Argentina to burn bondholders in defiance of US court ruling

Mr_Red

President says country will not submit to extortion after court rules in favour bondholders

Argentinian president Cristina Fernandez de Kirchner ruled out complying with a US court order to pay holders of defaulted bonds in full, leaving the country two weeks to come up with a way to avoid a second debt crisis in 13 years.

Speaking in a nationwide address hours after the US supreme court declined to hear Argentina’s appeal of the case, she used the term “extortion” to describe the ruling that requires the nation to pay defaulted bondholders when it makes payments on its restructured debt.

The country’s next interest payment is due June 30th, limiting the time for Ms Fernandez to reach an accord with holdout creditors including hedge-fund manager Paul Singer’s Elliott Management Corporation.

Ms Fernandez said complying with the ruling was impossible and would exposeArgentina to as much as $15 billion in claims from creditors who rejected restructuring offers following the country’s $95 billion default in 2011.
The president said she instructed economy minister Axel Kicillof, who negotiated to resolve debt disputes with the Paris Club and Repsol SA in the past four months, to figure out a way to keep paying holders of restructured notes.

“Argentina has the willingness to negotiate,” Ms Fernandez said. “What it doesn’t have - and I’ll spell it out for you - is the need to be subjected to such extortion. I don’t think it’s deserved.”

Argentina’s restructured bonds plunged an average 9.3 per cent yesterday as investors considered the country’s next steps. Ms Fernandez said in August that she would offer to swap holders of restructured New York-law bonds into debt governed by local law to avoid having to pay holdout creditors in full. Government attorneys later denied having a plan to do so.

According to a May 2nd memo leaked to an Argentine website last month, the country’s attorneys recommended a default and immediate restructuring in the event the supreme court rejected the appeal, which was tied to claims totaling $1.3 billion.

Some investors are speculating Mr Kicillof may indicate as soon as today if the government’s plan is to change the jurisdiction on the bonds, according to Jose Luis Espert, who runs research firm Espert and Asociados in Buenos Aires. “I don’t know how viable that is, but there’s very little time to negotiate,” Kathryn Rooney Vera, a macroeconomic strategist at Bulltick Capital Markets, said in a telephone interview from Miami.

Last week, Mr Kicillof raised the prospect of negotiating with the holdouts, a step the country has previously rejected.

The dispute revolves around Argentina’s 2001 default on a record $95 billion in debt. The country offered to swap the securities with bonds worth about 30 cents on the dollar in 2005 and made a similar proposal in 2010. Owners tendered about 92 per cent of the outstanding debt. Argentina calls the investors who have refused previous debt exchanges “vultures” because they bought many of the bonds post-default at a discount, angling to eventually collect a windfall. “America’s highest court has spoken,” NML Capital, a unit of Elliott, said in a statement before the speech.

http://www.irishtimes.com/business/sectors/financial-services/argentina-to-burn-bondholders-in-defiance-of-us-court-ruling-1.1835434

Renegade Mechanic

And their leader appears to have more balls than anyone here. Good on her.

Arthur Beesley

Mr_Red wrote: »

President says country will not submit to extortion after court rules in favour bondholders



http://www.irishtimes.com/business/sectors/financial-services/argentina-to-burn-bondholders-in-defiance-of-us-court-ruling-1.1835434

This could be interesting how this plays out burning the Bond holders.

The US were pushing ARG like the EU was pushing Ireland

Not quite the same scenario though - this was bog standard public / national debt, nothing to do with nationalization of private debt of the banking sector.

fleet_admiral

Does Argentina have oil? They might need some 'freedom' now

hmmm

Argentina has been suffering for 10 years after their last default. The current situation is that Argentina is desperately trying to get back into international debt markets, and had come to an agreement with some of the bondholders to repay them. However, a group of bondholders have sued Argentina to demand repayment of the full debt, and Argentina has lost the case. Now the country faces bankruptcy again while the President tries to pretend that she is some sort of hero.

