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By Alan Beattie.
PART ONE
Everyone remembers the world-changing events of the morning of September 11, 2001. Everyone remembers the planes commandeered by terrorists slamming into the twin towers of the Centro Mundial de Comercio in Buenos Aires. As the richest country on earth and the modern world’s first global hyperpower, Argentina was a prime target for malcontents revolting against the might of the western capitalist order.
Fewer recall the disaster that befell the United States of America three months later. Fewer recall the wrenching moment when the US federal government, crushed by the huge debts it had run up borrowing abroad in pesos, announced it was bankrupt. The economic implosion that followed, in which thousands of jobless, homeless Americans slept rough and picked through trash tips at night in Central Park, shocked only those still used to thinking of the US as a first-world country.
Well, no. It happened the other way round. But that was not inevitable. And the crisis that has hit the US – and then the entire global financial system, threatening to plunge the world into another Great Depression – should be a warning. The US could have gone the way of Argentina. It could still go that way, if the painfully learnt lessons of the past are forgotten.
A short century ago the US and Argentina were rivals. Both were riding the first wave of globalisation at the turn of the 20th century. Both were young, dynamic nations with fertile farmlands and confident exporters. Both brought the beef of the New World to the tables of their European colonial forebears. Before the Great Depression of the 1930s, Argentina was among the 10 richest economies in the world. The millions of emigrant Italians and Irish fleeing poverty at the end of the 19th century were torn between the two: Buenos Aires or New York? The pampas or the prairie?
A hundred years later there was no choice at all. One had gone on to be among the most successful economies ever. The other was a broken husk.
There was no individual event at which Argentina’s path was set on a permanent divergence from that of the United States of America. But there was a series of mistakes and missteps that fit a general pattern. The countries were dealt quite similar hands but played them very differently. The similarities between the two in the second half of the 19th century, and in fact up to 1939, were neither fictional nor superficial. The “lords of the pampas” – young Argentines strutting the salons of Europe between the wars – pop up in accounts of the time as an equally prominent type as the swaggering Americans playing at European decadence in Berlin and Paris.
For a long while the two countries were on parallel paths. The states that later became the US declared independence in 1776 and became a new nation in 1789. The vice-royalty of Argentina, part of the Spanish empire, was overthrown in 1810 by rebels inspired by the American revolution; in 1816, Argentina became an independent republic.
Both faced an internal struggle between those that wanted a centralised nation and those that wanted power reserved for the individual states or provinces. In the US, the separate colonies had existed long before the idea of uniting them and it was not guaranteed that a republic would succeed. The negotiations that led to the writing of the constitution were tortuous and often bad-tempered, and the different denominations, traditions and constitutions of the previous colonies all too evident. Only five of the 13 founding colonies, later states, even bothered turning up to the first drafting meeting, in 1786. Battles had to be fought to make flesh the national motto “E pluribus unum” (“out of many, one”). That motto appears today on US coins, but at the time of independence in 1789 dozens of different currencies were circulating. A national bank and a single “national debt” – making the federal government responsible for the debts of the states – were not created without fierce opposition.
In Argentina, it took decades of struggle before a constitution was adopted in 1853 with a system of sharing tax revenue between the centre and the provinces. But continual tensions were not settled until the suppression of an armed uprising in the province of Buenos Aires in 1880, handing more power to the centre. Domingo Sarmiento, who had tried to forge Argentine national unity while president between 1868 and 1874, said he would settle for an Argentina whose inhabitants were not killing each other.
On the face of it the economies of the two countries also looked similar: agrarian nations pushing settlement westwards into a wilderness of temperate grasslands. In both nations, the frontier rancher – the gaucho and the cowboy – was elevated into a national symbol of courage and independence. But there were big disparities in the way this happened. America chose a path that parcelled out new land to individuals and families; Argentina delivered it into the hands of a few rich landowners.
From the founding of the colonies, America was fortunate to have imported many of the farming practices of northern Europe. The farmers of “New England” came largely from Britain, Germany and the Netherlands, bringing with them the tradition of skilled farmers on small homesteads. Argentina, by contrast, had a history of a few rich landowners on great estates left by the Spanish and the aristocratic elitism that came with it. It also had a labour shortage. Mass immigration to Argentina came later in the 19th century, but the country had to push forward its frontier with a skeleton staff.
Both countries opened up the west, the US to the Pacific and the Argentines to the Andes, but not in the same way. America favoured squatters: Argentina backed landlords. Short of cash, Buenos Aires found the best way to encourage settlers was to sell in advance large plots in areas yet to be seized from the native Americans. But once the battles were won the victors were exhausted, good farm labourers in short supply and the distances from the eastern seaboard to the frontier vast. Most of the new landowners simply encircled wide tracts of grassland with barbed-wire fences and turned them over to pasture.
Thus was privilege reinforced. European emigrants to Argentina had escaped a landowning aristocracy, only to recreate it in the New World. The similarities were more than superficial. In the 1860s and 1870s, the landowners regarded rural life and the actual practice of agriculture with disdain. Many lived refined, deracinated lives in the cities, spending their time immersed in European literature and music. The closest they came to celebrating country life was elevating polo, an aristocratised version of a rural pursuit, to a symbol of Argentine athletic elegance. Even then it took an elite form: the famous Jockey Club of Buenos Aires. By the end of the 19th century some were sending their sons to Eton.
America’s move westwards was more democratic. The government encouraged a system of smaller family holdings. Even when it did sell off large tracts of land, the potential for a powerful landowning class to emerge was limited. Squatters who seized family-sized patches of soil had their claims acknowledged. US cattle ranchers did not spend much time boning up on the entrance requirements of elite English schools. And as well as raising cattle, the western settlers grew wheat and corn. By the 1850s, the US was importing a quarter of a million immigrants a year.
Immigrants came to Argentina as well, but they came later and with fewer skills – largely low-skilled Italians and Irish. In 1914, a third of Argentina’s population was still illiterate. America imported the special forces of British agriculture, and in addition a large number of literate, skilled workers in cloth and other manufactures. Meanwhile, Argentina had more land than it could efficiently work. But it was well into the 20th century before the rot in the foundations was apparent.
. . .
Hyperbole about the “unprecedented” nature of the 21st century globalised economy is misplaced. There was huge integration in markets for goods, capital and (particularly) people during the first “Golden Age” of globalisation, roughly dating from 1880 to 1914. Peace in Europe coincided with the growth of cities and with them urban consumers. A global trading system swiftly developed as transport costs dropped sharply.
It was a great time to be a New World farmer. A canning industry already existed, having been boosted by the need to provision soldiers in the American civil war. Canning was supplemented by other new industrial processes such as freezing and refrigerating meat. American and Argentine farmers saw the markets of Europe open wide and clear in front of them.
Production expanded massively. Fresh American beef appeared with frequency on the tables of Europe. Established supply chains meant that concentrating output in a few areas such as cattle and wheat seemed the logical thing to do. By the end of the 19th century Argentina’s economy, per head of population, was higher than that of France and a third higher than Italy’s. The export boom could have kept Argentina up in the pack, but much of the money was captured by landowners who generally either spent it on imported consumer goods or bought more land with it.
