Rebirth: Japanese investor

   Chapter 494 Tango Effect

   Kishimoto Masayoshi and Kobayashi Kiyoshi chatted for a long time. Kishimoto also needs the other party to make a confidential and detailed plan.

  Kishimoto Masayoshi knows that not only the Japanese, but also many people in the world know very little about Argentina as a country.

   The one I know the most is Argentine football. Otherwise, it is the Falklands War that broke out between Argentina and Britain.

   In addition, little is known. On the international stage, it exists like a small transparency. Even when it comes to South America or Latin America, Brazil is often the first thing that comes to mind.

   In fact, Argentina has a variety of unique natural conditions that are conducive to economic development. Its population is only 4% of India's, but its land area is 85% of its size.

  India is 1/3 of China's land area and has more arable land than China. Argentina has a mild climate, fertile land and flat terrain.

  Argentines are often proud to say that our plains, from the Atlantic Ocean to the Andean foothills, will not touch a single stone.

   In addition, Argentina is also rich in resources, among which the reserves of the rare metal beryllium ranks second in the world, the reserves of uranium ore resources rank first in Latin America, and resources such as oil and natural gas are also relatively rich.

   Other conditions in Argentina are also well suited for economic development. It has more than 5,000 kilometers of coastline, numerous bays and a mild climate that provides Argentina with many ice-free ports.

   Argentines are mainly descendants of European white immigrants, making up about 97% of the country's total population. Therefore, there is basically no ethnic conflict in Argentina.

   In general, Argentines have a relatively high level of education and a relatively good workforce. The educational level of Argentines is also among the best among third world countries.

  In 2000, Argentina's total foreign debt reached 146.2 billion US dollars, equivalent to 4.7 times of foreign exchange earnings in that year, and debt repayment in that year accounted for 38% of export revenue. Argentina's per capita income is as high as more than 8,000 US dollars.

   Affected by the Southeast Asian financial crisis and the Brazilian financial crisis, in November 2001, the Argentine government announced that it was unable to repay its foreign debts and decided to implement debt restructuring.

  From December 20, 2001, when President de la Rua announced his resignation to January 1, 2002, when Senator Duard of the Justice Party took office as the new president, the five presidents changed in just 12 days, indicating that the political crisis is also quite serious.

  Large-scale riots and intense political turmoil forced the government to abandon the currency board exchange rate system in which the peso was pegged to the U.S. dollar, and domestic and foreign investors' confidence in Argentina plummeted. Argentina has not only encountered a debt crisis, but also a political and social crisis.

   Prior to this, the Argentine economy had fallen into depression, and the government's fiscal deficit and debt had deteriorated significantly. The government had to finance the deficit through domestic banks, and the ratio of government debt to bank assets rose sharply, which significantly increased the credit risk of the banking system.

   On December 23, 2001, the Argentine government announced that it would temporarily suspend the repayment of interest and principal of all public bonds. On December 24, it announced that the country's third currency, the Argentine dollar, would be issued in January 2002.

  The Argentine peso depreciated sharply, reaching a peak of 75%. Argentina's inflation rose rapidly. After the devaluation of the peso, the cumulative inflation rate reached 80%. A large number of enterprises closed down, and the unemployment rate rose sharply to 25%. In 2002, the economy fell by 10.9%.

   At the end of 2004, after arduous negotiations, an agreement was finally reached with international financial institutions, and a debt restructuring plan was announced to repay old debts by issuing new debts at a face value of only 25-35% of the debt. On March 3, 2005, the debt restructuring was successful, and the debt crisis that lasted for more than three years came to an end.

  Argentina has been included in the list of "crossover countries". In less than a hundred years, Argentina has evolved from a world economic power to the world's largest bankrupt country.

  Argentines also have a strong sense of over-consumption, so it is difficult to increase their savings rate. Taking 1998 as an example, Argentina's savings rate of 17.4% is not only lower than the Latin American average (19%), but also lower than Brazil (18.6%), Mexico (22.4%) and Chile (25.2), and even lower. in South Korea (33.8%).

   In fact, Argentina’s per capita GDP is less than South Korea’s. In 1998, Argentina was $8,030 and South Korea was $8,600.

   In the same year, Argentina’s private per capita consumption was US$7,818, while South Korea’s was only US$6,695. Due to the low rate of domestic savings, Argentina had to rely on external funds to expand reproduction. It is no wonder that after Argentina's debt crisis broke out in the early 1980s, it encountered a debt crisis again after a lapse of less than 20 years.

  More and more research results show that a higher saving rate is both the driving force and the result of rapid economic growth.

  When economic development accelerates, people’s living standards also improve rapidly and increase savings without reducing consumption.

   The increase in savings in turn expands investment, accelerates economic development, and ultimately leads to a virtuous cycle of savings and growth.

   The financial crisis that broke out in Argentina has not only damaged its own vitality, but also spread to neighboring Brazil and the whole of Latin America. A situation like this in Argentina is called the tango effect.

Since the 1990s, with the continuous development of financial globalization, when the financial situation of a certain country or a certain region is turbulent, or even after a financial crisis, it will have a contagious effect. The method is to find a title that can symbolize something in your country or region from your country.

  After the financial crisis broke out in Mexico in 1994, there is a kind of wine in Mexico called tequila, which refers to the wine produced in this country, so people call the effect of the financial crisis in Mexico the tequila effect.

   When the financial turmoil occurred in Brazil in 1999, Brazil was famous for its samba dance, so the international community said that the impact of Brazil's financial turmoil was called the samba effect.

   At this time, Masayoshi Kishimoto naturally remembered his five-year gambling agreement with Maki Iwasaki.

  Iwasaki Maki's investment focus is in South America centered on Brazil. I knew for a long time that I would eat her. Although victory is impossible, intrigue in the business field is the norm.

   When this time comes, he will definitely take back the other 50% of Hard Gold Media's shares from Maki Iwasaki.

  Perhaps, in less than five years, Iwasaki Maki will take the initiative to sell this part of the hard gold media shares in her hands to herself to fill the huge gap in her investment in South America.

   At that time, although there was more than one shareholder of the entire Hard Gold Group, there was no one who could threaten him.

   Whoever wants to withdraw shares can be repurchased by him effortlessly. Similarly, he wants to be fully privatized, and then realize the sole proprietorship, which is as easy as drinking water.

   (end of this chapter)