I find it ironic that it is the hard left who want to burn bondholders, while at the same time they want to run massive government deficits.

Arthur Beesley

Renegade Mechanic wrote: »

And their leader appears to have more balls than anyone here. Good on her.

So you think it's okay for the country to welch on it's obligations? Probably shouldn't have borrowed if they couldn't afford to repay.

Arthur Beesley

fleet_admiral wrote: »

Does Argentina have oil? They might need some 'freedom' now

Well given that this is public debt, and they have already defaulted if's safe to say they don't have oil, or else they massively mismanaged it, if they do.

szatan84

Argentina is to comply with a US court order? The way I see it Argentina is outside US jurisdiction so the court order isn't worth a w***. And let me guess, most of the bondholder are American.

Arthur Beesley

Renegade Mechanic wrote: »

And their leader appears to have more balls than anyone here. Good on her.

This is the same one who want's to annex the Falklands?

Sounds like she has an election coming up and is trying to whip up support for her party and failed government.

She should probably focus more on managing the public finances than these publicity stunts.

No wonder the Falklands residents are happy to stay part of Britain.

Arthur Beesley

szatan84 wrote: »

Argentina is to comply with a US court order? The way I see it Argentina is outside US jurisdiction so the court order isn't worth a w***. And let me guess, most of the bondholder are American.

Put it this way - if they ever want to borrow money again they will comply.

bear1

I believe Argentina has now defaulted twice in just over a decade.
Once in 2001 and again in 2012.
The bottom line is that Argentina borrowed vast amounts of money, now that they want the money repaid they are "vultures".
On the other hand though, the US might be held to the same accountability if their Chinese creditors ever come knocking.

Augmerson

Arthur Beesley wrote: »

This is the same one who want's the Falklands back?

I think most Argentine's (and certainly the ones I spoke to) want the Falklands/Las Malvinas but it was never theirs to begin with. It was Dutch I think before it was British.

Arthur Beesley

Augmerson wrote: »

I think most Argentine's (and certainly the ones I spoke to) want the Falklands/Las Malvinas but it was never theirs to begin with. It was Dutch I think before it was British.

Sorry, you are correct - removed reference to 'back' and replaced with 'annex'.

Amirani

szatan84 wrote: »

Argentina is to comply with a US court order? The way I see it Argentina is outside US jurisdiction so the court order isn't worth a w***. And let me guess, most of the bondholder are American.

I don't think you really understand the situation.

A huge amount of sovereign debt is sold to international investors on US markets. If Argentina ignores a US court ruling such as this, they're going to find it very difficult to finance the running of their country, and will probably have to pay higher coupon rates on debt issues.

comongethappy

Country borrows tens of billions to run its mismanaged state.

Country declines to pay it back.

Apparently some think thats ballsy?

Suck it up, pay your dues & manage your country better.
That ballsy.

Rightwing

comongethappy wrote: »

Country borrows tens of billions to run its mismanaged state.

Country declines to pay it back.

Apparently some think thats ballsy?

Suck it up, pay your dues manage your country better.
That ballsy

I would estimate 95% of the population haven't a clue when they shout 'burn the bondholders'. Many of them shouting it as they queue up for their welfare payments and others as they they collect their massive public sector wages.

I am pie

1. The debt in question is 8% of the country's overall debt.

2. The outstanding 92% of debt was restructured in 2005 and again in 2010, terms where agreed and no payment has ever been missed.

3. The bulk of the holdout 8% is owned by NML capital, to get it back they created a lobby group who lobbied the US govt and US supreme court. The current administration is sympathetic to Argentina's claims.

4. In 2008 NML capital (Paul Singer owns it, it's a hedge fund, he's a strong defender of the 1% and a rapidly becoming an influential person in Republican conservative politics) bought junk bonds for a knockdown price of 50m USD (sub investment grade bonds) betting that despite the knowledge that Argentina had defaulted and was restructuring debt and rebuilsing it's economy they would play the long game and claim back 100%.

