Wednesday, March 21, 2007

Dont cry for Argentina

Reading this amazing article on wealth of cities which put Buenos Aires at number 13 in the world based on buying power and total assets per person didnt suprise me

One thing that you notice as a foreigner living here in Capital Federal is the signs of visible wealth that you see all around you . Sure you see poverty as well with the homeless and the cartoneros sifting thu rubbish in the nights but the wealth that stands out hits you like a ton of bricks . This city has huge amount of megabucks and it seems each month it is changing rapidly especially amongst the rich that make up close to 15 percent of all inhabitants of Cap Federal.

Compared to 2002 when Argentina was in economic meltdown the visible signs of wealth apparent to me have increased in a staggering fashion. And that is not hard to understand if you see that peoples assets today in Capital Federal have never been worth as much in Dollars or Euros than ever before in its history. For example the area that I live Palermo Soho in 2002 was basically a lower to poorer middle class barrio with larger families and a huge community of transient sex workers and tranvestites who brazenly worked the streets of El Salvador and Godoy Cruz in the night. I remember my first trip down here and being in awe at the dark tree lined streets combined with a scene from a Pedro Aldomovar Movie. Every corner on those two streets had these goddesses of the night brazenly calling out to single men to enjoy a hour of pleasure with them in Buenos Aires numerous telos which are many and especially in Godoy Cruz Palermo Viejo.

The difference today is that this area has been moved out of sights way to the Bosques of Palermo. Nowadays Palermo Viejo subdivided into Soho and Hollywood have been transformed to these very trendy places with literally hundreds of restaurants and bars. To give you an example of the difference in those days to 2007 is this .

In 2002 there were maybe 20 simple restaurants and a few locales and the occasional coffee shop . Accomodation was limited to a run down pension or if you wanted some luxury there was Malabia Guest House which was the first guest house in the barrio .The owners will tell you that everyone thought they were mad for opening up in this area now they are laughing all the way to the bank . To give you a perpective of how cheap this area was In 2002 houses per square metre could have been bought for around 500 dollars a square metre in American terms a 1500 square foot house could have been found for 60000 thousand american dollars . Today that same house would be getting close to 300 thousand dollars . An increase of 300 percent in real terms . The older families of lower financial means who did not sell in 2002 are now sitting on a goldmine

Today Palermo Soho Hollywood have literally hundreds of restaurants and bars . There are 500 locales which translates in english as businesses .These mostly specialise in fashion .
Honduras and Gurruchaga in Palermo Soho is the centre of this and to walk down these streets on a Saturday afternoon you will be swamped by the hordes with bags full.

Palermo Viejo at night has the air of la dolce vita with its restaurants and bars at breaking point serving the latest in ethnic cooking and killer cocktails. The best places to people watch are Janio on Plaza Armenia or Meridian 59 on Borges and El Salvador.
To me this boom that Buenos Aires is experiencing shows no sign of abating and now in its 5th year with growth figures of 9 percent it keeps on getting stronger and stronger . If you ask the porteños they seem very optimistic about their futures.

Will Buenos Aires become the city is always dreamed it would be only time will tell.


Blogger yanqui mike said...

Hey Greek! Nice blog!

The method that Pricewaterhouse used is a little better explained at

Buenos Aires is in a lot better shape for the present and future than a lot of people would have us believe.

"Overall, the PWC research emphasises the economic significance of the world’s largest cities. The top 30 such cities ranked by GDP accounted for around 16 per cent of world GDP in 2005 and this share rises to around 25 per cent for the top 100 cities.

"Five emerging economy cities are currently in the top 30 ranked by GDP (Mexico City, Buenos Aires, Sao Paolo, Moscow and Rio de Janeiro), but projections suggest that all of these cities except Rio will move up the global rankings by 2020 while fast-growing cities such as Shanghai, Mumbai, Istanbul and Beijing will move into the global top 30 by then.

