• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Argentina Defaults

Tyler Durden's picture




 

It's all over but the crying: having explained Argentina's position (i.e. not giving to so-called vulture funds), Economy Minister Kicilloff explains:

  • *KICILLOF SAYS HEDGE FUNDS NOT WILLING TO GIVE DELAY ON RULING
  • *KICILLOF SAYS HARD TO BELIEVE ARGENTINA IN DEFAULT IF HAS FUNDS
  • *KICILLOF SAYS ARGENTINA CAN'T COMPLY WITH COURT RULING
  • *HOLDOUTS DIDN'T ACCEPT ARGENTINE OFFER: KICILLOF

As Bloomberg notes, by defaulting today, Argentina may trigger bondholder claims of as much as $29 billion -- equal to all its foreign-currency reserves. Just remember that the last 2 days have seen 'smart money' buy Argentine bonds and stocks to all-time record highs.

 

Some color on what next (via Bloomberg):

If the overdue interest on Argentina’s dollar-denominated securities due 2033 isn’t paid by July 30, provisions in bond indentures known as cross-default clauses would allow the nation’s other debt holders to also demand their money back immediately. The amount corresponds to Argentina’s debt issued in foreign currencies and governed by international laws.

 

In a default, even a temporary one, Argentina’s economy will contract and the odds of a crisis are high, according to Marcos Buscaglia, an economist at Bank of America Corp. Money demand will become unstable as Argentines scramble for dollars, causing the peso to slump, he wrote in a report today.

“Argentina’s current weak fiscal, monetary and external conditions make the probability of the situation spinning out of control quite high,” he wrote. “Argentina’s payment capacity should not be taken for granted if it defaults.”

  • *ARGENTINA'S RUFO CLAUSE PROHIBITS MAKING BETTER OFFER: KICILLOF
  • NEW YORK-ARGENTINA'S ECONOMY MINISTER KICILLOF REPEATEDLY CALLS HOLDOUT INVESTORS "VULTURE FUNDS
  • KICILLOF SAYS HOLDOUTS WOULD REAP 300% PROFIT IN DEBT SWAP
  • KICILLOF SAYS HEDGE FUNDS WANT MORE AND WANT IT NOW

*  *  *

All those equity and bond gains - which hit an all time high - today, gone.

Oops:

 

Finally, we aren't the only ones who are let down by today's anticlimatic development. Compare and contrast with this 2001 announcement when Argentina announced is last default: a far more exuberant affair.

 

0
Your rating: None
 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 07/30/2014 - 18:03 | 5024578 Silver Garbage Man
Silver Garbage Man's picture

That silver bomb has got to go off soon.

Wed, 07/30/2014 - 18:04 | 5024589 SoberOne
SoberOne's picture

Just checked my stash. All my oz are still there.

Wed, 07/30/2014 - 18:06 | 5024593 Herd Redirectio...
Herd Redirection Committee's picture

So first default, then declare bankruptcy?
Whats their plan?

Wed, 07/30/2014 - 18:10 | 5024620 fonzannoon
fonzannoon's picture

Did Bass get skanked?

Looks like the smart money was with Simon Blacks chilean inflation protected bonds all along. Way to pick the winning horse Kito.

Wed, 07/30/2014 - 18:16 | 5024644 The Alarmist
The Alarmist's picture

So, I'm walking along in the woods when I hear this loud sound, and I wonder ... Did a tree just fall, did a bear just shit, or did Argentina default (once again)?

Wed, 07/30/2014 - 18:22 | 5024679 COSMOS
COSMOS's picture

Easy fix for all of Argentina's problems.  Make their currency the reserve currency of the world.  Problem solved.  Then they can export all their problems via their currency.

Wed, 07/30/2014 - 18:34 | 5024736 gmrpeabody
gmrpeabody's picture

Don't cry for me, Argentina...

Wed, 07/30/2014 - 18:34 | 5024744 fonzannoon
fonzannoon's picture

Crimea river

Wed, 07/30/2014 - 18:41 | 5024769 gmrpeabody
gmrpeabody's picture

Too clever, fonz...

your on a roll today.

Wed, 07/30/2014 - 18:44 | 5024779 Latina Lover
Latina Lover's picture

Smart money is now stupid money, unless you are a bankster. Then you can put (stick) your losses to the USSA sheeple.

Wed, 07/30/2014 - 18:58 | 5024867 max2205
max2205's picture

How long were any money market funds?

Sorry gates are closed

Wed, 07/30/2014 - 19:06 | 5024906 Say What Again
Say What Again's picture

I would like to hear Jim Grant comment on this. 