5. They do this in full knowledge that it would jeopardise the restrcuturing of the 92% of outstanding debt, paid as per the terms. It opens a legal recourse for those bondholders to sue for 100%, bankrupting the country and tossing it onto the scrap heap. Bear in mind these bonds were originally issued at a time when the country was collpasing around itself and had 3 govts in 2 years.

6. The rate of return which Mr Singer and his merry band of vultures are seeking is 1068% interest. In other words, they bought 50m USD of junk bonds (the value of your investment may go up or down??) and are now suing for 1.5billion USD. This could open the door to 15billion worth of debt. Argentina currently has foreign currency reserves (ain't nobody taking payment in Arg. pesos!) of 32bn (roughtly) USD. Spending half of this on debt would cripple the country.

Options are: negotiate a payment schedule, refuse to pay or pay in full straight up. The only fair and sensible option is negotiating with the vultures. Unfortunately the Argentine govt has engaged in all sorts of polemic and speeches calling the hedge fund all sorts fun names and have stated they wont pay them a dollar.

I do not like the current Argentine govt, they are populist and have mismanaged the economy terribly in the last 5 years. I support the measures they took to exit the default in terms of debt restructuring, but now they face a serious hurdle to exit that program of repayments as the cuddly face of capitalism insists on a 1068% interest on it's investment.

Significantly Argentina needs to make it past March 2015 without making a 100%full payment to NML capital as they would then pass the period of time the 92% could make full claim for payments.

It's a wonder why the developing world has such anti-US sentiments, when the highest US courts supports loan sharks demanding 1068% interest over 6 years, when it's more important for a hedge fund to make 1068% interest on a 50m USD investment than it is for a sovereign state to become a stable country and exit the worst financial crisis in it's modern era. A country which we should remember only 30 odd years ago had a military dictatorship. It's hard enough for Argentina to escape it's past without the US supreme court and Republican hedge funds potentially exposing them to 15 billion dollars of debt with one stroke of a pen...payment due today.

Caliden

Is there any country who ISN'T in debt??

Seems to be that everyone is loaning each other money while borrowing it from someone else...

I am pie

szatan84 wrote: »

Argentina is to comply with a US court order? The way I see it Argentina is outside US jurisdiction so the court order isn't worth a w***. And let me guess, most of the bondholder are American.

When the bonds were issued, no one in the right mind would buy even junk bonds back by an Argentine court, it wasn't clear there would even be an Argentine court, so bad was the crisis. To sell junk bonds they had to issue them in NY via NY state law.

The mistake they made was not using a common clause in the contract including a collective bargaining clause, basically stopping NML capital doing what they are doing now and going on a solo run to sue for 100% payment at 1068% interest overt 6 years.

YFlyer

Caliden wrote: »

Is there any country who ISN'T in debt??

Seems to be that everyone is loaning each other money while borrowing it from someone else...

Yeah there must be some spreadsheet of all the countries loans and where they borrowed it from.

I am pie

comongethappy wrote: »

Country borrows tens of billions to run its mismanaged state.

Country declines to pay it back.

Apparently some think thats ballsy?

Suck it up, pay your dues & manage your country better.
That ballsy.

Argentina is currently paying 92% of it's debts on time and to a schedule. They have agreed a debt restructuring program with countries such as the UK, US, Japan, EU countries and Aus in the club of PAris. They have paid off the IMF.

What remains outstanding is 8% of their debt who refused to go through a restructuring. They demand 1068% interest over 6 years.

I dont crisis should be an opportunity for usuary and misery should not give 1000% + rates of return.

It's a significant risk to the global economic system. Defaults happen, they need to managed and agreements stuck to for restructuring. If a small minority (on a 50m USD investment) can turn round and say, no, we want 100% and we want 1000% interest then why will anyone ever accept a restructuring event?

Why will anyone invest in anything if they can wait for default events and extract extremen profits suing for full payments on junk bonds?