"John Hawksworth, head of macroeconomics at PricewaterhouseCoopers LLP, said that within the developed world, it seemed likely that the most successful cities of the future would be those that had comparative advantages in intangible business, financial and consumer services that were not so easily emulated by the rising stars of China, India or Brazil."


3:14 PM  
Anonymous Anonymous said...

Yes, Palermo has taken off and property values have soared. There are a few pockets of prosperity in Buenos Aires but the vast majority of people in this metropolis are poor - just trying to survive. They live in neighborhoods that have seen no construction boom, no expat invasion...just growing crime and social degradation. It might be interesting for some of the expats who employ maids to follow their employees around for a day. Get to know what it is like for the working class, see their wretched neighborhoods (often shanty towns), experience two hour one way commutes on standing room only trains and buses, talk to their unemployed family members, accompany them to the supermarket and see how it is to buy food on a shoe string budget (forget about the increasing price of beef - these people eat pasta, potatoes, polenta). This is the reality for the majority of people in the BA metropolitan area and it isn't getting any better for them.

10:13 PM  
Anonymous Anonymous said...

To the last anonymous dude can i ask you why you are targeting expats when they make us less than 1 percent of the population.

Argentinians are the one who pay these slave wages to their maids and most work very hard to earn peanuts.

Most expats I know pay above the average wage and also treat their workers a hell a lot better than the local people.

For your information the boom has nothing to do with expats who only make up 14 percent of all property sales in Capital Federal .

The rich of Buenos Aires are some of the wealthiest on this planet and they should part with some of their pesos to the working class . That is a law that I would fully support

11:25 PM  
Anonymous Anonymous said...

I guess I was not clear in my comments. I was not targeting expats. I was trying to call attention to the reality of life here. I was responding to the article about all the prosperity in Argentina. My point was that many expats are living in a bubble. They live in the few prosperous areas of the most prosperous city in this nation. They seldom - virtually NEVER - venture out of their little insular world. I have no idea whether or not some Argentines are among the richest people in the world (I very much doubt that there are any whose wealth can match that of the richest Americans, Saudi Arabians etc) however I know that there are wealthy people here. A few. Almost everyone in this country lives badly. The so-called vibrant middle class is anything but vibrant these days. You might be quite surprised to see what their homes look like and how they live (do not confuse the small BA upper middle professional class with the middle class. The small minority with good professional jobs are better off - though they too have slipped, especially since the devaluation). It seems that a lot of expats here fail to look beyond the surface of Argentine society. They are overwhelmed by the proliferation of cafes and restaurants and well-dressed people. There are 13 million people in greater BA. Of course there are going to be nice restaurants - in the few good areas. Dressing well is a priority here. Even people earning 600 pesos a month will save up to buy designer clothes.

You are right that many expats pay their maids a bit more than local people, and often treat them more respectfully. The bottom line, however, is that these women are servants and the abundance of poor working class women in this city is a sign of the third world nature of Argentine society - undeveloped, poor and unjust. Expats are not to blame for this reality but they should at least be aware of it. A construction "boom" of apartment buildings in Palermo hardly means that the country as a whole is prospering. It isn't. Most people lack what Americans and Europeans would consider the basics.

As for the increase in property values, I never said that expats were responsible. They aren't. They are a minor part of the equation. Argentines have brought money back from outside Argentina. You don't have to be a millionaire (or rather billionaire - the wealthiest people on earth have a bit more than a few million) to buy an apartment in Palermo.

Argentina has many charms. Life here can be pleasant if you have a certain amount of money. Expats bring money with them. A few Argentines earn good incomes here. The majority of people in this country struggle. I am just suggesting that expats wake up to reality. It's insensitive and unfair to the majority of people here to think that the reality for most Argentines is better than it is.

7:40 AM  
Blogger greekinargentina said...

Hey Yanqui Mike thanks for the link and keep up the blogging .

