What a Currency in Collapse Looks Like: Soup Kitchens, Barter Markets, and Civil Unrest

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via yahoo:

BUENOS AIRES, Argentina (AP) — Men wait outside the metal-grill door of a soup kitchen in a slum, hoping to get a small serving of beef and mashed potatoes. At a barter market on the capital’s outskirts, a woman tries to persuade another to exchange for her granddaughters’ tiny shoes.

Argentines are struggling in crisis in what was once one of the world’s most prosperous nations. Consumer prices are soaring, unemployment is high and the Argentine peso has plunged, bringing back haunting memories of the country’s economic meltdown in 2001 that pushed millions into poverty.

A growing number of people arrive at the “Happy Kids” soup kitchen in the Villa 1-11-14 shantytown, where servers try to stretch out steaming pots of stew because many more than expected are lining up for food.

“The city government gives us money for 440 rations a day, but we’re being forced to prepare smaller portions so that we can cover 600 rations,” said Cintia Garcia, who runs the soup kitchen.

A series of events battered the economy.

First, a severe drought damaged crop yields in the world’s third-largest exporter of soybean and corn. The situation worsened beginning in the first quarter of 2018 as world oil prices increased and then interest rate rises in the United States led investors to pull dollars out of Argentina.

That caused jitters among Argentines, who have stashed away dollars as a cushion since the 2001 economic implosion, and a rush to buy scarcer dollars pushed the peso’s value down. Despite several interest rate hikes by the Argentine Central Bank, the peso has lost more than half its value in less than a year.

President Mauricio Macri had to seek a $50 billion loan from the International Monetary Fund. Last week, he announced a series of austerity measures, including new taxes on exports and the elimination of several government ministries. He said he would allocate more economic aid and strengthen food plans for poor Argentines.

With unemployment around 9 percent and consumer prices surging, some Argentines are again turning to barter clubs, which first emerged during the collapse nearly two decades ago.

The tumbling peso has pushed up prices for fuel and, in turn, transportation costs. That has affected food prices in a country where most grains and other goods are transported in trucks. Inflation is expected to reach an annual rate of more than 40 percent this year, the Central Bank says.

“To make doughnuts a month ago, I used to spend 150 pesos (almost $4) for oil and seven bags of flour. Now it’s more than 400 pesos,” complained Gladys Jimenez.

Jimenez, who is from Paraguay, is one of those who rely on the “Happy Kids” soup kitchen in Villa 1-11-14, a slum crowded with tens of thousands of Argentines and immigrants from neighboring countries.

The price of beef has also increased in one of the world’s top meat-consuming countries. Nicol Alcocer, a teenager who attends an educational workshop where the food is distributed in the slum, said that previously she would eat roast every Saturday. “Now it’s every four months,” she said.

The rapid fall in the peso brings frequent boosts in the prices charged by vendors, leading to anger. Some slum dwellers recalled that when the peso recently fell to 40 to the dollar, they lined up at small local stores but the owners refused to sell to them.

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