Socialism and the Damage Done

[CraigM]

https://finance.yahoo.com/news/houston-oil-ceo-calls-venezuela-230656306.html

"Venezuela is uninvestable" - Exxon CEO

For those of you with a soft spot for socialism, Kirchner, Kiciloff and the like, this is the kind of long term damage that socialism will do to a country. The US President is telling major oil companies "we're in control, the oil is bubbling to the surface, go get it" and the oil companies are saying "no way". The reason is that operations like natural resource extraction and distribution require enormous amounts of upfront capital and you need to know that your ability to recoup it all is protected by law, not just now but decades into the future. Like Argentina, Venezuela has outright seized assets and the population has deep socialist leanings and keeps electing people like Kiciloff. So nobody trusts them. Chile and Argentina share many of the same natural resource deposits yet only one of them is benefitting from it. The long term damage to Argentina's economy from this sort of mindset and behavior is mind-boggling when you think of foreign investment, jobs (real ones), exports (bringing in dollars), tax revenues etc.

Socialism is like heroin, feels so good until it feels so bad.

 

[Betsy Ross]

Those companies invested and lost a fortune when they were taken. Argentina had the same sort of thing happen before. We need for it to never go back to the socialists.

 

[Uncle Wong]

https://finance.yahoo.com/news/houston-oil-ceo-calls-venezuela-230656306.html

"Venezuela is uninvestable" - Exxon CEO

For those of you with a soft spot for socialism, Kirchner, Kiciloff and the like, this is the kind of long term damage that socialism will do to a country. The US President is telling major oil companies "we're in control, the oil is bubbling to the surface, go get it" and the oil companies are saying "no way". The reason is that operations like natural resource extraction and distribution require enormous amounts of upfront capital and you need to know that your ability to recoup it all is protected by law, not just now but decades into the future. Like Argentina, Venezuela has outright seized assets and the population has deep socialist leanings and keeps electing people like Kiciloff. So nobody trusts them. Chile and Argentina share many of the same natural resource deposits yet only one of them is benefitting from it. The long term damage to Argentina's economy from this sort of mindset and behavior is mind-boggling when you think of foreign investment, jobs (real ones), exports (bringing in dollars), tax revenues etc.

Socialism is like heroin, feels so good until it feels so bad.

I don't get people voting for Kiciloff. He still seems kind of popular for as popular that Milei is. It seems like Argentina has a long way to go before the risk is gone of the country flipping back to the left. Hopefully Argentina can continue with all the reforms. I have met many people there and it seems like a tough place to run a company.

 

[Bingo]

https://finance.yahoo.com/news/houston-oil-ceo-calls-venezuela-230656306.html

"Venezuela is uninvestable" - Exxon CEO

For those of you with a soft spot for socialism, Kirchner, Kiciloff and the like, this is the kind of long term damage that socialism will do to a country. The US President is telling major oil companies "we're in control, the oil is bubbling to the surface, go get it" and the oil companies are saying "no way". The reason is that operations like natural resource extraction and distribution require enormous amounts of upfront capital and you need to know that your ability to recoup it all is protected by law, not just now but decades into the future. Like Argentina, Venezuela has outright seized assets and the population has deep socialist leanings and keeps electing people like Kiciloff. So nobody trusts them. Chile and Argentina share many of the same natural resource deposits yet only one of them is benefitting from it. The long term damage to Argentina's economy from this sort of mindset and behavior is mind-boggling when you think of foreign investment, jobs (real ones), exports (bringing in dollars), tax revenues etc.

Socialism is like heroin, feels so good until it feels so bad.

I don't doubt oil companies or any other companies wanting to invest in Venezuela. Considering they are still hunting and putting in jail people that supported the Trump invasion. Even in Argentina it doesn't seem like foreign companies are rushing to invest in Argentina. It will probably take Milei winning again solidly to get companies feeling safe but taxes will need to come down.

 

[Nasdaq]

I don't doubt oil companies or any other companies wanting to invest in Venezuela. Considering they are still hunting and putting in jail people that supported the Trump invasion. Even in Argentina it doesn't seem like foreign companies are rushing to invest in Argentina. It will probably take Milei winning again solidly to get companies feeling safe but taxes will need to come down.

It's true. It has been a race to exit for foreign companies. It seems like companies are getting out while they can.