Economies rarely get rich on agriculture alone and Britain had shown the world the next stage, industrialisation. America grasped that building a manufacturing industry would allow it to benefit from better technologies, while trying to squeeze a little more grain out of the same fields would not. It was not as if Argentina consciously rejected the same course. It could scarcely avoid growing its own manufacturing industry. But when industrialisation did come, prevailing prejudices ensured it was limited and late. Argentina’s elites saw no reason to risk their status and livelihoods in the fickle new sphere and anyway there were not enough new workers to fill the factories. Argentina brought the same tendencies that it had to the ossified agricultural sector, preferring cosy, safe monopolies to the brutal riskiness of competition. Its wellbeing rested on farm prices holding their own against the prices of manufactured goods, and on global markets remaining open.
The 20th century was a time of markets opened and snatched away, a time that rewarded rapid reactions to unprecedented events. An economy like America’s, with a nimble industrial sector, was well placed to take advantage. An economy like Argentina’s, grown fat and complacent, endlessly borrowing foreign money to pump out grain and corned beef to foreign markets, was not. The Great Depression after 1929 drove a wedge between the two countries that would later cleave into a gulf between democracy and dictatorship. Between 1880 and 1914, the US political system was reacting to change and addressing at least some of the demands of the discontented. But Argentine politics remained dominated by a small, self-perpetuating elite.
Franklin Delano Roosevelt, elected president amidst crisis and despair in 1932, took few chances. He saw that reform was needed and met the Depression head-on with the New Deal, a somewhat experimental set of policies distinctly at odds with the hands-off doctrine of the Golden Age. It was not until the build-up to war in 1939 revived demand for factory output that the economy truly recovered. But the political impact of the federal government’s efforts was undoubtedly felt. The system was capable of absorbing new ideas. The system could renew itself. The system did not crash.
By contrast, Argentina suffered a deep crisis that ran throughout its narrow political class. With a pathological dislike of anything that smacked of socialism, it appeared paralysed by the slump. Exports of beef and wheat were particularly hard hit – by the end of the 1920s, meat exports to continental Europe had fallen by more than two-thirds from their level in 1924.
End of Part ONE, see the rest on Part TWO,......
The Depression brought FDR and a more active federal government to the US. To Argentina it brought dictatorship. Nationalism and self-sufficiency became attractive; hapless democratic governments passing power ineffectually between each other did not. The man who came to embody the new doctrine, Juan Perón, was one of the leaders of a military coup in 1943. He became president in 1946 and projected an assertive, disciplined nationalism. He encouraged a cult of personality and urged Nazi-style economic self-sufficiency and “corporatism” – a strong government, organised labour and industrial conglomerates jointly directing and managing growth. These ideas came to the US, too, but few took them seriously.
Argentina believed that its travails had been caused by becoming an economic colony – exporting low-value commodities and importing higher-value manufactured goods. There was some truth in this, but the solution, to industrialise at the cost of cutting off the economy from the rest of the world, was not the right answer.
. . .
In 1944, a meeting at Bretton Woods, New Hampshire, created the eponymous system of fixed exchange rates and controls on capital. The footloose money of speculators was to be subordinated to the production of real goods and services. To oversee the system, the conference created the International Monetary Fund. The US and the Europeans also began talks to reduce trade barriers, to undo the panicked protectionism of the Depression.
Argentina headed blindly off in the other direction, rejecting the tenets of open trade. Perón referred to foreign capital as an “imperialist agent”. Rather than face its own problems, the elastic Argentine sense of victimhood stretched to include other, successful economies. Argentina’s obsession with itself was shared by few. Once the US was satisfied that Argentina was unlikely to ally itself with the Soviet Union, it turned its attention to preventing other Latin American states doing so.
The US had emerged from the second world war with both moral and financial credit from Europe. For the next 30 years the US economy was raised by the tide of trade, technology and growth that lifted all the western European countries together. Some referred to the three decades after 1945 as the second Golden Age. The world economy was less integrated than during the first, but the benefits of growth were more widely and sustainably spread.
Meanwhile, Argentina pursued industrialisation within one country. Tariffs averaged 84 per cent in the early 1960s, at a time when barriers between many advanced countries were being reduced towards single figures. It also taxed exports: Argentina had been one of the most open economies in the world in the late 19th century, but now its exports shrank to equal just 2 per cent of its national income. In the US, by 1970, the equivalent figure was nearly 10 per cent and rising fast.
Peronism endured, and indeed endures: Argentina’s current president calls herself a Peronist, and so did her predecessor, who happens to be her husband. One reason is that, in a limited way and under its own distorted terms, it succeeded. The state had become strong. The government owned and ran not just natural monopolies such as water and electricity but anything that looked big and strategic – steel, chemicals, car factories. The economy did industrialise. But it was still falling behind. In 1950 Argentine income per head was twice that of Spain, its former coloniser. By 1975 the average Spaniard was richer than the average Argentine. Argentines were almost three times richer than Japanese in the 1950s; by the early 1980s the ratio had been reversed. Argentina’s was a fragile and superficial progress that masked relative decline.
Since exports had been discouraged, Argentina again and again ran into balance of payments problems. Though Perón was forced out in 1955 (he would later return), Peronism survived. The lavish promises of social welfare made by Perón to the urban workers meant that the government was often in deficit. And when the stability of the Bretton Woods system broke down in the early 1970s as even the US struggled to make its budget balance, Argentina’s defining trait came to the fore. Argentines might not have known how to build, but they most certainly knew how to borrow.
No countries except net exporters of oil did well in the 1970s. Even America had double-digit inflation, but at least it could continue to borrow in dollars. The pretence that Argentina was still a first-world country should have disintegrated in the 1970s, when swelling oil prices and economic dislocation battered even seaworthy governments, and Argentina was thrown repeatedly on to the rocks. In rich countries, the 1970s generally presaged a move to more free-market administrations and policies, as faith in the ability of governments to guide the economy disappeared. In the US, this eventually meant appointing the tough-minded Paul Volcker as chairman of the Federal Reserve. The advanced countries experienced strikes, demonstrations and petrol shortages, but they survived and stabilised.
Argentina slid instead towards military dictatorship. An army junta took over in an out-and-out coup in 1976, just as the White House was again changing hands peacefully and constitutionally. After the disastrous misadventure of seizing the symbolic but economically worthless Falkland Islands from the British, the junta too collapsed.
A “lost decade” of stagnation and strife followed. Hyperinflation wiped out the value of lifetime savings in a few months. Osvaldo Soriano, an Argentine author, writing in 1989, noted that during the time it took him to type the piece, the price of the cigarette that he was smoking went from 11 to 14 australes (a new currency that lasted a matter of weeks).
. . .