But for the headline act, we MUST have Dr. Faber

Wed, 07/30/2014 - 19:14 | 5024937 JLee2027
JLee2027's picture

I expect a secret emergency meeting, Janet Yellen to print 29 billion, and this all goes quietly away with a few keystrokes.

Wed, 07/30/2014 - 19:24 | 5024976 Liberal
Liberal's picture

Sorry guys.  I'm just not seeing this on CNN or Huffington Post.  So this didn't happen.

Wed, 07/30/2014 - 19:49 | 5025061 LasVegasDave
LasVegasDave's picture

Pay yo Damn Bill or we gon shut you off

https://www.youtube.com/watch?v=U-PQQX4Itzk

Maybe they should send Willie to the Argie Embassy

Wed, 07/30/2014 - 20:15 | 5025181 kaiserhoff
kaiserhoff's picture

Wonerfullah wonerfullah,

  The world needed another Chinee Cluster Fuck about now.

Wed, 07/30/2014 - 19:51 | 5025070 Say What Again
Say What Again's picture

How about looking at your Bloomberg Terminal.  If you can't afford that, then try this

http://www.bloomberg.com/news/2014-07-30/argentina-defaults-according-to...

Wed, 07/30/2014 - 19:53 | 5025081 eatthebanksters
eatthebanksters's picture

Iceland...think like Iceland...

Wed, 07/30/2014 - 19:57 | 5025099 Say What Again
Say What Again's picture

I'm trying to think like Iceland, but all I can think about is a hot-tub, a bottle of Vodka, and a tall blonde with a nice ...  Well you get the picture

Wed, 07/30/2014 - 21:03 | 5025379 JLee2027
JLee2027's picture

I'll bet those vultures funds feel like idiots now. All that time and expense and they are going to get ZERO.

Wed, 07/30/2014 - 20:07 | 5025145 booboo
booboo's picture

Pffft, 13b, thats chump chan......whats that, rehypopolyrazzmatazz, WTF did you say? Whats that mean?

Wed, 07/30/2014 - 21:06 | 5025399 Richard Head
Richard Head's picture

YOUR an idiot. Got it?

Wed, 07/30/2014 - 21:09 | 5025419 FredFlintstone
FredFlintstone's picture

Reminds me of a t-shirt I saw that said "YOUR retarded". Get it?

Thu, 07/31/2014 - 06:18 | 5026469 StychoKiller
StychoKiller's picture

"I can't brain today, I have the dumb!"

Wed, 07/30/2014 - 19:58 | 5025104 nmewn
nmewn's picture

Argentina defaults, again.

Krugman: This is not a spending problem. This is a lack of Argentina not spending enough problem!

(I swear, you can't make this shit up)

Wed, 07/30/2014 - 18:42 | 5024772 Publicus
Publicus's picture

Argentina will declare war on hedge funds. Guess who on what side is going to die in this war?

 

Checkmate, NWO.

Wed, 07/30/2014 - 20:14 | 5025170 Kirk2NCC1701
Kirk2NCC1701's picture

Messi.

Wed, 07/30/2014 - 21:25 | 5025479 Rusty Shorts
Wed, 07/30/2014 - 19:05 | 5024903 RafterManFMJ
RafterManFMJ's picture

Argentina Defaults.

Who could have seen this coming?

Wed, 07/30/2014 - 19:19 | 5024958 Monty Burns
Monty Burns's picture

Of course the banking criminals are to blame but so are the Argentinians.  They voted for politicians who promised free bread and circuses.  That country hasn't been paying its way for more than half a century.

Wed, 07/30/2014 - 20:21 | 5025210 WillyGroper
WillyGroper's picture

might want to go back & see how the 1st one was connected to MonSATAN.

Wed, 07/30/2014 - 21:11 | 5025425 JLee2027
JLee2027's picture

I agree on Argentina, but neither has anyone else paid their way for more than half a century. We're all borrowing and living on borrowed time.

Wed, 07/30/2014 - 19:36 | 5025018 Landrew
Landrew's picture

The payments were made, the cash is sitting in the bank in New York. The payments the original settlement amount. Now the non hedge funds will sue the bank along with Argentina. Other countries will now avoid New York for settlement. Zurich, Hong Kong where this would not have happened.

Wed, 07/30/2014 - 20:04 | 5025106 Kirk2NCC1701
Kirk2NCC1701's picture

Good time for Argentina to drop the Other Shoe of Unexpected Facts:  After the Default, Argentina joins the BRICS for a new monetary system.  Germany, Russia, China and Brasil back Argentina's revival.  So, Don't Cry for Argentina.

Heads will explode in NY.

Wed, 07/30/2014 - 20:55 | 5025348 downwiththebanks
downwiththebanks's picture

Word.

F the Anglo banker-gangsters.  

