥淚t should be about $100,000,鈥� said a friend who keeps an eye on real estate. 鈥淏ut everything is high.鈥�

The cab ride from the airport was 70 pesos when we came 4 years ago. This time it was 128 euros. Two glasses of wine at a local bar were 40 pesos. They would have been half that a few years ago.

鈥淭here鈥檚 a boom going on,鈥� continued the financial editor. 鈥淏ut it can鈥檛 go on forever. You can鈥檛 have 25% inflation and have a healthy economy. People don鈥檛 make wise investments. They just try to avoid getting ripped off by inflation. They don鈥檛 make long-term investments. They just try to park their money where it won鈥檛 disappear. That鈥檚 why real estate is so expensive. People will save their money and buy an apartment whether they need it or not. They figure it will still be there in five or ten years. The peso won鈥檛 be. At least not today鈥檚 peso.鈥�

Nor will the dollar.

------------------------------

海角大神 has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.