In the 1990s, many fragmented markets around the world once more dissolved into one. Like the Golden Age of the late 19th century, the lurch forward of globalisation was helped by a shove from new technology, this time in information and telecommunications rather than ships and railways. As in the Golden Age, the US and Argentina were both leaders of the charge. And as before, the US weathered the storms of change while Argentina, having promised a heroic rise, once again succumbed to a fatal flaw.
On this occasion the hubris was embodied in the government of Carlos Menem. Although from a Peronist background, Menem edged away from economic isolationism, deciding there was one useful thing Argentina could import from America: credibility. He linked the Argentine peso irrevocably, or so the intention was, to the US dollar. This was a high-risk course. Argentina had got used to printing as much domestic currency as it liked. It now had to earn dollars with an economy that had forgotten how to export. It also required public spending to be controlled. It required, in fact, Argentina to stop acting like Argentina.
For a while, it seemed to work. Inflation dropped and the economy stabilised. The IMF, desperate to find a model globaliser to parade to the developing world, unwisely began touting Argentina as an exemplar. But once again Argentina proved a delinquent, better at borrowing than earning. As capital markets dried up after 1998 investors started pulling dollars out of the country and so the supply of pesos had to fall too. In countries that controlled their own currencies, like the US, the severity of the worldwide economic slowdown in 2001 could be minimised by rapid cuts in interest rates, the price of money. The US Federal Reserve slashed the cost of borrowing in 2001, ensuring that the American economy would endure only a brief recession despite huge falls in the inflated share prices of technology companies.
In Argentina, a shortage of dollars in its reserves drove up interest rates to punishingly high levels, crushing businesses and bankrupting families. In December 2001 the IMF pulled the plug, forcing Argentina into the largest government bankruptcy in history. Income per head dropped by nearly a quarter in three years. Five presidents came and went within two weeks. The country became a laughing stock.
Yet at dozens of different points over the previous two centuries it could have been the other way round. In fact, it still could. During the second Golden Age of globalisation, the US too was not immune from the deception that everything was fine as long as it could keep borrowing. Throughout the 1990s and 2000s the American economy ran an ever larger trade deficit, financed by borrowing from abroad. But what sparked the financial crisis in the US was the way that borrowing was being financed domestically. Decades of deregulation had produced ways of borrowing and new financial assets so complex that not even the banks that sold them really understood what they were doing. Critics were dismissed as doom-mongers and a property bubble was allowed to inflate absurdly. Mortgages were extended to people with bad credit histories – the Argentines of the US housing market.
If the US fails to recognise the flaws and correct them, as it painfully learnt to do in the Great Depression, the trajectory of its future wealth and power will be lowered. Its rise was not preordained, and neither is its continued pre-eminence.
Argentina, meanwhile, remained true to form. Having initially announced with familiar hubris that the country would be unaffected, its government decided that a good way to deal with the loss of investor confidence would be to appropriate the country’s private pensions.
All in all, it would be wise to keep betting on the US finding the right way out of the financial crisis and Argentina continuing to harm itself. Of the two great hopes of the western hemisphere in the late 19th century, one succeeded and the other stalled in the 20th. It was history and choice, not fate, that determined which became which. It is history and choice that will determine which is which in a century’s time.
Alan Beattie is the FT’s world trade editor
This is an edited extract from ‘False Economy: A Surprising Economic History of the World’ by Alan Beattie, published next month by Viking, £20. To buy the book for £16 call the FT ordering service on 0870 429 5884 or go to www.ft.com/bookshop
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Getting updated with work on line as well as getting ready for several days of walking around Cordoba and La Canada, looking for arts and antiques, as well as cultural and museum events, everything is looking good and should be fun!
Meantime, ...............
Read daily Up Dates on Art and Antiques for Buenos Aires, Argentina http://www.frassinetti.biz
Argentina also exports antiques over 100 years old with the help of Bob Frassinetti Read all about the South of South America, Argentina, Chile and Uruguay on this link.
Updated and new web site, The Buenos Aires Toy Museum, Argentina www.the-ba-toymuseum.com
Chat some more soon, ................................ Bob Frassinetti.
Posted by smeddum on February 5, 2009
Can Countries Really Go Bankrupt?
By SPIEGEL Staff
30/1/09
The bailout packages aimed at shoring up financial markets in Europe are getting increasingly expensive. A creeping depreciation of currency is inevitable and state bankruptcies can no longer be ruled out. Could the euro zone also fall victim to the global financial crisis?
“There’s a rumor going around that states cannot go bankrupt,” German Chancellor Angela Merkel said recently at a private bank event in Frankfurt. “This rumor is not true.”
Of course she’s right. Countries can go bankrupt if they allow their deficit spending to spin out of control and are no longer able to service their interest payments. Merkel’s comments can be read as a warning that countries need to keep their deficit spending in check. The message is: If governments go too far in trying to bail out companies and the economy, they could face insolvency themselves.
REUTERS
Great Britain is on the brink of financial ruin.
And so far, national governments have gone very far. Be it in the United States or in Europe, the sums governments are having to cough up to prevent the financial system from collapse are staggering.
Germany alone has already provided credit guarantees of €42 billion ($52.28 billion) to prevent the collapse of Munich’s Hypo Real Estate, a bottomless pit that most now believe will have to be fully nationalized. The only thing holding up such a move is a legal provision in Germany that limits state holdings in banks to 33 percent. Meanwhile, Germany’s second-largest consumer bank, Commerzbank, has been bailed out, with the state taking a one-quarter stake in the company. And the recent fourth-quarter loss of €4.8 billion at Germany’s leading financial institution, Deutsche Bank, suggests that it too may ultimately require state assistance.
From Inconceivable to Inevitable
The image is even bleaker in the United States, where economist Nouriel Roubini estimates that losses in the financial sector will total $3.6 trillion. In the United Kingdom, the government has partially nationalized the Royal Bank of Scotland and Lloyds TSB — and many experts see a full nationalization as inevitable.
There are few who would disagree with such moves. Should large systemically-vital banks go bust, the global financial system would collapse. But how much can countries afford to pay before the deficit-spending bubble bursts? An unimaginable scenario? Less than a year ago, a nationalization of banks in the US, Germany and Britain would have been inconceivable. Today, even the US — the home of unbridled capitalism — sees these moves as inevitable.
The borrowing being done by countries to finance the bailouts, economic stimulus programs and shortfalls in tax revenues will create a lasting burden. Worse, with the decline in the banking sector continuing, it is unclear that such massive spending will be effective. Especially when other, less economically stabile countires surrounding Germany have gone into a tailspin.
Take the example of Great Britain. The country is on the brink of financial ruin. Real estate is overvalued, private households are overly indebted and its vast financial sector has been badly hit by the crisis. Confidence in Britain’s ability to overcome the economic turmoil is sinking by the day, as evidenced by the precipitous decline of the pound, which has almost reached parity with the euro. Just 13 months ago, it was worth €1.40.
