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TheStreet Open House

Argentines jockey to cope with economic turmoil

By ALMUDENA CALATRAVA and DEBORA REY

BUENOS AIRES, Argentina (AP) a¿¿ Prices are soaring, foreign reserves are falling and the peso has had its sharpest slide in 12 years. Instead of rioting, though, Argentines are falling back on tried and true survival skills learned in earlier, more dire times.

Some are hoarding dollars, while others stockpile goods or plow their savings into real estate.

More people ride bikes now following recent increases in public transportation fares. They eat out less and buy cheap, pirated DVD copies of the latest films rather than go to the cinema.

With inflation running at about 30 percent, Sofia Basualdo, a 43-year-old geography teacher, has used shopping sprees to beat further price rises.

"I might pay one peso for a product today, but next week I'll likely have to pay two pesos," Basualdo said as she left a Buenos Aires supermarket pushing a shopping cart filled to the brim. "In this country, when you start smelling inflation it's best to buy and save."

Many Argentines note that the current economic woes are not as bad as Argentina's financial collapse in 2001-2002. Unemployment remains relatively low, and many people benefit from government handouts. Yet they worry the country may be at a tipping point.

"People are adopting defensive measures to survive," said Jorge Raventos, a political analyst and former spokesman for Argentina's foreign relations ministry. "People endure this by zig-zagging along, but it's hard to know how much they can take before they explode."

The thirst for dollars was fed over the past few days when the peso suddenly slipped 15 percent against the greenback.

Although it is exceedingly difficult because of strict regulations, some people and businesses have succeeded in past years in sending their dollars out of Argentina as a hedge against inflation. Then Deputy Economy Minister Axel Kiciloff last year estimated Argentine individuals and companies had socked away up to $200 billion in undeclared currency outside the country.

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