This page has been archived and commenting is disabled.
Argentina Central Bank Funds At Federal Reserve "Embargoed"
And so it escalates: first the head of the Argentine Central Bank was demonstratively sacked by the president, and now Argentina funds held at the Federal Reserve have been "embargoed" by US District Judge Thomas Griesa. We are doing a thesaurus check to see if embargoed is a synonym for confiscated. Wily old Ben - always coming up with new and improved ways to create funding crises thousands of miles away (as long as they are not at the Marriner Eccles building). We are confused how gold has so far managed to escape the same "embargo" fate as the South American country.
Dow Jones reports:
BUENOS AIRES (Dow Jones)--U.S. District Judge Thomas Griesa has embargoed U.S. accounts held by the Argentine central bank, a central bank official said Tuesday.
The court ruling froze the central bank's accounts at the Federal Reserve, the official said.
The ruling "clearly mentioned" the decree signed in December by President Cristina Fernandez, which allowed the government to settle debts using central bank reserves, the official said. The official said he didn't know how much money was in the account, but that
the levels had been reduced to a minimum "given the risk which existed." Legal experts had said that the decree could open the way for creditors holding defaulted bonds to settle claims against Argentina by seizing the central bank's reserves.
Clerks in Judge Griesa's office weren't available for comment.
»
- 6442 reads
- Printer-friendly version
- Send to friend
- advertisements -
WHO RUN BARTER TOWN?
A deranged midget on the back of a "differently abled person"?
http://www.youtube.com/watch?v=Hgq4w4dqKsU
LOL, I almost choked to death on that one.
Food run barter town. Hungry asshole country want to run barter town. Bank better not fuck with farmer or people starve eat banker.
If you are going to eat a banker. Do a nice rump roast. They are usually tender. It looks like national security concerns are starting to garner some central banker attention.
Bugs, you have my vote for post of the ages, or at least the week.
...unexectedly...
When it is about touching the government interests in a small country on the south.
US federal judges are very brave. On the other hand Government Sachs is all sacred
Just wait and see when Mr. Hatoyama pulls the central bank lever for domestic debt service...
The currency crisis intensifies...
Cristina's attempts to govern by decree have been blocked by her own judges.
This may be a prudent move by Judge Griesa.
I assume you guys saw where an Argentinian Judge overruled the president of Argentina and reinstated their Central Bank head when the president tried to pay off the debt with the currency reserves of Argentina... Why are you guys not mentioning that part of the story? That's insanely more important than this part.
Sorry Rupert, disclosure is more important than profit for a single story.
http://online.wsj.com/article/SB126296529801421655.html?mod=WSJ_WorldMar...
BUENOS AIRES -- A federal judge blocked President Cristina Kirchner from using foreign-currency reserves to pay Argentina's national debt and revoked her dismissal of the central-bank chief who opposed that policy.
The twin legal defeats for the government injected further uncertainty in the battle for control of the central-bank reserves. The dispute, which has put Argentina on the verge of a constitutional crisis and placed the president and the opposition-controlled Congress at loggerheads, led to a selloff in the country's bond and stock markets.
On Friday morning, federal judge Maria Jose Sarmiento granted an injunction request by two opposition parties barring the central bank from transferring money into the so-called Bicentennial Fund, which Mrs. Kirchner had hoped to create with $6.57 billion from the reserves.
A few hours later, Judge Sarmiento ordered the reinstatement of the bank president, Martín Redrado, whom Mrs. Kirchner dismissed on Thursday for refusing to make the transfer.
The Kirchner administration said it will appeal the two decisions.
Argentine television showed Mr. Redrado returning to the bank Friday afternoon. Earlier in the day he defended his action in defying Mrs. Kirchner. "The reserves belong to all Argentines and if they are to be used for some purpose besides backing the currency, the matter should go before Congress," he said.
