Argentina Swaps Debt, Foreign Investors Are Screwed

Surely most readers here know about Argentina's economic problems. Well, today Argentina's president declared victory, since apparently the majority of the foreign bondholders accepted their debt swap offer. What this means is that the foreign investors will turn in their old bonds (which Argentina is not paying interest on) and get new ones (which they will pay interest on). The catch... the new ones are only worth 20-30% of the value of the old ones. I'm very sorry if you bought one of those things.

This should be a lesson for expatriates living in Argentina... keep your money out of this country. People have asked me about how to open a bank account when they arrive, transferring their savings here, etc. Just don't do it! Keep only the money you need on a monthly basis. Don't think about putting your life savings in this country.

Now, I'm not saying that you shouldn't invest in Argentina. Lots of people are making money on real estate, businesses, etc. But don't take your liquid assets and put them in banks here. Argentina is not the place for your nest egg. Did you know that some banks require you to buy private insurance against government confiscation of the money in the account? I'm not joking.

Before you consider an investment here, realize that you are investing in a high risk environment. There are certain things that are safe here and certain things that are not. It seems like every 10 years or so Argentina has a financial meltdown... which means we have another 5 years to go until it happens again. So, just be vigilant. You don't want to be the next foreign investor that loses their shirt.

If you have an idea for an investment or business and you want me to give you an opinion, let me know. I won't do a thorough analysis for free, but I'd be happy to give you a gut-check opinion. I'm familiar with what kinds of things are going to work here and what's going to be difficult/risky.