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Argentina Debt "Mediation" Goes Surreal As Neither Side Turns Up For Meeting, Black-Market Peso Tumbles

Tyler Durden's picture




 

Despite Judge Griesa's demands that the holdouts and the Argentinian government hold "continuous" mediation until the debt conflict is resolved "or fear the worst," this morning's headlines are somewhat surreal:

  • *NEITHER SIDE IN ARGENTINE DEBT CONFLICT HAS ARRIVED TO MEETING

Argentina decided not to send the economy minister (just a 'delegation') as BTG analysts warn that "all the music from the Argentine government indicates default," and judging by the tumble in Argentina's black-market Peso (Dolar Blue) the last few days, that risk is starting to rise.

 

As Bloomberg reports,

Neither Argentine govt delegation nor attorneys for the South American nation or holdout creditors had arrived at 10am meeting called with court-appointed mediator Daniel Pollack in Manhattan.

 

Pollack didn’t respond to e-mail seeking comment

 

Argentine Economy Minister Axel Kicillof wasn’t part of delegation that traveled to NY

“All the music from the Argentine government indicates default,” according to a BTG report (as Bloomberg annotates):

“It is not that much that they are myopic about the consequences of default. Rather it is fear of the legal consequences of the RUFO clause”

 

A deal shouldn’t trigger RUFO clause “but govt wants to be sure, and nobody could give that sort of assurance”

 

“In this circumstance Cristina Kirchner herself seemed to have taken the decision of not paying”

 

“Still we do not lose hope on a deal”

 

Incentives of all parties favor a deal

 

Analysts expect volatile environment until July 30

 

“We will not be sure about the outcome until the very last minute”

In case of default, economy will suffer scarcity of dollars, which may lead govt to restrict imports further, thus harming value chains and reducing activity

Govt likely to print “an awful lot of pesos” given impossibility of tapping market

 

Central Bank could increase rate to lure peso holders

There may be pressure on parallel dollar market, which eventually could force govt to either depreciate the currency or try to settle with bondholders

Source: DolarBlue.net

UPDATE: Argentine Debt Talks in NY Postponed Until Tomorrow (maybe)

 

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Wed, 07/23/2014 - 14:06 | 4994076 Dr. Engali
Dr. Engali's picture

Regardless of what happens, it will not be a default. Even though it is a default.... It won't be.

Wed, 07/23/2014 - 14:12 | 4994108 SWRichmond
SWRichmond's picture

The most important thing to understand is that now, NOTHING MATTERS.  No one gives a fuck.

Wed, 07/23/2014 - 14:16 | 4994125 walküre
walküre's picture

Dollar default is like burning a stash of weeklies in the hood to keep warm

Wed, 07/23/2014 - 14:21 | 4994152 NotApplicable
NotApplicable's picture

Yes, but did Daniel Pollack get paid?

Wed, 07/23/2014 - 15:02 | 4994394 Omen IV
Omen IV's picture

youre wrong- this will affect Bond Indenture venues for resolutions of all kinds - NY and UK - anything could happen in either court house - there is no justice

Wed, 07/23/2014 - 17:31 | 4995137 SWRichmond
SWRichmond's picture

there is no justice...


that was my point no one can expect justice anywhere no one gives a f*** anymore.  the courts are a sham the markets are a sham its all a big f****** joke.  we are going to revert to the Lockean state of nature and we'll figure things out from there

Wed, 07/23/2014 - 18:16 | 4995329 balanced
balanced's picture

Is there any chance that this situation will have actual consequences? In other words, is there any chance that the fall out will be too disruptive to be papered over? I'm guessing not. Consequences are an outdated concept. The illusion of a status quo is all we have now, along with a slow but steady decline that will go on, and on... and on... ... and on.

Wed, 07/23/2014 - 21:45 | 4996218 BigRedWall
BigRedWall's picture

Other EMs might look at an Argentina funded through a BRICS bank or by China and wonder why they shouldn't do the same...thats an unlikely scenario but it might happen so there is your "chance".

Wed, 07/23/2014 - 14:34 | 4994240 NoDebt
NoDebt's picture

Excellent Haiku, Doc.

