Monday, May 30, 2011

Make 500 USD a day in the streets of Buenos Aires!!

Dollar at 3.50? Not any more.

No kidding! Who said there are no opportunities after an economic collapse?
Here’s the deal. Remember how we used to have a fictional 1 to 1 exchange rate with the US dollar that practically destroyed us and pressed the “reset” button in Argentina in 2001?

Well, our wise populist leaders are artificially keeping the dollar down, so the official exchange rate is around 4 pesos or 4.10 per dollar, but on the street they are paying up to 4.50 for it. Say you are a tourist looking to sell dollars, the bank pays you the artificially low rate, say 4.07, while on the street they pay you 4.15. The question though is, why would anyone buy dollars in the black market. The reason is that there’s a limit to how many USD you can buy at a time and most important, they ask for ID. People here know better than having the government know you’re putting your money into dollars. It’s the best way to have the tax hounds go after your company or personal finances, start investigating your assets and freezing you accounts. During the Soccer world cup for example, those that foolishly bought big screen TVs with their credit card or gave their personal information otherwise when making the purchase, they got a visit soon after by the Argentine IRS.

Because of this, with 10.000 USD to work this “bicycle” scheme, you can make about 500 USD a day, buying at the bank, selling on the street, then getting back in line at the bank and doing it all over again. Because you spend most of the time in lines at the bank, these guys are called “coleros”, people that form lines and often work for a bigger fish that owns a “cave”, a store that may do business with clothing or a small drugstore, but its just a front for a buy/sell dollar business. They usually hire others to do the line for them, unemployed people with no resources, and willing to use their ID. There’s 6.000 “coleros” already identified but that’s not a problem, there’s more than enough unemployed people willing to replace them in spite of risking financial penalties. How big is this business? As of today, it moves 30 million USD per day.

The risk? Other than risking your financial status and getting banned from a number of banks, the greatest problem is that you risk getting identified and targeted by criminals because of the amount of cash you handle. One “arbolito” that I used to know (“tree”, the person that sells the green dollars on the street), he got murdered for the cash he had at hand. So yes, there’s a risk involved, but as the president says, crime here is mostly a “sensation”. Sucks though that the “sensation” you and your family have after getting shot to death, happens to be so very real.
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Maldek said...

The second the IRS is given the manpower to investigate private persons buying something unremarkable as a TV (a 200ft yacht or a multi million $ estancia I would understand) you can be 100% certain you are living in a socialist dictatorship.

Such conditions are (for me) unbearable and unacceptable. Living under threats like these would have me leave the country yesterday rather than tomorrow.

Matt said...

I've lived in two foreign countries that had significan black market exchange rates. Often you had to learn by word of mouth where and when you could exchange U.S. Dollars. A few times I made pocket money working similar exchanges like you describe.

K said...

This reminds me of a scam I heard about a few years ago in Shenzhen, which borders on Hong Kong.

The scam went like this; a guy would obtain a wad of fake HK$500 and HK$1,000 bills. All day he would ride taxis in Shenzhen, every time going to or from the border crossing points along the border. And every time pretending to be in a hurry. The trips would cost about 50 to 100RMB, but when it came time to pay he would "discover" that he only had a big HK$ "banknote".

At the time about HK$1 = 1.1RMB. So the countefeiter would offer to receive change in RMB at HK$1 = 1RMB. The taxi drivers would happily accept, thinking they would be getting a windfall profit. Most of the drivers would not know that they had been tricked, since they either could not exchange the money because they did not have the proper documentation at the bank, or they stopped the exchange when they realized that their windfall profit would disappear in the transaction fee.

The counterfeiter ran the risk of capital punishment if the PRC police caught him.

A similar and even safer con game for the conman, was used by an African guy I knew there. He would some times trick local hookers by paying for their services with a bank note from his home country, which would have a lot of zeros on it. Of course the value of the note's paper was more than the face value. Since the women got paid for a criminal service, they never would even dare to complain to the police.