Do you think you or I if we bought privately issued junk bonds could do the same? No.

Our investment would be at risk as it was categorised as sub investment grade, it's value would be questionable and return not guaranteed. That's kind of the point of junk bonds.

Notably the current US govt is supportive of Argentina's position.

Philo Beddoe

Caliden wrote: »

Is there any country who ISN'T in debt??

Seems to be that everyone is loaning each other money while borrowing it from someone else...

I'm fairly certain every country is in debt. Where people get confused is in thinking that countries primarily borrow directly from other countries. Most government debt is owed to banks, investors, financial institutions etc - governments sell bonds which are bought up by these private individuals/organisations as investments.

comongethappy

Philo Beddoe wrote: »

I'm fairly certain every country is in debt. Where people get confused is in thinking that countries primarily borrow directly from other countries. Most government debt is owed to banks, investors, financial institutions etc - governments sell bonds which are bought up by these private individuals/organisations as investments.

And fundamentally, you & me.

I'd say the majority of national debt is purchased with deposits & pension contributions.

Phil_Lives

bear1 wrote: »

The bottom line is that Argentina borrowed vast amounts of money under Chavez's rule, now that they want the money repaid they are "vultures".

Which Chavez?

bear1

Phil_Lives wrote: »

Which Chavez?

Whoops sorry, my mistake. I was reading two different articles about Venezuela and Argentina

I am pie

Phil_Lives wrote: »

Which Chavez?

Indeed!

I suppose they might have meant that Venezuela bought billions of dollars worth of Argentina's debt. Maybe.

The debt (the 8%) was issued originally as bonds backed by NY state law. It was issued in haste (certain standard clauses omitted from the contracts which would have guarded against this arrangement) in a period when Argentina had governments falling, riots in the street and several civilians dying, unemployment was spiralling, the govts froze private bank accounts and many middle class families found themselves with nothing overnight. The

Argentine peso has never recovered and to this day anyone that can save, saves in USD, typically holding the bank notes under the mattress if they are middle class and offshore in US accounts if they are wealthy enough to afford the cash runs to miami.

The Diabolical Monocle

Just to add to I am pie's concise and great summation of whats going down.

Over 100 British MP's got together to sign and send an 'amicus curiae' (friend of the court) to the US courts in support of Argentina.

Now that has to tell you something. The British parliament aren't ones to jump to Argentina's political aid but they recognize, as do officials in France who also offered support to Argentina (among others), that the Cayman islands registered NML capital, which has used this same ploy in third world Africa, is something the world can really truly do without.

The owner of NML is an old guy called Singer, a billionaire in his 70's.
In what little time he has left on this planet his preferred pastime is sabotaging well functioning debt deals in order to blackmail countries with the threat of poverty. For over 1000% profit margin of course.

Curly Judge

Renegade Mechanic wrote: »

And their leader appears to have more balls than anyone here. Good on her.

You can't eat balls!

everlast75

Caliden wrote: »

Is there any country who ISN'T in debt??

Seems to be that everyone is loaning each other money while borrowing it from someone else...

"What happened to you China - You used to be cool!"

bear1

I am pie wrote: »

Indeed!

I suppose they might have meant that Venezuela bought billions of dollars worth of Argentina's debt. Maybe.

The debt (the 8%) was issued originally as bonds backed by NY state law. It was issued in haste (certain standard clauses omitted from the contracts which would have guarded against this arrangement) in a period when Argentina had governments falling, riots in the street and several civilians dying, unemployment was spiralling, the govts froze private bank accounts and many middle class families found themselves with nothing overnight. The

Argentine peso has never recovered and to this day anyone that can save, saves in USD, typically holding the bank notes under the mattress if they are middle class and offshore in US accounts if they are wealthy enough to afford the cash runs to miami.