Wed, 07/23/2014 - 15:17 | 4994494 JLee2027
JLee2027's picture

Judge blinked long ago. I suppose they'll keep extending and pretending.

"""As the deadline of June 30th came and went, Argentina attempted to make $832USD million in payments to restructured hedge funds, but was forced to take the money back by Judge Thomas Griesa who ordered the original debt ruling back in June.1 The New York Courts demanded BNY Mellon give back the $539 million it received from Argentina, deeming the payment in violation of the equal payment clause. Griesa decided that Argentina must make payments to both the restructured hedge funds and the holdouts or service neither. Because neither received debt payments by the original deadline, Argentina is technically in default.  Griesa granted Argentina a 30-day grace period, pushing back the deadline to July 30th. However, Argentina isn’t pleased with the postponement, still accusing the judge of making an “impossible” order."""

 

http://www.panoramas.pitt.edu/content/argentine-debt-mediation-continues

Wed, 07/23/2014 - 16:01 | 4994716 rsnoble
rsnoble's picture

So far the name of the game has been: NO defaults, NO bad economies, NO civil wars.........and nothing else that could sound bad.

Wed, 07/23/2014 - 14:06 | 4994079 Grande Tetons
Grande Tetons's picture

I remember when I skipped class to get a handjob. Let us hope that is what is at play here. 

Wed, 07/23/2014 - 14:09 | 4994089 1stepcloser
1stepcloser's picture

i usta get handjobs in class... good ole game of chicken...I just say cut the floor play and just grip it and rip it...

Wed, 07/23/2014 - 14:12 | 4994102 Grande Tetons
Grande Tetons's picture

I installed interior windshield wipers. 

Wed, 07/23/2014 - 14:11 | 4994082 NOTaREALmerican
NOTaREALmerican's picture

No credit, bad credit,  NO PROBLEMO.   You can still drive away with a new car from crazy Eddie's car bling emporium. 

Wed, 07/23/2014 - 14:08 | 4994083 l8apex
l8apex's picture

Looks like dolarblue.net is reporting 13.0 right now.  Wish I could get down there right now for some good steak and red wine.  

Just remember to bring lots of USD with you because otherwise you're on your way to Uruguay to get any more USD.

Wed, 07/23/2014 - 14:36 | 4994172 Oldrepublic
Oldrepublic's picture

re: 18apex and  black market dollar rate: international tourists getting money via a debit card in Argentina will get the official rate, no US cash dollars available, I understand that USD notes are available at Argentina-Uruguay border  ATMs

Wed, 07/23/2014 - 15:04 | 4994403 DoChenRollingBearing
DoChenRollingBearing's picture

Bitcoin is apparently scarce in Argentina, you can find people there who will give you Argentines pesos at the black market US$ rate.  Bring enough US$ CA$H or BTC, you can pay for your trip.

Enjoy your wine & steak while there!  

Wed, 07/23/2014 - 15:47 | 4994646 brunoaa
brunoaa's picture

There are a lot of places where you can change dollar and are resonably safe, any local/hotel personnel will indicate one, avoiding the changers advertising in the street which are not always ok. 

Wed, 07/23/2014 - 15:07 | 4994416 Omen IV
Omen IV's picture

i converted $1,500 US at 11.9 -  5 weeks ago

the best steak in Palermo - Don Julio

Wed, 07/23/2014 - 15:18 | 4994495 DoChenRollingBearing
DoChenRollingBearing's picture

In La Recoleta, we liked "Montana Ranch".  Mmm...

Wed, 07/23/2014 - 15:40 | 4994616 moroots
moroots's picture

Don Julio is indeed fantastic.  The only place I ate in my short time in BA that didn't overcook the steak.

Wed, 07/23/2014 - 16:13 | 4994775 nodhannum
nodhannum's picture

I like the steak, wine and lobsters, but the real treasure is the women down there.

Wed, 07/23/2014 - 14:10 | 4994095 disabledvet
disabledvet's picture

Again...send in the battleships. Port all four in New York Harbor...have them re-fitting with the finest...hired some retired sailor dudes and "pull the trigger on this thing."

