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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: bobby beara who wrote (19869)	1/8/2002 5:48:23 PM
From: Sully-	Respond to of 99280

Economic Crisis Worries Argentina Price Hikes, Threats of Inflation Worry Argentina After Steep Devaluation By BILL CORMIER Associated Press Writer BUENOS AIRES, Argentina (AP) -- Argentines camped through the night in a blocks-long line outside the Spanish Embassy, hoping to get passports Tuesday to escape feared economic chaos, with post-devaluation prices rising on everything from bread to electronics. A similar scene played outside the Italian Embassy that also allows close descendants of immigrants to reclaim citizenship. ``I was born in Spain but haven't been back since I was 7 years old. But when I look at Argentina now, things look bad,'' said Maria Ofelia Gonzalez, 73. She stood outside the Spanish mission with a teen-age grandson. Complaining of a scarcity of wheat, many bakers warned they might have to increase bread prices as much as 30 percent. The prices on everything from diapers to imported coffee to home appliances already are climbing by similar amounts. But some business owners, like Jose ``Pepe'' Benito, at the Carpinacci bakery, said they would hold the line. Benito said consumers already have so little disposable income it makes no sense to raise prices. ``The distributor who brings the dough tried to pass along a price increase but I turned him away,'' Benito said. Hoping to reverse the continuing slide of South America's second-biggest economy, President Eduardo Duhalde has abandoned the decade-old peg between the peso and the U.S. dollar in a bid to make exports more competitive. Many economists believe the peso was significantly overvalued. Now imports and exports will be priced at 1.4 pesos to the dollar, effectively decreasing the cost of Argentine exports while boosting the cost of imports. Beginning Wednesday, the domestic exchange rate will be allowed to float. In theory, by decreasing the export cost of Argentine goods and raising the price of imports, domestic producers could see a quick benefit as would workers in those industries. Unemployment in Argentina has climbed to 18 percent and a recession has crippled the economy for four years. But citizens are worried that the floating currency for domestic exchange could further erode the currency's value and restart ravaging inflation that prompted imposition of the one-to-one dollar-peso peg a decade ago. Those fears are have sent Argentines with close family ties to Europe and other countries to embassies, seeking a way out. ``If the economy gets worse, these lines are going to get even longer,'' said 24-year-old Gabriela Climend as she stood outside the Spanish mission. She was laid off months ago at a lighting store and hasn't been able to find new job. Her father was born in Spain. Alicia Griffi, a lawyer, went to the Italian consulate to see if she could get a passport for her 20-year-old son. She said the economic future of Argentina looked bleak after the Dec. 1 imposition of a banking freeze. ``The problem is you can't get ahead in this country,'' said Griffi. ``As a lawyer I have fewer clients than ever and those who come to my practice can't pay my fees anyway. On top of that, even if you have dreams and career goals, you spend hours every day standing in banking lines just to try to get your money out.'' The government announced it was continuing for another day a ``banking holiday'' halting all but the most basic banking transactions. Duhalde has said he will present a deficit-cutting budget for 2002, but it was not clear he would impose unpopular spending cuts that inspired the street riots and toppled the last elected president, Fernando De la Rua, on Dec. 20. Steps away from the landmark Obelisk where rioters rampaged during a succession of four caretaker presidents, Daniel Arias stood in his men's clothing store and recalled the looting. ``They pried open my steel shutters and cleaned out everything,'' said Arias, who now displays a big red cardboard sign offering one of the more unusual summer sales: ``Looters' Liquidation Sale. Everything must go!'' it reads. biz.yahoo.com