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Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria Message Board

  • stotwx stotwx May 8, 2012 1:56 PM Flag

    argentina stability

    in a perverse way, argentina seems stable and controlled in comparison to european politics...anyone know if argentine peso is traded internationally?

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    • Are you crazy? Argentina looks as stable as Italy in the 30's with Mussolini. It has the appearance of stability, but it is totally unstable and rotten from inside.

      Maybe that will happen to Europe again, on a worst case scenario. Argentina went though severe economic crisis and after a while people get tired of all the arguing of democracy, and they just want a strong leader to get the country out of the mess.

      People in Latin America are very familiar to those things. Democracy degenerates to shouting and confusion and then some ruthless and corrupt leader the lead from some point on. If it does not work, another one comes with even crazier plans. If it does work, he and his family will be on power until they all die out or another economic collapse comes and the people kill the guy.

      These leaders set the countries usually on an unsustainable path, because in order to increase their power they have to engage in economic populism.

      At this stage Argentinian government could seize pretty much any asset they want, and the only reason they leave Cresud and others alone is because it suits them, they bring immense wealth to Argentina, which without its farmland produce would be a very poor country.

      That wealth is seized by the government at rates as high as 50% for soybeans. Marginal tax rates go as high as 95%. That means, if prices would keep going up, even if it is due to inflation, all the production would be taxed in 95%, practically a confiscation.

    • I have been long CRESY for the past 3 years or so. To me it was a pure farmland value play. I sold all my holdings after reading the April 23 Seeking Alpha article about Argentina stability. One can only guess what might happen if the government decides to nationalize more companies. They can't borrow internationally, so what other options do they have?

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