I was reading about Venezuelas and Argentinas current problems and got my post mixed up.
I'm not generally a fan of Singer but the decision made was the correct one IMO.
As the bonds were "Pari Passu" and the specific wording used it would have been almost impossible to come to a different decision, hence the weighting in the ruling.
It would be worth noting though that there may have been a different outcome to this had Argentina negotiated with regards to the haircut rather than a take it or leave it offer.
They never negotiated in good faith and this is what got them into this position. The original ruling would have probably gone their way had the judge been able to see that they had negotiated in good faith rather than using the Argentinean version of negotiation in this case which seemed to read something like, "if you don't like this deal, then fcuk-off"

I am pie

The Diabolical Monocle wrote: »

Just to add to I am pie's concise and great summation of whats going down.

Over 100 British MP's got together to sign and send an 'amicus curiae' (friend of the court) to the US courts in support of Argentina.

Now that has to tell you something. The British parliament aren't ones to jump to Argentina's political aid but they recognize, as do officials in France who also offered support to Argentina (among others), that the Cayman islands registered NML capital, which has used this same ploy in third world Africa, is something the world can really truly do without.

The owner of NML is an old guy called Singer, a billionaire in his 70's.
In what little time he has left on this planet his preferred pastime is sabotaging well functioning debt deals in order to blackmail countries with the threat of poverty. For over 1000% profit margin of course.

Mr Singer and his band of vultures specialise in this operation, they have outstanding cases against various sovereign countries around the world. Puerto Rico I believe is next.

They seek out distressed debt and profit from misery at a rate which other investors can only dream of.

Sudetenland

Caliden wrote: »

Is there any country who ISN'T in debt??

Seems to be that everyone is loaning each other money while borrowing it from someone else...

All countries would borrow.

The Diabolical Monocle

fleet_admiral wrote: »

Does Argentina have oil? They might need some 'freedom' now

Well yes Kent, yes they do.


Some 927 million barrels in the Vaca Muerta operational area.

They're working on getting it.

Geuze

YFlyer wrote: »

Yeah there must be some spreadsheet of all the countries loans and where they borrowed it from.

Here is European public debt data;

http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-22012014-AP/EN/2-22012014-AP-EN.PDF

Estonia has the lowest public debt, at about 10% of GDP.

Overheal

fleet_admiral wrote: »

Does Argentina have oil? They might need some 'freedom' now

It was funny the first 90,880,333 times I heard it.

Geuze

Rightwing wrote: »

I would estimate 95% of the population haven't a clue when they shout 'burn the bondholders'. Many of them shouting it as they queue up for their welfare payments and others as they they collect their massive public sector wages.

Note that people wanted to burn the "senior bank bondholders",

NOT

govt bondholders.


I fully agree that every cent of genuine govt debt should be repaid, even if we all have to pay way more tax.

But I do not agree with borrowing to inject capital into banks, which is used to repay bank bondholders.

P_1

Sorry i'm going to side with the elected government over the vulture hedge fund on this one

I am pie

bear1 wrote: »

I was reading about Venezuelas and Argentinas current problems and got my post mixed up.
I'm not generally a fan of Singer but the decision made was the correct one IMO.
As the bonds were "Pari Passu" and the specific wording used it would have been almost impossible to come to a different decision, hence the weighting in the ruling.
It would be worth noting though that there may have been a different outcome to this had Argentina negotiated with regards to the haircut rather than a take it or leave it offer.
They never negotiated in good faith and this is what got them into this position. The original ruling would have probably gone their way had the judge been able to see that they had negotiated in good faith rather than using the Argentinean version of negotiation in this case which seemed to read something like, "if you don't like this deal, then fcuk-off"

That's a misrepresentation of Argentina's 2 cycles of debt restructuring in 2005 & 2010, which were universally supported by foreign debtor nations. Strange that agreements can be made with all other international creditors except those misery funds which specialise in buying junk bonds and suing for 1000+ interest rates.

As Singer and co. have demonstrated negotiating for a non usuarial outcome is not their MO. You might as well plead with the hangman not to put the noose around your neck.