Wed, 07/23/2014 - 14:31 | 4994221 icanhasbailout
icanhasbailout's picture

yep, what the world desperately needs right now is a precedent for taking part of a country's territory by force as collateral for defaulted sovereign debts

 

that would be sooooooo freakin COOL

Wed, 07/23/2014 - 16:38 | 4994888 twh99
twh99's picture

If they had done that in the past there would be no Argentina.  They are a habitual deadbeat nation.

Wed, 07/23/2014 - 14:11 | 4994098 syntaxterror
syntaxterror's picture

Wow, Argie isn't getting the same 2.2% free money rate as their Spanish friends across the Atlantic? That's the shocker here. 

Wed, 07/23/2014 - 16:38 | 4994893 twh99
twh99's picture

There are no Germans obligated by treaty to back them up.

Wed, 07/23/2014 - 14:13 | 4994111 robertocarlos
robertocarlos's picture

Some of the best meetings happen when nobody shows up.The saying is you can ignore things but you can't ignore the consequences of ignoring them.

Wed, 07/23/2014 - 14:14 | 4994118 q99x2
q99x2's picture

Argentina defaults often. They are cool. Anybody seeking to make interest and profits on people or organizations that don't have enough money should lose everything. It is the moral thing to do.

We will come rejoicing bringing in the thieves.

Wed, 07/23/2014 - 14:17 | 4994137 walküre
walküre's picture

For real. There has never been a better time to pick up physical. Forget whatever gains or losses you may have. What you hold and who will accept it matters far more.

Wed, 07/23/2014 - 14:18 | 4994141 buzzsaw99
buzzsaw99's picture

i blame the capitalist swine

Wed, 07/23/2014 - 14:18 | 4994142 SmittyinLA
SmittyinLA's picture

The sham can continue indefinitely as long as the judge and his minions get paid.

the Detroit liquidation that we all prayed for and needed aint gonna happen.

Wed, 07/23/2014 - 14:19 | 4994146 orangegeek
orangegeek's picture

Daniel Pollack: (pause) So what happened? The snooze alarm, wasn't it?

Argentina: Man, it wasn't the snooze. Most people think it was the snooze, but no, no snooze.

Daniel Pollack: AM/PM.

Argentina: Man, it wasn't the AM/PM. It was the volume.

Daniel Pollack: Ah...the volume.

Argentina: Yes, the volume. There was a separate knob for the radio alarm.

Daniel Pollack: Ah, separate knob.

Argentina: Yes, separate knob. Why separate knob?! Why separate knob?! (frustrated)

Daniel Pollack: Some people like to have the radio alarm a little louder than the radio.

Argentina: Oh, please, man, please!

Daniel Pollack: Don't worry, it's not gonna happen again. Not if I have anything to say about it.

 

Wed, 07/23/2014 - 14:21 | 4994148 pakled
pakled's picture
"...Goes Surreal As Neither Side Turns Up For Meeting."

 

 

At least in Battlestar Galactica one side would always show for the Human/Cylon meetings. (before the shite hit the fan)

Wed, 07/23/2014 - 14:20 | 4994151 Milestones
Milestones's picture

Deleted.

Wed, 07/23/2014 - 14:21 | 4994153 Gringo Viejo
Gringo Viejo's picture

Don't Cry For Me Assholes! I'm about to stiff ya!

Wed, 07/23/2014 - 14:22 | 4994156 Pumpkin
Pumpkin's picture

Well, finally, some people in charge are getting a grasp of the gravity of the problem.

Wed, 07/23/2014 - 14:23 | 4994164 Dien Bien Poo
Dien Bien Poo's picture

i wont make any friends here but IMHO, Argentina should stuff Singer et al. Its not like they dont know the risk of playing the Argie curve. Serial defaulters who will do anything but pay creditors in the short term. You play you pay. 

I wouldnt piss on an Argentine if he was on fire, much less buy their bonds to try and manipulate a good outcome. 

Elliott will be left holding its proverbial. 