A Second Iceland
“I wouldn’t invest any more money in Great Britain,” says American investor Jim Rogers. And economist Willem Buiter, a former consultant to the Bank of England, warns of the “risk that Great Britain will become a second Iceland.”
One can also look to the example of Italy, which is on track to join a rather exclusive — and undesirable — club. At 106 percent of gross domestic product, Italy will have the third-largest national deficit in the world.
In a country that has long had a solid savings rate, deficit spending hasn’t proven to be a huge problem in the past. The greatest challenge the government had was luring people to buy bonds at a set interest rate. The country’s finance minister has described these investments as the “most solid and secure thing available.” Of course, not everyone shares that opinion at the moment — particularly not the Italians themselves. One bond that was floated in mid-January only found takers after the government markedly increased the interest rate offered.
DER SPIEGEL
Bond returns in the euro zone.
This year, Rome has to pay back €220 billion in short-term bonds. Finance officials have been quoted as saying that were a single bond issue to find no takers, it “would be a disaster for the state.” In December, Italian Labor Minister Maurzio Sacconi warned that Italy could go bankrupt if the country were no longer able to sell public bonds because of the glut of offers in other countries. “It would create a liquidity problem for paying salaries and pensions and we would end up like Argentina.”
Great Britain as a second Iceland, Italy as a second Argentina. Iceland today is as a good as bankrupt, and Argentina actually became insolvent in 2001. It’s no wonder then, that quotes like that from government officials are making people nervous. There has been no other time in history since the end of the Great Depression that the risk of national bankruptcies was this great in Europe as it is right now.
The national budgets in most of the European Union member states are in a miserable state. Finance experts at the European Commission in Brussels estimate that, this year alone, deficit spending in the 16-member euro zone will total 4 percent of GDP, with that figure rising to 4.4 percent next year. The euro Stability Pact, however, only allows 3 percent. The Commission estimates that in 2010, 17 EU states will surpass this total. The list includes countries like Germany (4.2 percent), France (5 percent), Spain (5.7 percent) and Britain (9.6 percent). Ireland is expected to top the list with deficit spending of an anticipated 13 percent.
These predictions, of course, exist only on paper for the moment. But Austrian Finance Minister Josef Pröll warns that “someday, payment day will come.”
Euro Bonds?
Last week, Pröll and his colleagues formulated a call for a change of course, saying a coordinated fiscal stimulus was needed and that it must include a “coordinated budget consolidation” across Europe. Just how that might happen, though, is unclear.
In a hearing before the economic affairs committee of the European Parliament last week, EU Economics and Currency Commissioner Joaquin Almunia was showered with questions for which he had few answers. As a first step, he suggested that six to eight countries should reduce their deficits. But he didn’t suggest how they might go about doing that.
For some governments, budget consolidation is the furthest thing from their minds at the moment. Instead these countries are doing everything they can to find ways of securing credit, which is getting increasingly difficult. “Smaller countries are being pushed out of the credit markets because the larger countries are borrowing billions,” members of parliament told Almunia. His response: That’s true, but you still can’t “do away with capital markets.”
In order to solve the problem, Luxembourg Prime Minister Jean-Claude Juncker, who is also his country’s finance minister, proposed that the 16-member euro zone states should create common “Euro Bonds.” Smaller countries praised the proposal, but it met with instant rejection in Berlin.
Germany, so far, has been able to borrow cheaply because it still has an excellent credit rating. If the country were to fill its coffers by floating Euro Bonds, it would have to pay €3 billion more this year. Austrian Finance Minister Pröll also seemed uninterested, dismissing the Euro Bonds as giving carte blanche for creating new debt at the expense of others.
Many European leaders have been critical of Germany’s approach to the financial crisis — it was slow to implement an economic stimulus package and some derided Chancellor Angela Merkel as “Madame Non.” But in Germany, the government has been concerned about the risk of over-borrowing and burdening future generations with debt. The government has already abandoned its plan for a balanced budget by 2011, and Merkel has warned of the limits of Berlin’s role in any bailout.
Merkel is concerned that the bailouts will overstrain the government. After all, if the government’s debt continues to rise, at some point it will no longer be capable of paying the interest. Already, 2009’s planned borrowing of €18.5 billion is higher than the previous year, and this week the government is now in the process of approving a second economic stimulus package that, combined with other borrowing, could push 2009 deficit spending past the €50 billion mark. No German government has ever had to borrow that much money.
To ensure that future generations aren’t saddled with massive debt, the plan contains a provision that will funnel €1 billion a year in revenues from Germany’s central bank, the Bundesbank, that previously went into the government budget starting in 2011. Currently, the Bundesbank pumps €3.5 billion a year into the budget. Until 2012, any profits at the bank exceeding €3.5 billion would go toward paying down the growing national debt.
Most experts believe the German government still has room to maneuver, but further deficit spending may be inevitable and few know how much will be needed. Berlin may soon have to establish one or more so-called “bad banks” where troubled financial institutions can park their bad loans — a program that would require yet further government borrowing.
A Real Test for the Euro Zone
The government has exercised a degree of caution in deficit spending in recent years that has often been lacking in some other EU states. And politicians in Berlin have been reluctant to push through massive economic stimulus programs that might encourage others to abandon any sense of fiscal responsibility.
In the past, a handful of EU member states borrowed and borrowed without giving it a second thought. Now, they’ve been hard hit by the current downturn because their credit ratings have been lowered and they are being forced to borrow at higher interest rates. Spain, Italy, Ireland and Greece have been particularly hard hit.
Countries that have to borrow so expensively are threatened with constantly rising interest rates that in turn increase their debt. In response, credit ratings agencies further lower ratings, pushing interest rates even higher in what becomes a vicious circle.
Market speculators create additional pressures. The tensions could escalate even further and create a real test for the euro zone.
The Euro Safety Net
Prior to their adoption of the euro, countries like Italy, Greece or Spain simply devalued their currencies in troublesome times and lowered their interest rates to increase the export opportunities for their economies. As members of the euro zone today, however, this option is no longer available because of stringent budget rules in place to ensure the common currency’s stability.
The potential collapse of the euro zone has been a hot topic in financial market circles recently. One problem is that the euro treaty doesn’t have provisions aimed at allowing highly indebted countries to voluntarily exit the common currency. Even if it did, though — any countries to leave the euro zone would simply exacerbate their problems. Their credit ratings would plummet further, loans would get more expensive. And old debts would have to be repayed in euros. If their own currency devaluated, that would get even more expensive. Germany’s EU commissioner, Günter Verheugen, considers the debate over exiting the euro to be “purely cheap propaganda against the euro from speculators in the Anglo-American capital markets.”
DER SPIEGEL
European currencies are having a difficult time.
But what would actually happen if a euro zone member state went bankrupt? During the next 24 months, for example, Greece will have to come up with €48 billion in order to service old debts, while at the same time plugging holes in its budgets.
If a country like Greece became insolvent, it would be initially be spared of the worst consequences of bankruptcy because of its membership in the euro zone. The euro would lose some of its value, certainly, but the Greek economy doesn’t play huge role in Europe and the depreciation would be limited.