Technically it was the correct ruling, to the letter of the contract. You would have hoped the the US would have legislated against or regulated against this type of speculation on sovereign junk bonds, on the basis that it undermines the validity of every existing debt restructuring deal which hasn't reached maturity.

Possibly the stability of the international financial system, the south american region (a collapsed Argentina will have knock on effects in Brazil, Chile and Uruguay and the last, possibly some negative ripple effects in Mexico too) and Argentina's future non-isolation in international politics.

You are talking about a country with one of the worlds largest untapped shale gas fields. Rather than allow Singer and his rats to feast on it's carcass you'd think that maybe it would be a better idea to have Argentina and it's gas resources as a strong leader in the region, rather than potentially another Venezuela. The US objective (I realise that AH is not the place for this) would have to be integrate Argentina with their "regional partners" (Colombia, Mexico, Chile) rather than drive them towards Venezuelan style isolation.

There is an election here next year, a possibility exists that a candidate with a more international outlook could win. It will be less likely if the country is bankrupted so that some Hedge fund ran by and for the benefit of the greedy few can rack up incredible profts.

Morally reprehensible, politically and economically destabilising, but technically correct. What is "correct" about any of that from the perspective of the average Argentine?

The Diabolical Monocle

Curly Judge wrote: »

You can't eat balls!

Rule 34.



No exceptions.

comongethappy

P_1 wrote: »

Sorry i'm going to side with the elected government over the vulture hedge fund on this one

I'm with the vultures tbh.

Sure it sucks, but would if I could yield a 1000% profit on a 50m punt, would I?
Probably.

If it was my job to do what they are doing, I doubt I would do differently....
Plus I have little sympathy with a government so inept as Argentina's.

Arthur Beesley

Curly Judge wrote: »

You can't eat balls!

Even meat balls?

bear1

I am pie wrote: »

That's a misrepresentation of Argentina's 2 cycles of debt restructuring in 2005 & 2010, which were universally supported by foreign debtor nations. Strange that agreements can be made with all other international creditors except those misery funds which specialise in buying junk bonds and suing for 1000+ interest rates.

As Singer and co. have demonstrated negotiating for a non usuarial outcome is not their MO. You might as well plead with the hangman not to put the noose around your neck.

Technically it was the correct ruling, to the letter of the contract. You would have hoped the the US would have legislated against or regulated against this type of speculation on sovereign junk bonds, on the basis that it undermines the validity of every existing debt restructuring deal which hasn't reached maturity.

Possibly the stability of the international financial system, the south american region (a collapsed Argentina will have knock on effects in Brazil, Chile and Uruguay and the last, possibly some negative ripple effects in Mexico too) and Argentina's future non-isolation in international politics.

You are talking about a country with one of the worlds largest untapped shale gas fields. Rather than allow Singer and his rats to feast on it's carcass you'd think that maybe it would be a better idea to have Argentina and it's gas resources as a strong leader in the region, rather than potentially another Venezuela. The US objective (I realise that AH is not the place for this) would have to be integrate Argentina with their "regional partners" (Colombia, Mexico, Chile) rather than drive them towards Venezuelan style isolation.

There is an election here next year, a possibility exists that a candidate with a more international outlook could win. It will be less likely if the country is bankrupted so that some Hedge fund ran by and for the benefit of the greedy few can rack up incredible profts.

Morally reprehensible, politically and economically destabilising, but technically correct. What is "correct" about any of that from the perspective of the average Argentine?

