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Dice Have No Memory: Big Bets and Bad Economics from Paris to the Pampas by William Bonner

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Chapter 8

The Gaucho’s Guide to Investing in Argentina

Earth’s Bright Side

September 27, 2002

“Did you see the news? Argentine workers are taking over the factories. . . .”

“Yeah . . . the factory owners are probably glad to get rid of them. . . .”

Your editor was having dinner with his friend from Argentina, mentioned above.

“My brother still lives there,” the friend continued. “He said people are being forced to sell their furniture . . . even their wedding rings. Of course, it’s great if you’re a buyer.”

As you know, dear reader, here at the Daily Reckoning, we always try to look on the bright side of things. So, today, we turn away from the darkening days north of the equator and look south—where the sun shines a little brighter each and every day.

It has been a dismal season below the Rio Plata. The Argentine Bolsa has dropped 85 percent in the last five years. If that weren’t enough, the country has been in recession for the last four years—one that has been longer and deeper than the Great Depression of the 1930s . . . and worse than any downturn in the last 100 years. This year alone the national GDP is expected to decline another 16 percent.

Since January, the Argentine peso has fallen 60 percent against the dollar. So great has been the currency decline and the recession that typical monthly wages have dropped from near $1,000 at the beginning of the year to only $250 today. This places annual earnings of the average Argentine below nearly every country in Latin America. ...

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