Argentina to burn bondholders in defiance of US court ruling

Sudetenland · 17-06-2014 02:57PM

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 · 17-06-2014 03:00PM

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 · 17-06-2014 03:00PM

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 · 17-06-2014 03:03PM

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 · 17-06-2014 03:04PM

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 · 17-06-2014 03:04PM

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

I am pie · 17-06-2014 03:06PM

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 · 17-06-2014 03:10PM

Curly Judge wrote: »

You can't eat balls!

Rule 34.

No exceptions.

comongethappy · 17-06-2014 03:13PM

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 · 17-06-2014 03:20PM

Curly Judge wrote: »

You can't eat balls!

Even meat balls?

bear1 · 17-06-2014 03:21PM

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 · 17-06-2014 03:23PM

Overheal wrote: »

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

Was it though?

pickarooney · 17-06-2014 03:26PM

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 · 17-06-2014 03:26PM

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

Chuckle chuckle.

darkpagandeath · 17-06-2014 03:27PM

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 · 17-06-2014 03:40PM

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 · 17-06-2014 03:54PM

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 · 17-06-2014 04:07PM

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 · 17-06-2014 04:47PM

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 · 17-06-2014 05:09PM

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

darkpagandeath · 17-06-2014 05:14PM

Alf. A. Male wrote: »

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

Team America world police

blackwhite · 17-06-2014 05:20PM

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.

Argentina were the ones who elected to issue bonds under New York law.

Alf. A. Male · 17-06-2014 05:32PM

darkpagandeath wrote: »

Team America world police

So the verdict was durka durka? That's what I thought, thanks.

I am pie · 17-06-2014 05:41PM

Alf. A. Male wrote: »

So the verdict was durka durka? That's what I thought, thanks.

No, as has been pointed out a couple of times, the bonds were issued under the jurisdiction of NY state due to the crisis in confidence in Arg state institutions brought about by the collapse of the financial system.

blackwhite · 17-06-2014 05:52PM

I am pie wrote: »

No, as has been pointed out a couple of times, the bonds were issued under the jurisdiction of NY state due to the crisis in confidence in Arg state institutions brought about by the collapse of the financial system.

No point talking logic or fact.
They're too busy with the "Death to America" circle-jerk for that.

darkpagandeath · 17-06-2014 06:02PM

blackwhite wrote: »

No point talking logic or fact.
They're too busy with the "Death to America" circle-jerk for that.

Who said that ? And I'm sure if China Americas largest creditor made some kind of ruling like this, There would be short sharp sorry lads that's your court not ours.

suicide_circus · 17-06-2014 06:05PM

darkpagandeath wrote: »

Team America world police

**** YEAH

Amirani · 17-06-2014 06:09PM

darkpagandeath wrote: »

Who said that ? And I'm sure if China Americas largest creditor made some kind of ruling like this, There would be short sharp sorry lads that's your court not ours.

Make a ruling that the US has to repay its debt? Why would it do that when the US already pays its debt?

It's also relevant that China buys US debt on markets outside of China, so it's not at all comparable.

Your post is either quite confusing or just completely ignorant.

blackwhite · 17-06-2014 06:10PM

darkpagandeath wrote: »

Who said that ? And I'm sure if China Americas largest creditor made some kind of ruling like this, There would be short sharp sorry lads that's your court not ours.

The Argentine bonds were issued under New York law, so it's up to New York courts to rule on them.
The was Argentina's choice to issue them in NY, Argentina's choice to be subject to the New York courts in respect of these financial instruments, and yet you seem insistent on having a pop at the USA regardless.
That speaks more on you than it does on any US "imperialism."

The USA doesn't issue any bonds under Chinese law, so Chinese courts wouldn't have any jurisdiction - much like they don't have any jurisdiction on Argentine bonds that Argentina chose to issued under New York law.

Arthur Beesley · 17-06-2014 06:10PM

Alf. A. Male wrote: »

So the verdict was durka durka? That's what I thought, thanks.

Better than burka burka.

Argentina to burn bondholders in defiance of US court ruling

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