To the anonymous comments my views are based on 2 years of living here and also many years of travelling here since 1982 when I first set foot in Argentina.

While I do not deny that there is no poverty in Buenos Aires and some people live wretched lives in the villas but to most people visiting Capital Federal this is not very apparent.

The city of Buenos Aires which covers areas as diverse as Boedo Monserrat Belgrano Nunez Caballito Palermo Caballito Recoleta Retiro Microcentre
does not have a huge homeless problem . In actual fact I have seen more homeless in San Francisco and United State cities than I have here .
Compared to 3 years ago we must admit this city has changed incredibly in many obvious ways and the average citizens lives have improved as well.

Sure the rich have benefitted the most but the poor and the lower middle classes have also improved their lives.

To say that the middle class is shrinking and their situation is not improving is denying many facts .

Did you know that 40 percent of car owners have brought a new car in the last 2 years in Capital Federal . Look on the streets and see how different the cars are these days compared to 5 years ago.They are positively luxurious compared to the bombs that trawled the streets back then. Most taxis these days are decent and even a lot have air conditioning.

There is a lot of employment in Capital Federal and while minimum wages are low by international standards they are improving and people are getting two jobs if needed quite easily.

To me it is more than apparent that the country is doing very well and the changes in the last 3 years have been outstanding . Yes inflation is a problem and the banking system is archaic but over time I beleive that this will stabilise.

The problem that Argentina has to change is its international image which does not express the realities here.

This is not a third world country with terrible infrastructure dictators and appaling crime rate.

Argentina is a proud country with grest public institutions excellent education and medicine and the most educated population in South America.
Buenos Aires to me is a vibrant cultured city with literally 100s of things to do . At times it is a frenetic frtustating place but one thing it is not is boring .

9:53 AM  
Anonymous Anonymous said...

I agree with the anonymous writer. I have been here since before the devaluation. After the devaluation there was a HUGE crash. The number of seriously poor increased in a major way. Its better than it was but based on what I see among my friends, work colleagues and others, the middle class is far worse off than it was before the crash. About poverty: I dont think the issue is just homelessness. Its more about the very poor quality of life for many thousands who have homes, maybe very humble. I think anpnymous is right that some foreigners are living in an unreal world. maybe they should travel to some of the more typical areas, especially in the province of Buenos aires, better yet, they should live there and see the reality.

2:05 PM  
Blogger greekinargentina said...

To the last anonymous writer I dont agree with your comments that the middle class are worse off now and there is simply a lot of facts to prove that their lives are getting better and for many they are much better off now than before the devaluacion.

Yes it is true that wages are lower in dollars than before 2001 but that is an illusionary thing because the money if kept in Argentina and buy local products is the same if not better in pesos for many.

A lot of middle class people now are making excellent money in investment properties which are mostly rented out to tourists for dollars . Most of this money is undeclared and certainly pulls up the gdp substantially .
Before 2001 there was very very little of this and tourism was non existent so while wages are low in dollars and euros undeclared wages earnt from investments are a huge component of the locals salaries.

In regards to your comments about living in the provinces I do agree that the situation out there is completely different to Capital federal and people live with very little out there unfortunately . Hopefully over time their lives will improve.

Poverty is apparent in most societies by the way . In Australia where I was born and grew up there is poverty and terrible health conditions for the local indigenous people called aborogines who have a life expectancy of around 50 in many communities . This is happening while Australia is constantly growing and getting wealthier.

Do I have answers for this and yes it saddens me but life can be very injust at times

2:56 PM  
Anonymous Anonymous said...

This PWC "research" should be treated with utter contempt. The GDP for Buenos Aires is given as $245bn. Pray where exactly did they pull this fairytale figure from? There are 13m people living in the greater Buenos Aires area: that should mean a per capita income of almost $20,000 a year (i.e. for each man, woman, and child). Does anyone believe this daft figure? A high-ranking Argentinian executive would deem himself lucky to be earning that much (roughly 5000 pesos a month). What we know is that only 5% of households (I said "households," not individuals) earn 5000 pesos a month or over. I also know the figures given for many other cities are pure fabrication: reliable statistics simply don't exist for cities like Cairo and Mumbai. Management consultants like PWC and others are in the business of fabricating "statistics."