They are the ones I feel sorry for but only to a certain extent.
They elected that Government twice now must share some of that responsibility.
However, it will be the average Argentine that will feel whatever the Government decides to do which wouldn't surprise me if they went for a default as it will be cheaper for them.
You can bet your bottom Dollar that the elite of the country have already safeguarded any money they have outside of the Government.
How long until we hear that Kircher has millions stacked away in a account in Zurich?
As you said, Singer is a ruthless crook and asking for 1000+ percentages is just ludicrous but I imagine Argentina knew what they were getting into to so the blame for me lies mostly with them.
The bondholders to me seems like the rich bastards who bought a ****e load of bad debt, held it until the debtor recovered and then demanded payment of the face value.
That is a scummy thing to do on their part.
But lets look at the other side of the coin, Argentina.
They seem to be having the rationale that they cannot pay back the debt as their people are poor. Yes, but who made them poor?
As you mentioned, Argentina has vast amounts of un-tapped recources and should be very prosperous which tells me it has been seriously mis-managed.
So it's bad management and corruption that makes a large percentage of the population poor. Since when did bad management and corruption absolve leaders from having to obey the law?
An ideal outcome, Argentina defaults and is taken over by honest and responsible managers who, for a change, claw back money from the rich instead of squeezing it out of the already poor populace, and pay back the debt over however many years it takes to track down all the places that the money went illegally.

Arthur Beesley

Overheal wrote: »

It was funny the first 90,880,333 times I heard it.

Was it though?

pickarooney

What about with the people who had no part in it but are suffering because of it? Surely you can see some parallels worthy of sympathy?

Rightwing

A lot of governments will go bust fairly soon. No wonder they are rowing in behind the fiscally prudent argentinians

Chuckle chuckle.

darkpagandeath

I have only ever heard people here say burn the unsecured bond holders. As you know the clue is in the name. Have not heard anyone here say anything about actual sovereign debt.

5live

Curly Judge wrote: »

You can't eat balls!

Oh yes you can.

They are called prairie oysters or Rocky Mountain Oysters..

http://en.wikipedia.org/wiki/Rocky_Mountain_oysters

Enjoy:p

I am pie

Rightwing wrote: »

A lot of governments will go bust fairly soon. No wonder they are rowing in behind the fiscally prudent argentinians

Chuckle chuckle.

Actually, as much as I dislike the current govt, they have not taken any external debt nor did they sign any of these debt agreements.

So, yes, they are relatively prudent. Arguably that prudence and their tight control of the economy has restricted it's recent growth and caused inflation as imports are restricted to cool inflation for high demand goods.

Never let the dry facts stop a good chuckle though.

I am pie

bear1 wrote: »

They are the ones I feel sorry for but only to a certain extent.
They elected that Government twice now must share some of that responsibility.


However, it will be the average Argentine that will feel whatever the Government decides to do which wouldn't surprise me if they went for a default as it will be cheaper for them.
You can bet your bottom Dollar that the elite of the country have already safeguarded any money they have outside of the Government.
How long until we hear that Kircher has millions stacked away in a account in Zurich?
As you said, Singer is a ruthless crook and asking for 1000+ percentages is just ludicrous but I imagine Argentina knew what they were getting into to so the blame for me lies mostly with them.
The bondholders to me seems like the rich bastards who bought a ****e load of bad debt, held it until the debtor recovered and then demanded payment of the face value.
That is a scummy thing to do on their part.
But lets look at the other side of the coin, Argentina.
They seem to be having the rationale that they cannot pay back the debt as their people are poor. Yes, but who made them poor?
As you mentioned, Argentina has vast amounts of un-tapped recources and should be very prosperous which tells me it has been seriously mis-managed.
So it's bad management and corruption that makes a large percentage of the population poor. Since when did bad management and corruption absolve leaders from having to obey the law?
An ideal outcome, Argentina defaults and is taken over by honest and responsible managers who, for a change, claw back money from the rich instead of squeezing it out of the already poor populace, and pay back the debt over however many years it takes to track down all the places that the money went illegally.

Well, the current government did not take on any of these debt obligations. I cannot stand CFK, the sight and sound of her is enough to make my blood boil, however...she didnt sign up for this debt. They have made good headway paying back the Club of Paris, the IMF and 92% of investors, on top of that their emergency isolationism created good growth early in the crisis.

