Friday, April 06, 2007

State of Argentina

This article is a good primer on the current state of Argentina. It mentions cartoneros, the influx of tourists, cheap real estate, political history, etc. Anyone wanting to read more about the crisis should read And the Money Kept Rolling in (and Out) by Paul Blustein, who also wrote the excellent The Chastening, the account of the East Asian Financial Crisis.

A bit on the real estate: one of the most important determinants of real estate prices is
interest rates both nationally and for borrowers. So when places have high interest rates (like Argentina, for example) that holds prices down. But at some point the "rent yield" (the percentage of the value that typical rents are) is high enough that it can attract cash buyers from abroad who want the absolute return. I wonder how much of this is going on in Argentina, but I suspect that more typical is people that want a vacation home. And hey if that's what they're going for, its a great place to do so.


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