Argentina records negative foreign investment for the first time in over two decades - Buenos Aires Herald

A top Canadian fertilizer company is the latest to leave Argentina, amid a wave of foreign companies selling their operations to local businesses

buenosairesherald.com

 

[Finance Prof]

It's true. It has been a race to exit for foreign companies. It seems like companies are getting out while they can.

Argentina records negative foreign investment for the first time in over two decades - Buenos Aires Herald

A top Canadian fertilizer company is the latest to leave Argentina, amid a wave of foreign companies selling their operations to local businesses

buenosairesherald.com

Many assume because Milei is trying to improve Argentina that many foreign companies are coming. There are a few new stores but it sounds like more are leaving Argentina. I doubt if the labor laws change and taxes are lowered that many will come. The country is very tough to operate a company here. A large part of the economy is in black.

And things can change quickly here. Just because Milei is doing ok now doesn't mean he will be in two years. Argentina has a long history of boom and bust cycles, corruption and defaults. Argentina is structurally a very weak economy and many are taking the opportunity to leave Argentina which is a bit troubling to me.

Reform takes time. There is some success with the RIGI program but actual new capital in flows take time and they could back out. A lawyer that I know well that deals with RIGI planning told me that most of these are just in planning or pre investment stages and might not ever happen. Many foreign companies are in wait and see mode.

Inflation is falling but it is still high by most global standards. Even with all the pro-market talk, Argentina's economy has been contracting. Consumer demand in many areas is weak.

I think if Milei's government is successful with the structural reforms THEN foreign companies will start to think about Argentina. But the strong peso might help with inflation but it hurts with higher labor costs and higher costs to produce goods here. It is not profitable for many foreign companies to operate here.

Keep in mind a few good years doesn't change decades of instability, weak economic fundamentals, tough credit conditions, currency risk problems.

 

[IrishLad]

It's true. It has been a race to exit for foreign companies. It seems like companies are getting out while they can.

Argentina records negative foreign investment for the first time in over two decades - Buenos Aires Herald

A top Canadian fertilizer company is the latest to leave Argentina, amid a wave of foreign companies selling their operations to local businesses

buenosairesherald.com

The companies sound wise to sell while they can and get out. I love Argentina but most of the people I know that have companies here have ended up going out of business.

I hope things turn around long term but my money is things flip around again.

 

[Bharat]

https://finance.yahoo.com/news/houston-oil-ceo-calls-venezuela-230656306.html

"Venezuela is uninvestable" - Exxon CEO

For those of you with a soft spot for socialism, Kirchner, Kiciloff and the like, this is the kind of long term damage that socialism will do to a country. The US President is telling major oil companies "we're in control, the oil is bubbling to the surface, go get it" and the oil companies are saying "no way". The reason is that operations like natural resource extraction and distribution require enormous amounts of upfront capital and you need to know that your ability to recoup it all is protected by law, not just now but decades into the future. Like Argentina, Venezuela has outright seized assets and the population has deep socialist leanings and keeps electing people like Kiciloff. So nobody trusts them. Chile and Argentina share many of the same natural resource deposits yet only one of them is benefitting from it. The long term damage to Argentina's economy from this sort of mindset and behavior is mind-boggling when you think of foreign investment, jobs (real ones), exports (bringing in dollars), tax revenues etc.

Socialism is like heroin, feels so good until it feels so bad.

It is amazing how well Chile works. I can't tell if things are really improving or not in Argentina. Many friends are hopeful but they point out they are much worse off under Milei. I guess we will see.

 

[Bharat]

It's true. It has been a race to exit for foreign companies. It seems like companies are getting out while they can.

Argentina records negative foreign investment for the first time in over two decades - Buenos Aires Herald

A top Canadian fertilizer company is the latest to leave Argentina, amid a wave of foreign companies selling their operations to local businesses

buenosairesherald.com

Wow I am surprised to hear this news. I thought foreign investments were increasing in Argentina. I guess the numbers tell the real story.

 

[Wally]

Wow I am surprised to hear this news. I thought foreign investments were increasing in Argentina. I guess the numbers tell the real story.

We will take wins wherever we can. My wife is thrilled Victoria's Secret opened up here. My kids were happy that Decathlon and Shein stores opened up here.