4:09 PM  
Blogger greekinargentina said...

My question for the last comment leaver is what about undeclared incomes which make up more that wages in this country.

There are literally hundreds of thousands of rental properties in this city and they earn their owners huge incomes .

Argentinas wealth has always been built on speculation and if you look at the stock market here it has more than tripled in less than 5 years .

Wages from legitimate jobs are not the major component of gdp.

Statistics show that the inhabitants of Capital Federal have very high home ownership much higher than many european countries.

Net worth is based on home ownership personal debts and standard of living to enjoy the simple things of life and many a citizen here is doing well.

4:51 PM  
Anonymous Anonymous said...

How do you know that legitimate wages are not the biggest chunk of GDP? I'm sympathetic to the idea that there's a huge black labor market, but if we can't measure it, how can we make any credible statements? What I find more credible than the PWC nonsense is the estimated GDP figure for 2006 given by the CIA:

Again, this is an estimate but it seems closer to what one sees on the ground in Argentina. The figure is $210bn for all of Argentina's 40m people, not $245bn for 13m people. And even this figure assumes most GDP is not wage income. It assumes, in fact, that there are huge disparities in wealth and income, so that a big chunk of that $245bn is taken by the rich, and the other 95% of the population has to make do with whatever crumbs are left. I'm amazed anyone would even quibble with this. One can find scads of people earning 500-700 pesos a month. Assume for the sake of argument that they earn the same again in the "informal sector": that still doesn't add up to serious money in the aggregate.

Once upon a time there was a robust middle class in Argentina. Once upon a time workers could live decently. Those days are long past. The chill winds of neo-liberalism have taken their toll in Argentina

6:09 PM  
Anonymous Anonymous said...

To the last guy what rock are you living under .

Buenos Aires has a huge middle class and they are doing very well.

Who is buying all these businesses and apartments then it certainly aint foreigners.

7:20 PM  
Anonymous Anonymous said...

Who is buying all the new apartments? The 10-15% of the country who have money. Do you really think "middle class" people own investment properties? You are talking about upper middle to wealthy people, the 10-15%. If it makes expats feel better to think Argentina is a lot wealthier than it is, so be it. Live in your fantasy world with your dollars, pounds and euros. Who cares about the plight of millions of Argentines. They can eat cake!

12:46 AM  
Anonymous Anonymous said...

First of all I must state that I am an Argentinian and would consider myself "middle class". I believe some argentinians fail to realise just how much salaries are increasing, at least for professionals, or qualified workers, and at least in Buenos Aires (which is what we are talking about here, not overall Argentina).
I earn around 4000$ a month and I am a professional working in a big company which does not pay a high salary. My husband earns a bit more than this, and he is also not a very high ranking manager, just barely a manager. If anyone here believes a high ranking manager earns less than 5000$ a month they are seriousle deluding themselves.
Admitting this does not mean that all of Argentina is doing great, but it is facing the truth. There are a lot of poor people outside of Buenos Aires, some poor people live in Buenos Aires (few in comparison), and a lot of people are doing great in Buenos Aires (the construction boom, inflation, cars sales, etc, all point to this fact).

6:01 PM  
Anonymous Anonymous said...

Buenos Aires is a very wealthy city and dont let anyone tell you otherwise.

How do the Porteños afford to buy all those luxury apartmemts on low salaries

4:51 PM  
Blogger yanqui mike said...

Hey Greek!

I hope you can make it to the party:

un abrazo,

5:28 PM  
Blogger Fernando (Nerd Gaucho) said...

The "fact" that all new constructions are "luxury appartments" is a flat out lie.