Wed, 07/23/2014 - 15:56 | 4994648 Almost Solvent
Almost Solvent's picture

Elliott will be left holding bonds it paid about .02$ on the dollar to acquire and upon default can use them as a write off OR try to seize Argentine assets for the next 20 years (enforcement length under NY law).

fixed it

Thu, 07/24/2014 - 08:13 | 4997315 Dien Bien Poo
Dien Bien Poo's picture

In other words, a momumental waste of time, effort, stress and opportunity. My heart bleeds for them. No seriously, it does. 

Thu, 07/24/2014 - 08:14 | 4997316 Dien Bien Poo
Dien Bien Poo's picture

In other words, a momumental waste of time, effort, stress and opportunity. My heart bleeds for them. No seriously, it does. 

Wed, 07/23/2014 - 14:24 | 4994169 Joebloinvestor
Joebloinvestor's picture

Doesn't this trigger a "bad faith" clause somewhere?

Wed, 07/23/2014 - 14:28 | 4994200 lasvegaspersona
lasvegaspersona's picture

It's Argentina....this is just how they are. Beautiful country, wonderful cities but centuries of questionable management.

May be time to hoist the 'Las Mavinas son Argentine' signs.

Wed, 07/23/2014 - 15:21 | 4994515 DoChenRollingBearing
DoChenRollingBearing's picture

"Questionable management" is an understatement.  I agree on all the rest.

Wed, 07/23/2014 - 14:32 | 4994226 gosh
gosh's picture

I dont get why the debt holders didnt show up if they go bankrupt I assume the debt holders would get nothing.  Why not negotiate?

Wed, 07/23/2014 - 14:39 | 4994266 QQQBall
QQQBall's picture

The holdout bondholders won in court and they must figure they have a line on enough assets to be made whole, so no need to negotiate. If the Argentines show up and the creditors don't, they would look like even bigger morons.

Wed, 07/23/2014 - 14:43 | 4994290 One eyed man
One eyed man's picture

This is high-stakes poker (or chicken) being played. Showing up for negotiations would be interpreted as a sign of weakness.

Wed, 07/23/2014 - 14:58 | 4994376 nonclaim
nonclaim's picture

That. And to be fair nobody asked for negotiations either.

It was a judge that, thinking he's very smart, imposed it against all parties.

Wed, 07/23/2014 - 15:05 | 4994412 HardlyZero
HardlyZero's picture

Argentine Standoff:  The Good, The Bad and The Bankrupt.

to the wire.

Wed, 07/23/2014 - 16:41 | 4994907 twh99
twh99's picture

Every embassy, consulate or piece of physical property anwhere in the US or Europe.

Wed, 07/23/2014 - 14:46 | 4994308 astoriajoe
astoriajoe's picture

Why doesn't she just pound out a few platinum coins and be done with this.

Wed, 07/23/2014 - 15:06 | 4994415 HardlyZero
HardlyZero's picture

Save some money and just print a few 1ozt. "1 TRILLION" silver coins...and force them to be accepted at 'face value'.   Under duress of course.  

Dismal.

Wed, 07/23/2014 - 16:58 | 4994985 TheSecondLaw
TheSecondLaw's picture

Isn't that what the US is doing...to the tune of over $4 trillion so far?  Monetizing debt.  May as well mint the platinum coin call a spade a fucking shovel.

Wed, 07/23/2014 - 14:49 | 4994322 Kaiser Sousa
Kaiser Sousa's picture

cant wait til the 30th...

"if a debt negotiation takes place and no one attends...is there really any debt...."
Unknown Philosopher

Wed, 07/23/2014 - 15:10 | 4994442 HardlyZero
HardlyZero's picture

Given there is some time and days required to actually 'do the deal' once agreed to, and do it legal.  It is probably more like 2 days from now to "do it right". 

This weekend should show some emerging markets bank bubble burst.

Next Monday and Tuesday might be horrorshow for sovereign bonds in the emerging markets.

Credit is getting tight.

Wed, 07/23/2014 - 15:21 | 4994506 TNTARG
TNTARG's picture

No default. Argentina has already sent the money to pay bonholders. It's the bank which is not paying. Griesa hasn't confiscated the money. The bank is asking Griesa, he doesn't really know what to decide (or at least it seems so).