Mr. Redrado said he was motivated by the principle of central-bank independence. "It's necessary to keep working for ideas," he said. "We have shown commitment to maintaining the prestige of the Central Bank."
Mrs. Kirchner defended using a portion of the $48 billion in reserves to pay debt.
"It's much better to use the reserves than to take loans at 15% interest," President Kirchner said in remarks at a political event. She added that Mr. Redrado had been guilty of misconduct, and she was within her rights to dismiss him.
Mrs. Kirchner faced a further threat on the legislative front, as Argentina's vice president, Julio Cobos, moved Friday to call Congress out of recess for an emergency session on the reserves dispute. Mr. Cobos has fallen out with Mrs. Kirchner and her husband, former President Nestor Kirchner, and is their chief rival before next year's presidential elections.
Mr. Cobos has questioned the legitimacy of the special decrees of "necessity and urgency," which Mrs. Kirchner used both to enact the Bicentennial Fund and to fire Mr. Redrado. Some constitutional scholars said such decrees were intended for use only in emergencies, such as natural disasters. Congressional leaders maintain that the legislature must be consulted to replace the central-bank president and has final control over the reserves. Mrs. Kirchner's faction of the Peronist party lost the majority in Congress in June midterm elections.
The government's dealings with the central bank represent "a new abuse of the republic's institutions," said Ricardo Alfonsín, a leader of the opposition Radical Party.
Mrs. Kirchner accused Mr. Cobos of conspiring against her with Mr. Redrado, and lashed out at the Radicals, saying they presided over economic debacles when in power.
"If they didn't know how to govern at least let us do it," she said.
Underlying the dispute is the Kirchner administration's need for funds to sustain the Peronist patronage machine. Last year, public spending grew at three times the rate of revenue.
From the government's standpoint, paying debt with reserves frees up resources for politically popular spending programs. It also helps to persuade skeptical financial markets of Argentina's willingness to pay its debts.
Mrs. Kirchner is moving to try to reinsert Argentina into international financial markets, which have frozen the country out since a massive default eight years ago.
Now the whole idea of the Bicentennial Fund may have boomeranged, revealing the fragility of Argentine institutions.
"In addition to vanquishing any remaining semblance of central-bank independence, this episode serves as a reminder of the acute political risks that still face investors in Argentina at a time when the government is planning its return to international debt markets," wrote Neil Shearing, senior emerging markets economist at Capital Economics Ltd.
Roberto Sifon Arevalo, a director in the Latin America Sovereign Ratings Group at Standard & Poor's said compromising central-bank authority is disturbing to investors.
"There is a conceptual reason why people focus on the independence of the central bank," he said. "In a context where you already have inflationary pressures, if you don't have that independence and you have a central bank that starts financing current expenditures, then that's going to get significantly worse."
Oh good. The fireworks are about to begin.
Wow, I'd really like to keep my sovereign reserves somewhere that a district judge can freeze at will...
At least someone had the balls to oust a banker. It also goes to show you who is really in power. Banksters untie! I can't wait until china starts paying off the $ debts of resource rich countries in exchange for, um, real stuff. This ain't over.
Uhhh a Judge overruled the president and re-instated the banker. Banks still run the world.
Ah Buenos Aires...that city built by the English to look like Paris populated by Italians who speak Spanish.
RRP, funny, that is precisely Buenos Aires.
And who feel superior to other Spanish speakers because they consider themselves Europeans and who exterminated all native peoples in their country. Pompous pretentious shits.
Can't knock their rugby program though.
Jealous.
Excellent! Where'd you come up with that one! Was that in the Sydney paper?
Hahaha. Now I know why "we" need to go the Moon. There is no place to run away to on this planet. How about this: "District of Moon"? OT: Gives a new meaning to the term "mooning"< doesn't it?
There are so many hot spots in this story... just to start:
The last one raises so many red flags for other countries that it could start a bank run... a CB run, no less.
Ms Kirchner could be just the butterfly to start the avalanche ....