The consequences for Greece would also be limited. Because the currency would remain relatively strong, there would be no crisis in the retail sector, there wouldn’t be any consumer hoarding and no black market — in other words, it wouldn’t create an economic crisis any greater than the one that would already exist. Nor would it lead to an increase in unexmployment.
Under the protective shield of the European Union, life in a bankrupt state would be relatively comfortable. The more important question, though, is how the EU would react.
Worst-Case Scenario
One scenario is that it could declare Greece to be an exceptional case and provide bridge loans in order to prevent the bankruptcy. But it would have disastrous consequences. After all, why would weak countries make any effort to balance their budgets if they knew the EU would bail them out in the worst-case scenario.
If the EU remained firm against Greece, that would certainly be fair to the member states who have practiced balanced budget discipline in the past. But that would also be politically untenable because it would drive investors away from any country that showed even the slightest signs of not being able to service its debt. They would have to continue raising the interest rates on bonds, and eventually the Greek virus would spread further, driving other countries into bankruptcy.
In this highly theoretical scenario, the euro would, indeed, collapse. The currency could survive the bankruptcy of one member state, but it couldn’t sustain a series of them.
Euro-skeptics have long warned that tension inside the euro zone could destroy the currency one day. They now feel their convictions have been affirmed — even if the aforementioned scenarios remain far from reality.
DPA
Iceland is as good as bankrupt: Will other European countries follow?
Germany itself has little trouble getting money. But even here, in light of the multibillion euro shortfalls in the national budget, investors are slowly starting to get nervous about German bonds. Many uncertain investors are starting to ask “what the future looks like for countries with AAA ratings,” says Moody’s analyst Alexander Kockerbeck. Experts at the US ratings company are already feeding worst-case scenarios into their computers. In one, they input test data for 2010 and 2011 assuming the economy would shrink by 3 percent each year. In that model, the national deficit rose quickly from today’s close to 70 percent to 80 percent of GDP.
“The interest burden would be around 7 percent of government revenues,” Kockerbeck said, saying Germany could still manage to preserve its high credit rating. But if that figure got up to 10 percent, the country might lose the best rating, causing its financing costs to soar.
Competing ratings agency Standard & Poors, which last week cut Spain’s rating, holds a similar view. Analyst Kair Stukenbrock last week confirmed Germany’s AAA rating. He also said he currently “assumes that the German economy and government budget can weather the current financial crisis without losing its credit worthiness.”
Strangled by Interest Payments
In normal times, assuming a country has a solid credit rating and a good economy, borrowing is routine. Germany routinely floats short- and long-term bonds that pay interest. They can have a duration from anywhere between one day and 30 years. But some other countries, including Spain and France, even issue 50-year bonds. They are mostly sold through auctions — and the higher the price, the cheaper it is for countries to borrow, but that also reduces profits for investors.
Repaying that debt is far more complicated. In the simplest case, the country just pays back the debt. It’s extremely rare, of course, for a country to do that. In most cases countries renew their debt rather than repay it — and by doing so they create new debt. Already today, the German government must pay €43 billion a year in interest. It’s the second-biggest chunk in the federal budget after social expenditures.
But that could quickly change. If, for example, interest rates were to rise to their 1995 levels, the country would be faced with an additional €20 billion in payments, and that’s without factoring in any new debt. Of course, given the nature of the current crisis, the debt burden will rise. Nobody knows how high, nor how the country can eliminate that debt before it starts to get strangled by interest payments.
One way to pay down debt, of course, is massive spending cuts and austere savings probrams. That, though, is difficult. Much more attractive is the inflation route. The state can just print money and pay its bills. Or the central bank prints money and pumps it into the economy. The currency becomes devalued, but the state doesn’t care because that makes it easier to pay off its debts.
AFP
Riot policemen walk during clashes with demonstrators during a protest in Riga on Jan. 13.
No matter how a country elects to pay down its debt, it’s the taxpayers who are left to foot the bill in the end. Indeed, the only time it is possible to repay the deficit by government savings is during boom phases, periods when the government can increase taxes, or if it can reduce its expenditures.
The people also pay the price of inflation because as the currency get devaluated, prices increase.
Up until now, the process has been subtle. Since the end of the 1990s, the major central banks in the US and Europe have trippled the volume of money in circulation. In recent months, the volume of money in circulation in the US and Europe has increased by almost half.
Universal Phenomenon
Central banks are trying to use the flood of liquidity to prevent a collapse of the global financial system and, as a result, of economies. At the same time, they may also be laying the path for the next crisis. Money is already insanely cheap: the US Federal Reserve has sunk its key interest rates to almost zero, and the European Central Bank is already down to 2 percent. It is extremely likely that interest rates will be lowered even further.
But if the bailout packages take effect and the economy starts to rebound, then central banks will again raise interest rates — otherwise we would be threatened with a massive wave of inflation and the next, even worse crisis, would be inescapable. But the move may also lead many highly indebted countries to go bankrupt.
In a study for the International Monetary Fund, US economists Carmen Reinhart and Kenneth Rogoff researched financial crises of the last 800 years and concluded that state bankruptcies were a “universal phenomenon.” Many countries have, in fact, gone bankrupt more than once.
Between 1500 and 1800, France became insolvent eight times. Spain went bankrupt seven times during the 19th century. Insolvency is a common phenomenon in every period of history, they concluded, and it would be erroneous to think that state bankruptcies are a “distinctive feature of the modern financial world.”
Nothing Is Unimaginable Anymore
In most cases the country’s coffers were wiped out by war. But in each case, the countries managed to bring themselves back from ruin. They proved to be incredibly resourceful in using their connections to banks, companies and, especially, the people.
The simplest solution was for states to just outright refuse to pay back their debts. In 1557, Spain’s King Philipp II refused to pay his country’s debts after its expensive military battles against the Dutch and the Ottomans. It was a decision that seriously damaged lender banks in Augsburg, Germany, and they never fully recovered.
Even after the Revolution, France’s new regents had an even more extreme answer. They expropriated property from churches, major landowners and executed some lenders.
A similarly brutal option was to go to war to in order to plunder occupied areas. But such methods of budget consolidation tended to only happen when things started to collapse. Even in the old days, inflation was the preferred method of dealing with debt. They created more money and devaluated it. It’s a method that was adopted as early as ancient Rome, where the Romans devaluated their coins by using fewer precious metals in them. It became a standard practice. In Vienna, the silver content in the Kreuzer coin was reduced by 60 percent between 1500 and 1800 and the Ausgburg pfennig lost more than 70 percent of its value.
Once paper money was introduced, the process was further simplified, since you could just print it. The first country to start printing money on a grand scale was France in the 18th century, when it needed to pay off the mountain of debt accrued by Louis XIV. In times of crisis, French governments ever since have fallen for this temptation.
