Seeking Dollars Desperately: Massive US Dollar Shortage in Argentina as Peso Inflation Runs 25%-30%

My friend blbl has sent me the following link to the Figaro and here is the (rather poor) Google Translate link, a French newspaper.  Here are quotes from the translated link, with improvements I've made:

Greenback withdrawals have been restricted in order to preserve the reserves of the central bank. "Seeking dollars desperately": for months, an obsession of the greenback touches the Argentinians, as the government tightens controls on foreign currency purchases. 

Restrictions applied since October, forcing the Argentines to obtain special permission for each withdrawal of dollars, was added a series of restrictive measures on travel abroad, imports and remittances outside the country. 

The aim is to preserve of central bank reserves (47 billion) under pressure due to the reduction of current account surplus (government expenditure increase by an average of 30% against 26% for recipes) while Argentina still has no access to international credit for refinancing as a result of defaulting on its debt in 2002. For now, these measures were successful in slowing capital flight, increased from $ 8.4 billion in the third quarter 2011 to 1.6 billion in the first quarter of the year. But this at the cost of a dollar surging parallel. The authorities had to call the police to close the illegal exchange bureaus that have exploded in the center of Buenos Aires, and beautiful golden retrievers have been specially trained to "smell" (illegal) greenbacks. 

Inflation between 25% and 30%: The government is trying to change attitudes, while a large part of economic life is pegged to the dollar. The president, Cristina Kirchner , announced that she would change the dollar savings account in pesos, to give the "good example", calling her "friends, business owners and employees" to do the same.  She is not sure that's enough to calm the fears of his countrymen. For the leading economist Rogelio Frigerio, "the problem is not the dollar, but the peso and inflation." The latter, always overshadowed by the authorities, running between 25 and 30% per year for an estimated private practice, no incentive to save in the Argentine national currency. 

While officials of the central bank minimizes the problem of soaring dollar parallel, the haunting of the country is experiencing a new "corralito" blocking of bank accounts and a devaluation, as during the 2001-2002 crisis. Control of sales of foreign currency has also been called "corralito verde" by the Argentines, who took to the streets of Buenos Aires last week by tapping their pans in protest.

At the (inverse) beauty conquest of the ugliest currency, it seems like the USD is failing to get anywhere close to the top. This is another thing that (hyper)-inflationists have missed: many currencies will collapse well before the USD, and these collapse will force people to turn themselves to the least ugly choice, and so far, there isn't anywhere to turn but the USD (and maybe the SGD, but there aren't enough of these). I'm not counting the CHF and JPY as the central bankers of these countries are even more mad than Ben Bernanke, and one way or another, they will collapse before the USD does.

Still Too Much Bullishness For a Real Bottom [Updated x3]

On Friday, I closed some of my positions as I thought we were hitting bottom due to high level of VIX and a short term capitulation.

But:

• The market managed to recoup the losses and the VIX collapsed again, while it was a Friday, and speculators seemed too happy to load up on risk during the week-end
• There are too many people calling a buying opportunity still
• The US has been downgraded, and I do not see enough reaction besides emotionally charged anger against S&P.
• Gold and silver are soaring, showing that the "risk on" trade is moving from equities and other commodities into the precious metals.
• ECB's Chairman, Trichet has decided to monetize Spanish and Italian debt, although this is illegal and highly inflationary, the Euro is rallying, showing yet again, that the über-bullishness on the Euro is not deflating, while the economies of the Eurozone are collapsing.
• [Update] Goldman Sachs just downgraded their forecast for the S&P... they expect the S&P to end the year at... 1450 points! That's 20% gain in about 5 months...  Call that panic and bearish?
• [Update2] Barry Knapp of Barclays Capital tells on Bloomberg TV that he doesn't change his forecast for the S&P to end the year at 1450. He calls this decline a tremendous buying opportunity, and says that stocks are extremely cheap.
• Aug. 8 (Bloomberg) -- The combination of the past two weeks’ $1.94 trillion equity wipeout, record cash levels and rising dividends means the Standard & Poor’s 500 Index is offering comparable values to Treasuries.
  
  “Many corporations are in better shape than even the United States,” E. William Stone, who helps oversee $109 billion as chief investment strategist at PNC Wealth Management in Philadelphia, said in a telephone interview Aug. 6. “These companies are in a position to weather pretty much any sort of financial storm. Hopefully we won’t see that again. It certainly would argue for that tilt towards larger, stable companies with sustainable dividends.”
  

So I'm lost a bit here. I think the most likely scenario is a few more days of decline — I'm happy I've kept my short positions open — before the relief rally and the bounce that I will short.

Questions That Contrarians Should Be Asking Themselves

Here a few points that strike me to the point of being losing sometimes my sleep on them:

• That we are not running out of oil? That Peak Oil will take the price of oil to unbelievable levels? Do you know anyone who thinks oil will be a poor investment?
• Do you know anyone who thinks that Silver and Gold can decline meaningfully and stay there? Even after what happened to silver in May?
• Do you know anyone who believes that the US Dollar can have a meaningful rebound?
• That the Australian dollar and the Euro can collapse?