But Argentina has paid. I guess it's Griesa problem now. Didn't he take into consideration this scenario? It's everybody else's problem 'cause Argentina has paid.

I kinda like what the gvt. has done. After all, NML bought defaulted bonds. He certainly knew the risks involved.

 

Wed, 07/23/2014 - 16:43 | 4994920 twh99
twh99's picture

It's a distinction with no difference.  The bond holders are not paid = Argentina is in default.  It matters not that they paid it to a bank to be distributed.

It is like writing a check but not signing at the bottom.

Wed, 07/23/2014 - 16:59 | 4995006 TNTARG
TNTARG's picture

No no, I don't think so. The payment has to be made in two steps:

1. Argentina delivers the money to the bank

2. The bank pays bonholders

(Same as me paying my employees salaries every month. I put tbe money on the bank, the bank pays the salaries).

If I don't make my deposit, it's me who isn't paying.

If the bank doesn't pay the salaries, it's the bank the one accountable for.

Griesa hasn't confiscated the money. Why the bank isn't paying? It has no restraints to fullfill the agreements.

It's not a distraction, it's a strategy.

I bet Argentina sues the Bank if the bonholders don't get paid. Ah Ah! THat would be great!

 

Wed, 07/23/2014 - 19:52 | 4995733 HardlyZero
HardlyZero's picture

TNTARG

The law supported by the Judge a few months ago and then not heard by the Supreme Court (on reversal request by Argentina), says that all bondholders (including holdouts) must be paid.

The bank is just following the law and does not have sufficient funds to pay all (including holdouts).  Since the bank does not want to go to court it is just following the law.

There is no strategy so far, only non-payment under the law.

If Argentina wants to cut a deal with the holdouts, then lawyers would be involved to re-write the agreements and have the Judge approve and allow the new agreement.

There is no time remaining (really) to cut a deal and get the Judge to approve, and then pay out.  I'd say maybe 1 or 2 days more, then it is technical default.

Wed, 07/23/2014 - 23:23 | 4996590 TNTARG
TNTARG's picture

It's not the bank who would be accountable if it pays what Argentina orders to pay. It would be Argentina.

So why the bank doesn't pay?

I haven't heard Griesa order them not to.

If the bank doesn't pay, Argentina can go after the bank, I think.

Interesting.

 

 

Wed, 07/23/2014 - 15:22 | 4994522 Al Huxley
Al Huxley's picture

Argentina should just take whatever cash they have left and buy Facebook stock.  Then they can pay off their creditors with the capital gains, and they probably even get some kind of tax exemption for being a government.

Wed, 07/23/2014 - 15:56 | 4994692 Angry Plant
Angry Plant's picture

Well it seems Argentina has decided to defualt. So unless other creditors buy out the holdouts and settle dispute that way there will be a defualt.

Lots of winners and loser issues involved here that will come into play for future defualts and willingness of banks to loan money to soveriegns in the first place.

This defualt could well dry up credit in the thirdworld if after defualt it becomes clear that countries can defualt at will and get away with it at a reasonible cost.

Wed, 07/23/2014 - 19:54 | 4995746 HardlyZero
HardlyZero's picture

Should set off some sparks.

Greece x10 = Cyprus x10 = Argentina x10 (maybe?) = Portugal x 10 = Spain x 10 = Italy.

Mama Mia !!

What a meatball !

Wed, 07/23/2014 - 15:46 | 4994644 rsnoble
rsnoble's picture

Fuck Judge grease bend over and take it bitch!  Referring to grease, not my gf in Argentina lol.  Although I would love to tell her that.  Problem is with these bitches of power she probably has whips,chains and 12" black strapon.

Wed, 07/23/2014 - 16:06 | 4994740 Latitude25
Latitude25's picture

Argentina should just tell the judge and the debt holders to fuck off.  Then do the sensible thing that socialists never seem to grasp:  Mint gold and silver coins as currency.