I live in Almagro and I have not one or two but FIVE buildings in construction or just finished in the last 6 months within EYESIGHT.

Most of these have 2-bedroom apartments. Two of them were offered with credit lines by Banco Ciudad (public bank) payable in 25 years.

Guess who bought them? Yes, middle class.

Isn't it curious how all the prayers of doom and gloom are always anonymous?. The elections are coming, and the prophets of doom appear overnight...

I mean... in 1989 a candidate (M"nem) promised a "productive revolution" and instead we got trickle-down economics, privatization of all national assets, a cheap dollar, a flood of cheap imports, and the destruction of almost all small to medium sized business which menufactured anything (it was more cost effective to import pultry from Brazil than produce them locally, go figure), oh and skyrocketing debt.

Services prices (phone, gas, water, electricity) was adjusted per law by the US INFLATION RATE (while we had deflation internally!).

Then we voted for change and voted for De La Rua ("La Alianza" -a pact of center-right UCR and center-left FREPASO) the alliance was broken soon after inauguration, the left side of the coalition left due to the rampant corruption. That was the beginning of the end of the De La Rua presidency.

For better or for worse, Kirchner has done what he promised, and we're much better.

what are the options? The "incendiary" far left? The
right-wing? (PRO)? A "daddy's boy" spoiled rich kid who got involved
into a customs smuggling scandal to pocket government funds when he
headed SEVEL (Fiat-Peugeot at the time)??

Sadly the middle class has short memory. Five years ago there was no
government, there was no currency (provinces printed their own "bonds"),
we didn' t know how to pay the country's debt. "Swap clubs" (club del
trueque) flourished. The people's savings were gone.

Small and medium sized business were bankrupt and closed after a decade
of cheap imports and an overvalued currency.

Yet the same IMF who helped got us into this ordeal was giving periodic
"recommendations" of what to do or not to do (privatize education, privatize the only 3 public banks left, Nacion, Provincia and Ciudad).

-The banking system is healthy again
-We paid all debt to the IMF
-The IMF no longer meddles with if we want to have a public banking
system or not
-Small and Medium sized business are back on their feet. From hammers to
lamps to food, everywhere you look "industria argentina" tags are back
again. That is argentine jobs.
-Argentina' s food industry is exporting like never before. In late 2000
most poultry factories were closing. Now we' re exporting to the rest of
South America.
-Argentina's car production is at record levels
-ARgentina is exporting machinery to brazil and venezuela (specially
agriculture machinery)
-Despite gloom and doom predictions of the far right, energy accords
with Chile (price and volume of gas), with Venezuela (Fuel Oil for our
power stations exchanged for biotech), and Paraguay (increase of the
Yacyreta quota in exchange for settling Paraguay's debt with our
country) have averted the so much hyped "energy crisis" trumpeted by the
Right Wing rags like La Nacion all summer.
-Tourism has jumped to the #2 spot in income creation in Argentina, just
below agriculture.

Yet, in the eyes of some middle class upset by the single-digit inflation (hint: no economy can grow at argentina's rates without at least SOME inflation), the private sector's inability to invest to expand production to keep up with demand is SOMEHOW a fault of the president? Give me a break!.

What a short term memory we argentines have... It's sad.

5:49 AM  
Blogger miss tango in her eyes said...

What peso figure would you consider middle class? 1500 pesos or 5000? If you make 2400 pesos, 800 USD a month which is what a computer engineer with a degree usually makes, it is pretty much impossible to purchase that 100,000 USD apartment in Palermo.
The future may appear bright and shiny, but people are struggling here.

5:48 PM  
Blogger Kimberly said...

What I love most about the city is that everyone stays late at night. You can go to a nightclub on a Thursday night and it will be full. The apartment for rent in buenos aires I got was in the middle of Palermo and all the pubs were open almost till midnight. Isn´t that great?

1:33 PM  

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