Historically Argentina has been economically mismanaged, it's a long and tragic story, but foreign influence has not always been benign. It's not worth even attempting to tell that story on AH but it's long and defeinitely worth sifting through. You are right to say corruption (and in the wake of corruption and mismanagement we have tax evation) is a problem. That said, efforts are being made to improve the tax take, corruption is a major issue with this goverment.

The ideal outcome of a more balanced government will not be achieved by putting a gun to the head of the country and making impossible demands. That's my point. The current govt reacted well initially to the crisis but deepened it's course of isolationalism and bought off the lower income end of the electorate with social spending without correcting the structural issues with economy. They have been siphoning off money and will likely go in 2015, in timeles fashion, just like Menem, they will probably end up in court 10 to 15 years later. That said, if the country is pulled to it's knees by Singer and co a new reason to vote for isolation and veer further away from the international markets will be created. All for the sake of hedge fund profit.

The "fair" outcome would be an agreed payment schedule which provides for an acceptable profit for the vultures. A haircut of some 30% would seem reasonable to me, I'm sure NML wont shut the doors if they only make 650% profit!

Again, it's important not to overplay the "black sheep" card for Argentina, they are meeting international obligations, they paid Repsol after the expropriation, they paid off the IMF and are paying sovereign creditors. Yes, mismanaged, but you make it sound like all obligations are ignored. They aren't, nor is this a sovereign issue.

bear1

I am pie wrote: »

Well, the current government did not take on any of these debt obligations. I cannot stand CFK, the sight and sound of her is enough to make my blood boil, however...she didnt sign up for this debt. They have made good headway paying back the Club of Paris, the IMF and 92% of investors, on top of that their emergency isolationism created good growth early in the crisis.

Historically Argentina has been economically mismanaged, it's a long and tragic story, but foreign influence has not always been benign. It's not worth even attempting to tell that story on AH but it's long and defeinitely worth sifting through. You are right to say corruption (and in the wake of corruption and mismanagement we have tax evation) is a problem. That said, efforts are being made to improve the tax take, corruption is a major issue with this goverment.

The ideal outcome of a more balanced government will not be achieved by putting a gun to the head of the country and making impossible demands. That's my point. The current govt reacted well initially to the crisis but deepened it's course of isolationalism and bought off the lower income end of the electorate with social spending without correcting the structural issues with economy. They have been siphoning off money and will likely go in 2015, in timeles fashion, just like Menem, they will probably end up in court 10 to 15 years later. That said, if the country is pulled to it's knees by Singer and co a new reason to vote for isolation and veer further away from the international markets will be created. All for the sake of hedge fund profit.

The "fair" outcome would be an agreed payment schedule which provides for an acceptable profit for the vultures. A haircut of some 30% would seem reasonable to me, I'm sure NML wont shut the doors if they only make 650% profit!

Again, it's important not to overplay the "black sheep" card for Argentina, they are meeting international obligations, they paid Repsol after the expropriation, they paid off the IMF and are paying sovereign creditors. Yes, mismanaged, but you make it sound like all obligations are ignored. They aren't, nor is this a sovereign issue.

I am aware of their other 92% and the IMF and fair play to them for that as well.
That being said, what Argentina has done here is go to a loan shark and now that shark is biting back and is biting hard. Is it fair how it is being done? No way but Argentina signed up to this and is therefore legally obliged to pay back that debt.
As I said before, Singer is being a prat demanding so much and both Argentina and the bondholders should get to a table and negotiate a solution which is ideal both for the average Argentine and for the Wall Street fat cat.
Argentina are in this position also from the previous dictatorships that it suffered under.
So the debt they are in now is thanks to previous regimes which they now have to pay for.
The vulture funds bought off debt that had already been written off – and which could be written off because the creditors had already screwed out of it much more money than they had lent.
Could this also be the right time for the BRIC countries to begin getting even closer together?

Alf. A. Male

Could anybody enlighten me on why a US court might imagine it has jurisdiction over another sovereign state?