Wed, 07/30/2014 - 18:33 | 5024737 El Oregonian
El Oregonian's picture

Boy, everybody this is coming right to our shores shortly.

Wed, 07/30/2014 - 19:54 | 5025085 Kirk2NCC1701
Kirk2NCC1701's picture

Have them swim ashore in Astoria or Cannon Beach.  Water's balmy.  ;-)

Wed, 07/30/2014 - 21:10 | 5025422 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Have them swim ashore in Astoria or Cannon Beach.  Water's balmy.

As balmy as Yellen's private parts in December.

Wed, 07/30/2014 - 20:24 | 5025228 HardlyZero
HardlyZero's picture

Fat Dominos ?

Greece --> Cyprus --> Detroit --> Argentina --> Portugal --> Spain --> Italy --> France --> Chicago --> New Orleans, LA --> Pittsburg, PA --> Torrance, CA --> Philadelphia, PA  (Cherry Hill ?)

could be.... Here is brief review of Argentina 2001.             2008 Der Spiegel edition, and Bruce: First, Uruguayan Banks had long lines of businessmen from Argentina carrying suitcases filled with US dollars.  Deposting into accounts and safe deposit boxes.  Uruguay is South American Switzerland, a safe haven in times of crisis. Second, after Argentine businessmen had transferred their dollars aborad, the Argentine government froze all bank accounts.  Tens of thousands of desperate citizens stormed the banks, and many spent nights sleeping in from of the ATMs. Finally, in the Buenos Aires suburbs the consumption dropped 60%, and the young men began looting.  In December 2001, 40000 gathered at Plaza de Mayo.  They banged pots and pans day and night, until the government escaped.
Wed, 07/30/2014 - 18:35 | 5024751 Not My Real Name
Not My Real Name's picture

Aaand ... it's gone.

Wed, 07/30/2014 - 19:11 | 5024922 Renewable Life
Renewable Life's picture

I think most people are misunderstanding the "risk" here!

Of course the funny money printing presses will fire up to cover a one time event like this, but Argentina has to be punished for this, there has to be an example made of them, because if a default with massive western banking loses occurs and THEN the Argentinean economy explodes with GDP of 6-8% the next quarter without the anvil of debt payments to the West on its head, you can quickly see how that could cascade in a hurry!!

The elites that authorized this right down to the average citizen, must be made to feel massive pain and instability from this, or this whole shit show of debt and fiat bullshit will be in jeopardy!

Wed, 07/30/2014 - 19:22 | 5024972 11b40
11b40's picture

It would be a good time for Portugal & Spain to just spin right out of control, too, and light up a new Bonfire of the Vanities.

Wed, 07/30/2014 - 20:29 | 5025241 HardlyZero
HardlyZero's picture

Whoever gets the last cheap credit wins.  Race for the exits.  IMF will only have a few big bailouts left...then every other later country will be twisting in the wind.

Exit quickly.

Wed, 07/30/2014 - 21:21 | 5025460 JLee2027
JLee2027's picture

Could be a nasty pattern. Default in Argentina/Spain/Venezuela/etc, have Yanet fire up the printing press to cover said "default" and that country then renegade on all debts to join BRIC system. Could be quite lucrative in the short term and a disaster for the Dollar.

Wed, 07/30/2014 - 19:38 | 5025026 Landrew
Landrew's picture

You have no idea what you are talking about.

Wed, 07/30/2014 - 20:09 | 5025152 booboo
booboo's picture

Confessions of a Financial Hitman

Wed, 07/30/2014 - 18:23 | 5024684 fonzannoon
fonzannoon's picture

There is a rumor going around that Citi's emerging markets arm is hooked into this bigtime and is already scrambling behind the scenes for liquidity. The other banks are avoiding Citi like the plague but other huge players like BAC are tied to the hip with Citi so that is really not an option. If Citi finds itself in a liquidity crunch forget everything. You will see things go to instant freeze and it will be tanks on the streets by Monday.

Oh wait, nevermind, the fed fixed all this in 2008 and installed the red phone for these emergencies from now on.

 

Wed, 07/30/2014 - 18:27 | 5024705 Al Huxley
Al Huxley's picture

Ha ha, good one Fonz, for a second there I thought you were actually suggesting that there would potentially be consequences for this!  Very deadpan delivery, you totally had me going.

Wed, 07/30/2014 - 18:29 | 5024720 fonzannoon
fonzannoon's picture

I went insane somewhere around lunchtime on Monday. Don't expect much from me from here on out.

Wed, 07/30/2014 - 18:33 | 5024731 Al Huxley
Al Huxley's picture

Don't let that stop you from posting, nobody else does.

Do NOT follow this link or you will be banned from the site!