The Beeb reports that Paypal is being forced to prevent fund transfers between people in Argentina. Funny, I thought that transferring funds between people was the raison d'être of Paypal. What prompted the change?
[The Argentina government restrictions on dollar conversion] has led to an increase in currency sales on the black market - but Paypal's exchange rates are better. Locals were setting up two accounts under different email addresses and transferring money between the two, exchanging local currency pesos for dollars in the process.Because obviously the desire of people to exchange pesos for dollars is the root cause, right? We just need to prevent that desire from happening, and everything will be rosy.
Under the new rules only one account per person can be registered within Argentina.
Oh, maybe not:
Economist Eduardo Marty told the BBC that currency restrictions had been extended to all economic activities, from the export of goods to foreign travel.Wow. What possible reason could there be for people to be so eager to exit the peso into a harder currency? Well, other than a 24% (unofficial) inflation rate reducing the purchasing power of pesos by 20% per year. And the government adding the 15% tax on purchases abroad.
"You have to apply for permission to import any goods," he said.
"If you need to travel abroad the government gives you a meagre amount of money. Sometimes they approve it at the last moment and people are forced to buy on the black market."
Cristina Kirchner is heading at flank speed for the rocks of economic reality. She can stick her fingers in the dike of peso integrity all she likes, but that dike is just going to keep springing leaks. No-one has any faith in the value of the peso, Cristina, and this is mainly because you spend so much effort trying to stop people (the market) finding out what this value is. Eventually you're going to run out of state assets to sell for dollars, and then paying for all your imports is going to be somewhat tricky. The final stop on the railway track you're on is Zimbabwe.
(As a matter of curiosity, why the focus on the US dollar? Is it just for ease of exchange? I'd imagine that the CAD or CHF would provide an equally solid peso-inflation-proofing of one's savings).