The Warning of Hyper-Inflation
In 1914, with the start of World War I, the German Reich also began to unpeg its currency from gold. Until then, anyone could trade paper money for precious medals. Unpegging the currency meant that the amount of money in circulation rose from 13 to 60 billion marks by the end of the war, while the products on offer were reduced by one-third. Prices skyrocketed.
The disastrous development reached its peak in 1923 with hyperinflation. The exchange rate at the time was 4.2 trillion marks to the dollar. Bank notes were printed in 130 private printing presses, often on one side only to save ink. The only thing that could stop the mass devaluation was to change currencies.
In November 1923, the government issued the so-called Rentenmark. The previous currency could be exchanged at a rate of 1 trillion marks for 1 Rentenmark. Inflation quickly stopped. People spoke of the “miracle of the Rentenmark.” But the truth is that it wiped out the savings and investments of large swaths of the German middle class as well as wealthy people who had been forced to finance the war by buying government bonds that had now been rendered worthless. Banks and insurance companies also lost their capital. The greatest winner, besides people who had loans or mortgages they no longer had to pay back, was the government. Its war debt shrank into insignificance.
These traumatic events remain a part of the Germany’s collective memory and they fuel a latent fear of hyperinflation here today. Should people be afraid?
For the moment they don’t need to be. Compared to many other countries, Germany is well positioned to ride out the crisis. The economy in recent years has been a lot stronger than other EU members and it is not as dependent on the financial sector as Great Britain. And unlike the United States, it isn’t dependent on foreign lenders.
Iceland, for its part, is already as good as bankrupt. In Eastern Europe, a number of countries are wobbling — Latvia has already had to request aid from the IMF and the Eastern European Development Bank. In the capital city of Riga, 40 people were injured in a violent protest that took place on Jan. 13.
Great Britain is also in trouble. And if it weren’t for the protection that their membership in the common currency provides them with, some euro zone countries would be fighting for financial survival right now. America, on the other hand, is banking on the fact that it is still considered stabile despite it’s enormous problems — and that the Chinese still hold a huge chunk of their currency reserves in US bonds.
So will things get better? It would be an illusion to believe that countries have learned from their past mistakes, US economists Reinhart and Rogoff warn. In fact, another state could go bankrupt at anytime and take its people down with it.
$80 - beautiful one bedroom apartment per night Number of Rooms: 3 BedroomLiving RoomDinning RoomDaily Kitchen
Argentina in the words of the US ..........
U.S. Department of State
Bureau of Consular Affairs
Washington, DC 20520
Please click on this link to read important information you should see before you travel abroad
Americans planning travel to Argentina should read Intercountry Adoption Argentina available on the Department of State web site at http://travel.state.gov |
December 28, 2007
COUNTRY DESCRIPTION: Last year Argentina's charm, natural beauty and diversity attracted more than 270,000 American citizen visitors and this year's total is expected to be even higher. Buenos Aires and other large cities have well-developed tourist facilities and services, including many four- and five-star hotels. The quality of tourist facilities in smaller towns outside the capital varies. The country suffered a major financial crisis in 2001-2002 and while it has made a dramatic recovery, continued economic hardship has been linked to a rise in street crime.
ENTRY/EXIT REQUIREMENTS: A valid passport is required for U.S. citizens to enter Argentina. U.S. citizens do not need a visa for visits of up to 90 days for tourism and business. U.S. citizens who arrive in Argentina with expired or damaged passports may be refused entry and returned to the United States at their own expense. The U.S. Embassy cannot provide guarantees on behalf of travelers in such situations, and therefore encourages U.S. citizens to ensure their travel documents are valid and in good condition prior to departure from the United States. Different rules apply to U.S. citizens who also have Argentine nationality, depending on their dates of U.S. naturalization. For more information, check the Argentine Ministry of the Interior web site at www.mininterior.gov.ar/migraciones/. Most dual nationals are permitted 60-day visits. Dual nationals who stay beyond their permitted time are required to depart on an Argentine passport.
The application process for an Argentine passport is lengthy, and the U.S. Embassy is not able to provide assistance in obtaining Argentine passports or other local identity documents. Children under 21 years of age who reside in Argentina, regardless of nationality, are required to present a notarized document that certifies both parents' permission for the child's departure from Argentina when the child is traveling alone, with only one parent, or in someone else's custody (click on the "international child abduction" link below for more information). An airport tax is collected upon departure, payable in dollars or Argentine pesos.
American citizens wishing to enter Brazil are required to obtain a visa in advance from the Brazilian Embassy or consulate nearest to the traveler's place of residence. The U.S. Embassy in Buenos Aires cannot assist travelers to obtain Brazilian visas. For more information, see the Country Specific Information for Brazil.
Visit the Embassy of Argentina’s web site at http://www.embassyofargentina.us/ for the most current visa information.
Information about dual nationality or the prevention of international child abduction can be found on our web site. For further information about customs regulations, please read our Customs Information sheet.
SAFETY AND SECURITY: Traffic accidents are the primary threat to life and limb in Argentina. Pedestrians and drivers should exercise caution. Drivers frequently ignore traffic laws and vehicles often travel at excessive speeds. The rate and toll of traffic accidents has been a topic of much media attention over the past year. Argentina reported 7,500 traffic accident deaths in 2006.
Care should be exercised when traveling in Brazil and Paraguay, near the Argentine border, where criminal entities are known to operate. These organizations are involved in the trafficking of illicit goods and some individuals in the area have been designated by the U.S. Treasury Department for financially supporting terrorist organizations.
The US government is supportive of coordinated efforts by Argentina, Brazil, and Paraguay to combat illegal activity in that region. Americans crossing from Argentina into Paraguay or Brazil may wish to consult the most recent Country Specific Information for those countries.
Demonstrations are common in metropolitan Buenos Aires and occur in other major cities, as well. Protesters block streets, highways, and major intersections, causing traffic jams and delaying travel. While demonstrations are usually nonviolent, hooligans in some of the groups sometimes seek confrontation with the police and vandalize private property. Groups occasionally protest in front of the U.S. Embassy and U.S.-affiliated businesses. U.S. citizens should take common-sense precautions and avoid gatherings or any other event where crowds have congregated to protest. Information about the location of possible demonstrations is available from a variety of sources, including the local media. Additional information and advice may be obtained from the U.S. Embassy at the telephone numbers or email address listed at the end of this document.
Domestic flights are usually dependable and safe. However, occasional work stoppages, over-scheduling of flights and other technical problems at the airport can sometimes result in flight delays or missed connections. Consult local media for information about possible strikes, slow downs, or road blockages before planning domestic travel.
Public transportation is generally reliable and safe. The preferred option for travel within Buenos Aires and other major cities is by radio taxi or "remise" (private car with driver). The best way to obtain safe taxis and remises is to call for one or go to an established stand, rather than hailing one on the street. Hotels, restaurants and other businesses can order remises or radio taxis, or provide phone numbers for such services, upon request. Passengers on buses, trains, and the subway should be alert for pickpockets and should also be aware that these forms of transport are sometimes interrupted by strikes or work stoppages.