Important detail: if I understand correctly, the funds that Kirchner demanded, and hasn't yet received, represent amounts that the government previously stole from individual retirement accounts (or their Argentinean equivalent) on the pretext of replacing them with a form of social security (ditto). It's not as if it was just legitimate tax revenue on deposit and being refused.
Argentina seems to be in a nonstop crisis. 10 years now, or 30 or more depending what you count. I wonder if that is the future for the US, and perhaps most countries.
I don't know how you came to that assumption, it would be best if you posted analysis with fact rather than making an outright claim as you do. The Foreign currency reserves would have nothing to do with the pensions unless the pension assets were used to purchase those reserves, again, proof is required (although in this day and age, any opinion is taken for fact by an information deprived public - not saying yours, saying in general)
Second, she is stating that paying down debt instead of taking out more at 15% is a smart thing. I do not see how it's anything but a smart thing.
Sure it might be a smart thing to use existing funds rather then borrow at a high rate but Kirchner is scum. She is the queen of corruption, might as well just deposit the money right into her and her husband's bank account. I've read a fair amount about them and they are as crooked as they come and their arguments hold no weight with me. The idea that Kirchner is trying to act in Argentia's best intrest is laughable.
My understanding was based on an article at one of the other financial blogs I read. I can't find details now and it's possible I was wrong (either misreading the article or perhaps I read it correctly but the article was wrong).
This may or may not be on point, but I do know that it used to be common in Argentina to have USD personal savings accounts, and those were essentially confiscated earlier this decade.
I'm not the one who labeled your question as junk. It is a legitimate question and I might be wrong.
Phaesed and Carbonmutant are correct. For those of you playing at home remember that Argentina's currency has collapsed completely, twice in the last thirty years. Its too bad for a beautiful country with fantastic resources to be squandered time and time again by leaders that govern it like Louisiana or Cook County, Il.
Soros scored big on the last collapse, so who's going to score big this time?
Goldman Sachs?
-Soros scored big on the last collapse, so who's going to score big this time?
Meet the new boss, same as the old boss
Hahaha. You guys are right though. He owns a boatload of agricultural producing land down there.
History:
http://www.youtube.com/watch?v=rH6_i8zuffs
From Buenos Aires I can say that no one seems to be discussing this. This is like a slow moving train wreck for everyone, no real surprise. Plus, everyone is at the beach right now. Who the hell cares if the country is going broke? It's summer time, time to vacation.
Who brought this suit into court and requested the embargo?
That was the first thought that popped into my head, too. This US judge didn't wake up this am an decide to 'embargo' some foreign assets; someone/body/thing laid a petition on his desk. Any rumors on who/what/WTF?
On further consideration, the petition probably wasn't delivered this morning. It's probably been in a folder in his desk for quite a while.
It's a political move by Christina. Argentinians hate banks. So as long as a judge overturns her decision she gets to save face. I believe act II has begun.
Two things I can say about Argentina:
1. Great soccer players
2. They grill the best meat in the world
On another note, their military invasion of the Falklands was a fiasco but a great distraction from the economy. Maybe the US can invade Bermuda!
ha ha gimp.
if we're gonna invade some country for distraction & economic stim, lets invade canada or mexico. it will save on fuel since we have such difficulty with getting *cheap* fuel as it is. plus we can steal their reserves (or what's left of them) while we're at it.
the beef there tasted fantastic but was tough as hell. ye 'ole grass-fed v. corn fed issue, methinks.
I love Argentina. It's a crazy messed-up and beautiful country.
CB you are correct a quick drive to our nearest neighbor would be the best strategy.
I am glad you love Argentina, was in Brazil and Argentina a year ago, people are great it is the governments that are all screwed up...sounds like the US !
You just take it easy, guys. The amount embargoed is a jaw-dropping, astonishing, exorbitant sum of 1.7 mil USD. Hardly anything to write back home about.