Wed, 07/23/2014 - 16:07 | 4994752 bid the soldier...
bid the soldiers shoot's picture

Judge Griesa:  "Fear the worst." 

 What's he talking about?

Argentina or Ukraine?  Gaza?


Wed, 07/23/2014 - 16:41 | 4994903 Youri Carma
Youri Carma's picture

Michael Hudson: US Courts Defend Rights of Vulture Funds Over Argentina https://www.youtube.com/watch?v=IXKEKQ8vU28

Wed, 07/23/2014 - 16:57 | 4994974 asiafinancenews
asiafinancenews's picture

Argentina reportedly deposited the interest payment to holders of restructured bonds with the bank.  If the bank is barred from distributing the funds, is that a "default" by Argentina?

The People's Republic of China selectively defaulted on, and subsequently repudiated, China's full faith and credit sovereign bonds held by foreigners (1983), and then engaged in a settlement with UK bondholders (1987) which excluded non-UK bondholders ... all without any adverse effect on China's sovereign credit rating.

http://www.scribd.com/doc/210715422/Summary-Brief-of-the-Known-Actions-o...

Perhaps Argentina could do the same with the holdouts.

Wed, 07/23/2014 - 17:10 | 4995052 hallywood
hallywood's picture

Marissa Meyer was schedueld to negotiate for teh bondholders but she slept in and missed the meeting ;)

Wed, 07/23/2014 - 17:10 | 4995055 hallywood
hallywood's picture

Marissa Meyer was schedueld to negotiate for the bondholders but she slept in and missed the meeting ;)

Wed, 07/23/2014 - 17:13 | 4995067 Bemused Observer
Bemused Observer's picture

The idiots who bought those bonds knew exactly what they were getting into. I have NO sympathy for them at all. Let Argentina default then, and screw them all.
These vultures need a lesson. When you try and pick the flesh off the bones, make damned sure the 'victim' is dead, or else you might get kicked unexpectedly during your meal.
And if Argentina decided to mint new currency (coins) out of PMs they might end up having the most stable currency on the planet.
They don't have to import or export anything. There's no reason they can't just withdraw from the global economy, which is going to tank anyway. At least for a few years. And considering how miserable the global economy is, it won't be that big a loss to not be part of it right now.
But to give in to these assholes is the stupidest thing they could do.
And who the hell is this judge Griese anyway? As a US judge, he has no jurisdiction over Argentina...Who the hell does he think he IS?

Wed, 07/23/2014 - 20:05 | 4995784 asiafinancenews
asiafinancenews's picture

Griesa has jurisdiction over payors which are either domiciled within the U.S. or have a presence within the U.S., and located within other jurisdictions which would respect a U.S. federal court's judgment (e.g., the U.K. and maybe Germany).  That is how he is able to restrain payments internationally.

Wed, 07/23/2014 - 17:27 | 4995114 WhyWait
WhyWait's picture

Here's a first test for BRICS, exactly the scenario they set the new development bank up for.

Argentina has been living a recurring nightmare, a debt trap they can't escape, for decades, and the people of Argentina of all social classes are fed up with it.

Bemused Observer captures perfectly how it looks to them, but unfortunately in the past any two-bit US judge, with the help of the IMF and World Bank, was able to enforce the will of the international bankers, just by right of having the power to print dollars.

What new options does the BRICS bank open up for them now, and how would it work?

Wed, 07/23/2014 - 19:23 | 4995626 Ides of November
Ides of November's picture

Exactly. This is the chance - next week - for the BRICS to come of age.

Maybe they already have, they really should have agreed to all this in Fortaleza last week, but the BRICS should have advised Argentina to default on all foreign bond holders next week and China & Russia can at the same time announce a 10 year funding deal for Argentina out of the new BRICS fund to "get Argentina back on its feet".

It's pure politics really - the propaganda value of doing this outside the IMF/ US system is what makes it worthwhile.

It sends a message worldwide at a critical juncture. Just means Putin has to try and keep his head down for another week or so.

Might be tough when you have the Ukies claiming their planes are now being shot down from inside Russia!!

Things are really ratcheting up - and you have to asky why?

Could be related to Argentina default as well as anything else..........

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