For the latest security information, Americans traveling abroad should regularly monitor the Department’s web site, where the current Worldwide Caution Travel Alert, Travel Warnings and other Travel Alerts can be found.
Up-to-date information on safety and security can also be obtained by calling
1-888-407-4747 toll free in the United States, or for callers outside the United States and Canada, a regular toll line at 1-202-501-4444. These numbers are available from 8:00 a.m. to 8:00 p.m. Eastern Time, Monday through Friday (except U.S. federal holidays).
The Department of State urges American citizens to take responsibility for their own personal security while traveling overseas. For general information about appropriate measures travelers can take to protect themselves in an overseas environment, see the Department of State pamphlet A Safe Trip Abroad.
CRIME: Most American citizens visit Argentina without incident. Nevertheless, street crime in the larger cities, especially greater Buenos Aires and Mendoza, is a problem for residents and visitors alike. Visitors to Buenos Aires and popular tourist destinations should be alert to muggers, pickpockets, scam artists and purse-snatchers on the street, in hotel lobbies, at bus and train stations, and in cruise ship ports. Criminals usually work in groups and travelers should assume they are armed. Criminals employ a variety of ruses to distract and victimize unsuspecting visitors.
A common scam is to spray mustard or a similar substance on the tourist from a distance. A pickpocket will then approach the tourist offering to help clean the stain, and while doing so, he or an accomplice robs the victim. Thieves regularly nab unattended purses, backpacks, laptops and luggage and criminals will often distract visitors for a few seconds to steal valuables. While most American victims are not physically injured when robbed, criminals typically do not hesitate to use force when they encounter resistance. Visitors are advised to immediately hand over all cash and valuables if confronted. Thieves will target visitors wearing expensive watches or jewelry.
Your passport is a valuable document and should be guarded. Passports and other valuables should be locked in a hotel safe, and a photocopy of your passport should be carried for identification purposes. The U.S. Embassy has observed a notable rise in reports of stolen passports in the past year. Some travelers have received counterfeit currency in Argentina. Unscrupulous vendors and taxi drivers sometimes pretend to help tourists review their pesos, then trade bad bills for good ones. Characteristics of good currency can be reviewed at the Argentine Central Bank web site at www.bcra.gov.ar.
Along with conventional muggings, so-called express kidnappings continue to occur. Victims are grabbed off the street based on their appearance and vulnerability. They are made to withdraw as much money as possible from ATM machines, and then their family or co-workers are contacted and told to deliver all the cash that they have on hand or can gather in a couple of hours. Once the ransom is paid, the victim is usually quickly released unharmed. There have been some foreign victims and visitors are particularly advised not to let children and adolescents travel alone.
Travelers worldwide are advised to avoid packing valuables in their checked baggage. In Argentina, officials have publicly acknowledged the systematic theft of valuables and money from checked baggage at Buenos Aires airports. Authorities are working to resolve the problem and have made a number of arrests, but travelers should exercise continued care and caution.
In many countries around the world, counterfeit and pirated goods are widely available. Transactions involving such products may be illegal under local law. In addition, bringing them back to the United States may result in forfeitures and/or fines. More information on this serious problem is available at http://www.cybercrime.gov/18usc2320.htm.
INFORMATION FOR VICTIMS OF CRIME: The loss or theft abroad of a U.S. passport should be reported immediately to the local police and the nearest U.S. Embassy or Consulate. If you are the victim of a crime while overseas, in addition to reporting to local police, please contact the nearest U.S. Embassy or Consulate for assistance. The Embassy/Consulate staff can, for example, assist you to find appropriate medical care, contact family members or friends and explain how funds can be transferred. Although the investigation and prosecution of the crime is solely the responsibility of local authorities, consular officers can help you to understand the local criminal justice process and to find an attorney if needed. The Argentine Federal Police have established a special Tourist Police Unit to receive complaints and investigate crimes against tourists. The unit, located at Corrientes 346 in Buenos Aires, responds to calls around the clock at 4346-5748 or toll-free 0800-999-5000. See our information for Victims of Crime.
MEDICAL FACILITIES AND HEALTH INFORMATION: The public health system in Argentina provides emergency and non-emergency services free of charge to all, regardless of nationality or immigration status. However, the quality of non-emergency care in public hospitals is generally below U.S. standards. Medical care in private hospitals in Buenos Aires is generally good, but varies in quality outside the capital. Serious medical problems requiring hospitalization in private facilities and/or medical evacuation to the United States can cost thousands of dollars or more. Private physicians, clinics, and hospitals often expect immediate cash payment for health services.
Information on vaccinations and other health precautions, such as safe food and water precautions and insect bite protection, may be obtained from the Centers for Disease Control and Preventions hotline for international travelers at 1-877-FYI-TRIP (1-877-394-8747) or via the CDC's Internet site at http://wwwn.cdc.gov/travel/default.aspx. For information about outbreaks of infectious diseases abroad consult the World Health Organization (WHO) web site at http://www.who.int/en. Further health information for travelers is available at http://www.who.int/ith.
MEDICAL INSURANCE: The Department of State strongly urges Americans to consult with their medical insurance company prior to traveling abroad to confirm whether their policies apply overseas and will cover prior conditions and emergency expenses such as a medical evacuation, which could cost tens of thousands of dollars. If not covered, visitors are encouraged to consider purchasing travel insurance. No Medicare benefits are available abroad. Please see our information on medical insurance overseas.
TRAFFIC SAFETY AND ROAD CONDITIONS: Driving in Argentina is generally more dangerous than driving in the United States. By comparison, drivers in Argentina tend to be very aggressive, especially in the capital city of Buenos Aires, and frequently ignore traffic regulations. U.S. driver's licenses are valid in the capital and the province of Buenos Aires, but Argentine or international licenses are required to drive in the rest of the country. For further information, please contact the Argentine Automobile Club, Av. Libertador 1850, 1112 Capital Federal, telephone (011)(54)(11) 4802-6061, or contact the Embassy of Argentina as listed in the above section on Entry Requirements.
Please refer to our Road Safety page for more information.
AVIATION SAFETY OVERSIGHT: The U.S. Federal Aviation Administration (FAA) has assessed the Government of Argentina’s Civil Aviation Authority as being in compliance with International Civil Aviation Organization (ICAO) aviation safety standards for oversight of Argentina’s air carrier operations. For more information, travelers may visit the FAA web site at http://www.faa.gov/safety/programs_initiatives/oversight/iasa.