If you do, please email me the reports :-) 

If you don't, you know what side of the bet you should take.

Warren Buffett — The Ultimate Bull Market Phenomenon

I just came this blog post from M3 Financial Analysis (which I had never seen before). The blog seems to be an interesting one, and the post itself is awesome as it summarizes in a very good way many of my posts on Warren Buffet: the fact that he has been more lucky than skillful, benefiting from the longest bull market and the biggest credit bubble in history, losing his integrity in supporting anti-capitalistic and socialist ideas to push up his own book, and more recently, insider trading and other actions...

Here a few quotes:

Warren Buffett is not an expert at value. Value is non-rational and relative. Nobody is an expert at value since it does not exist. (just look at the 150 pe for the SP500 as an example...is that value now? is it value at 7? Either answer is equally inaccurate since they are both totally arbitrary.)

Warren Buffett is not an expert at derivatives trading. He sold billions of dollars of puts on the SP500, FTSE, Nikkei and Stoxx indexes right near the top of the market. There is a difference between being right and lucky. And though my view is that Buffet has more skill than just luck...he has primarily been the beneficiary of luck not skill.
[...]

Buffett continues to rationalize his holdings and trades. He continues to play out his own psychological patterns. And most important, he is now a victim of societies psychological patterns in that his decisions seemingly leave him no choice but to try to rationalize his actions and thesis rather than do something about them.
[...]
In my book, lucky is being on the right side of the credit-inflation story and playing the fiat game well on the way up. What is not lucky is trying to play that same game when the fiat system is dissolving before your eyes. But success via fiat is a high very much like, I guess, heroin or crack...great when you have some - but terrible when you don't. Buffett is addicted to the fiat system and his high is just starting to dissipate. Soon, he will be looking for replacement therapy. Methadone anyone?
[...]
So, what is Mr. Buffett's current investment technique?

He's become a promoter and a prop for the fiat money system. Masquerading as the last remaining real Bull-market success-story cheerleader, he's trying to convince everyone who will listen of marvelous and imaginative stories. For example, that his old ways (yes the lucky ones he used in the past) are the best choices, that the dollar is going to go in the tank, that holding cash for the last 8 years decreased your purchasing power. Much better to promote your own bubble manifestations like Well's Fargo, Bank of America, Conoco Phillips, GE and Moody's.

What I find truly sad and disingenuous is that he has resorted to promoting himself and his distortions via a structured public relations campaign. Specifically he has been used as a prop by Bernake and Paulson — obviously for his own benefit — is directly lying to people through his Op-ed and interview efforts.
What's more, he most likely is keenly aware of these facts. The only difference is that he has to lie in order to save his empire. If you were in his position you would most likely try to do something too rather than just watch the whole thing fall apart - even if it were crossing the line a bit. If Buffett tries to exit stage left he becomes a victim of his own bull-market demagogue status...everyone will try to exit with him. If he lies...he can simply say he was wrong but tried. (I think Barney Frank uses that technique a lot - but maybe its just most politicians)
[...]
What a down it will be for Berkshire and Buffett. A high climb becomes a long fall. People remember the fall much more than the climb when judging history - especially when they have no money left.
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The thesis that the dollar will go into the tank is a credit-inflation manifestation. The dollar is already in the tank - its down over 96% since the Fed took over managing inflation (if you want to call it that)...i mean protecting the dollar. But isn't it ironic, people are sure the dollar will go in the tank when it only has a few percent to go to get to zero. I am sorry to inform Mr Buffett - the dollar is already in the tank and maybe it wants to go up now for a few years. 38% retracement anyone?

Portuguese Two-Year Notes Yield the Highest Since 1999 — Ireland to Release Stress Tests Results Today — Euro Close Multi-Year High Against the Dollar

While the Euro is trading at above 1.42$ and is up 0.02 in 48 hours, the European are still crumble and trying to find some ways to avoid default...

March 31 (Bloomberg) -- Portuguese two-year notes dropped for a ninth day, pushing the yield to the highest since before the introduction of the euro.

The yield rose four basis points to 8.07 percent, the most since 1996, as of 8:37 a.m. in London. The 10-year yield was unchanged at 8.10 percent.

Irish two-year notes were little changed, with the yield at 9.53 percent, while the 10-year yield dropped two basis points to 10.08 percent.

March 31 (Bloomberg) -- Three of Ireland’s biggest banks may have to raise a combined 9 billion euros ($12.7 billion) in capital after stress tests are published today, said five people with knowledge of the matter.

Bank of Ireland Plc, the country’s biggest lender by market value, will seek as much as 5 billion euros, said two of the people. Irish Life & Permanent Plc will require more than 3 billion euros, while EBS Building Society will need about 1 billion euros, three people said. The people declined to be identified because the figures haven’t been made public yet. All three companies are based in Dublin.
[...]