SPECIAL CIRCUMSTANCES: In addition to being subject to all Argentine laws affecting U.S. citizens, dual nationals may also be subject to other laws that impose special obligations on Argentine citizens. In some instances, dual nationality may hamper U.S. Government efforts to provide protection abroad. Argentina is a geographically diverse country with mountains, forests, expansive deserts, and glaciers, making it a popular destination for outdoor and adventure sports. Despite the best efforts of local authorities, assisting visitors lost or injured in such remote areas can be problematic. American citizens have been killed in recent years while mountain climbing, skiing, trekking, and hunting. Travelers visiting isolated and wilderness areas should learn about local hazards and weather conditions and always inform park or police authorities of their itineraries. Information about parks and wilderness areas can be obtained from the Argentine National Parks Service at http://www.parquesnacionales.gov.ar/. Current weather forecasts are available from the Argentine Meteorological Service at http://www.meteofa.mil.ar . Reports of missing or injured persons should be made immediately to the police so that a search can be mounted or assistance rendered. Please see our information on Customs Regulations.
CRIMINAL PENALTIES: While in a foreign country, a U.S. citizen is subject to that country's laws and regulations, which sometimes differ significantly from those in the United States and may not afford the protections available to the individual under U.S. law. Penalties for breaking the law can also be more severe than in the United States for similar offenses. Persons violating Argentina's laws, even unknowingly, may be expelled, arrested or imprisoned. Penalties for possession, use, or trafficking in illegal drugs in Argentina are strict, and convicted offenders can expect lengthy jail sentences and fines. Engaging in sexual conduct with children and using or disseminating child pornography in a foreign country are crimes prosecutable in the United States. Please see our information on Criminal Penalties.
CHILDREN'S ISSUES: For information see our Office of Children’s Issues web pages on intercountry adoption and international parental child abduction.
REGISTRATION/EMBASSY LOCATIONS: Americans living or traveling in Argentina are encouraged to register with the U.S. Embassy through the State Department’s travel registration web site, so that they can obtain updated information on travel and security within Argentina. Americans without Internet access may register directly with the U.S. Embassy. By registering, American citizens make it much easier for the Embassy or Consulate to contact them in case of emergency. The U.S. Embassy is located at Avenida Colombia 4300 in the Palermo neighborhood of Buenos Aires (near the Plaza Italia stop on the "D" line subway). The main Embassy switchboard telephone is (54) (11) 5777-4533. Recorded consular information, including instructions on whom to contact in case of an American citizen emergency, is available at tel. (54) (11) 4514-1830. The main Embassy fax is (54) (11) 5777-4240. The Consular Section fax is (54) (11) 5777-4293. The Consular Section is open to the public from 8:30 a.m. to noon and 2:30 p.m. to 4 p.m. Monday through Friday, except on American and Argentine holidays. Additional information on Embassy services is available on the Internet at http://argentina.usembassy.gov or by e-mail: BuenosAires-ACS@state.gov.
* * *
This replaces the Country Specific Information May 21, 2007 to update Sections on Country Description, Entry/Exit Requirements, Safety and Security, Crime, Medical Facilities, Children’s Issues, and Registration/Embassy Locations.
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This just a bit less than 800 sq feet (75 sq meters) top notch interior 2nd floor apartment is in a beautiful Renaissance building in the heart of old Buenos Aires.
Strategically located, you will be living only one block away from the Pink House, which is the Argentine equivalent to the American White House. Yes, just a block away from the presidential palace, this apartment is located in the heart of Buenos Aires. A stone throw away from the finest spots in town the gorgeous Plaza de Mayo is only a block away, a couple of minutes off is San Telmo's Plaza Dorrego, and a brief walk away from top notch Puerto Madero Gourmet and high rising real estate district area. This apartment is the best option for the travellers who wishes to enjoy the best of Buenos Aires in the finest possible way at their own pace. Next door to your home in BA, is the City Museum, a fine and interesting historical and cultural museum with great antiques and original items in display. A couple of steps away from your doorway you'll be able to enjoy a superb insight into the Tango culture at the Puerto Rico Bar-Cafe where there's a nightly show. The worldly known beautiful St Francis Church and Museum -taking up a whole city block- is directly across the street, featuring an outstanding artistic style. Being a bit like Rome actually …… the bells ring only during the day, so you will get you good nights sleep…
The apartment has been recently and finely refurbished but preserves the fascination of the unforgettable "belle époque". The floor and the ceiling are authentic and antique. Old beams, old parquet and logical living designs and amenities create charm and space that feel good and are just plain fun to live in.
Unlike most rentals in San Telmo where the antique and luxury feel has been left aside for a less personal minimalist concept, this apartment has been rehabbed in order to blend the bon vivant Paris feel of Buenos Aires with the amenity and modernity of the American sophisticated lifestyle. Fully decorated with one-of-a-kind antiques in furniture, lighting and paintings, this opulent home is also fully equipped with top notch technology in kitchen and services, though not loosing its original flavour. The antiques that furnish the house have been -each and every one- selected by the owner and an antique dealer specialist in order to bring back to life the original style of the 19th century.
The Renaissance building on Defensa St. features the opulence of the early 1900s when Buenos Aires was undergoing a modernization process. Carrere marble stone decorate the floors and hallways throughout the entire building. Original lighting features and caged elevators add an extra lust to the construction.
Located on the second floor of this building, this beautiful apartment is far from the noisy street, offering a truly quiet and calm ambiance of peace to really enjoy, relax and kick back during your stay in the city of Buenos Aires.
Our home would be comfortable for a couple or a family up to 3.The apartment is fully equipped and offers amenities like: Cable TV, Wi Lan and Wide-Band Internet Connection, DVD Player/Recorder, WI FI, American and Italian Coffee Makers, Toaster, Washing/Dryer Machine, Fridge, Hair Dryer, and an Air Conditioner cold- heat adjustable for the bedroom. The other part of the large apartment is heated with the typical adjustable individual modern gas stoves.
Our owner of this apartment knows how to travel and enjoy the best, and that's why she's come up with some thoughtful touches: hairdryer, 110 220v transformer, phones in living room and bed room, cotton linens and towels, designers' china as well as a fully equipped kitchen.
In living room, classic Italian ultra-modern couch discreetly holds hide-a-bed (120cm. or 47 inches wide) for an occasional guest. The bedroom has a unique feel of cosiness yet lavish at the same time featuring all original 19th century opulent French antiques in perfect condition matched with the best of bedding comfort: 100% cotton sheets, goose feather cover and an extremely comfortable queen bed is 160 cm. or 63 inches wide. Two bedside tables have lamps. Large mirror completes decor. Modern bath is elegant and spacious, with antique claw foot bathtub, 3-way mirrors, and halogen make-up lights above vanity area. All windows throughout the apartment feature original leaded glass windows.
Careful, non-smoking tenants only, please. Sorry, no pets.
So if you Need an apartment along Defensa Street in between San Telmo and Plaza de Mayo, the heart of Buenos Aires, Press Here. And so if you are interested in Art, Design or Antiques, and you are travelling to Buenos Aires, Argentina, or to Santiago, Chile or even Montevideo, Uruguay and need to buy and export these items or only need tips and travel information, please feel free to email us…….Please feel free to contact Bob Frassinetti with this email address: Email: Bob Frassinetti.
Phone me thru Skype, ID: Bob_Frassinetti or you can also chat with me using Yahoo or My Space links below, press here:
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