This page has been archived and commenting is disabled.
How Argentina Became A Bad Debtor
Following this evening's lengthy finger-pointing lecture from Argentina's Kicillof, Argentina formally defaulted. Shortly thereafter the hoped-for private bank bailout deal also failed leaving the default process likely to take a while. So how has Argentina defaulted three times in the last 28 years?
Submitted by Nicolas Cachanosky via the Ludwig von Mises Institute,
This is a complex case that has produced different, if not opposite, interpretations by analysts and policy makers. Some of these interpretations, however, are not well-founded.
How Argentina Became a Bad Debtor
An understanding of the Argentine situation requires historical context.
At the beginning of the 1990s, Argentina implemented the Convertibility Law as a measure to restrain the central bank and put an end to the hyperinflation that took place in the late 1980s. This law set the exchange rate at one peso per US dollar and stated that the central bank could only issue pesos in fixed relation to the amount of US dollars that entered the country. The Convertibility Law was, then, more than just a fixed-exchange rate scheme. It was legislation that made the central bank a currency board where pesos were convertible to dollars at a “one to one” ratio. However, because the central bank had some flexibility to issue pesos with respect to the inflow of US dollars, it is better described as a “heterodox” rather than “orthodox,” currency board.
Still, under this scheme, Argentina could not monetize its deficit as it did in the 1980s under the government of Ricardo Alfonsín. It was the monetization of debt that produced the high inflation that ended in hyperinflation. Due to the Convertibility Law during the 1990s, Carlos Menem’s government could not finance the fiscal deficit with newly created money. So, rather than reduce the deficit, Menem changed the way it was financed from a money-issuance scheme to a foreign-debt scheme. The foreign debt was in US dollars and this allowed the central bank to issue the corresponding pesos.
The debt issued during the 1990s took place in an Argentina that had already defaulted on its debt six times since its independence from Spain in 1816 (arguably, one-third of Argentine history has taken place in a state of default), while Argentina also exhibited questionable institutional protection of contracts and property rights. With domestic savings destroyed after years of high inflation in the 1980s (and previous decades), Argentina had to turn to international funds to finance its deficit. And because of the lack of creditworthiness, Argentina had to “import” legal credibility by issuing its bonds under New York jurisdiction. Should there be a dispute with creditors, Argentina stated it would accept the ruling of New York courts.
Many opponents of the ruling today claim that Argentina’s creditors have conspired to take away Argentine sovereignty, but the responsibility lies with the Argentine government itself, which has established a long record of unreliability in paying its debts.
The Road to the Latest Default
These New York-issued bonds of the 1990s had two other important features besides being issued under New York legal jurisdiction. The incorporation of the paripassu clause and the absence of the collective action clause. The paripassu clause holds that Argentina agrees to treat all creditors on equal terms (especially regarding payments of coupons and capital). The collective action clause states that in the case of a debt restructuring, if a certain percentage of creditors accept the debt swap, then creditors who turn down the offer (the “holdouts”) automatically must accept the new bonds. However, when Argentina defaulted on its bonds at the end of 2001, it did so with bonds that included the paripassu clause but which did not require collective action by creditors.
Under the contract that Argentina itself offered to its creditors, which did not include the collective action clause, any creditor is entitled to receive 100 percent of the bonus even if 99.9 percent of the creditors decided to enter a debt swap. And this is precisely what happened with the 2001 default. When Argentina offered new bonds to its creditors following the default, the “holdouts” let Argentina know that under the contract of Argentine bonds, they still have the right to receive 100 percent of the bonds under “equality of conditions” (paripassu) with those who accepted the restructuring. That is, Argentina cannot pay the “holdins” without paying the “holdouts” according to the terms of the debt.
The governments of Nestor Kirchner and Cristina Kirchner, however, in another sign of their contempt for institutions, decided to ignore the holdouts to the point of erasing them as creditors in their official reports (one of the reasons for which the level of debt on GDP looks lower in official statistics than is truly the case).
It could be said that Judge Griesa had to do little more than read the contract that Argentina offered its creditors. In spite of this, much has been said in Argentina (and abroad) about how Judge Griesa’s ruling damages the legal security of sovereign bonds and debt restructuring.
The problem is not Judge Griesa’s ruling. The problem is that Argentina had decided to once again prefer deficits and unrestrained government spending to paying its obligations. Griesa’s ruling suggests that a default cannot be used as a political tool to ignore contracts at politician’s convenience. In fact, countries with emerging economies should thank Judge Griesa’s ruling since this allows them to borrow at lower rates given that many of these countries are either unable or unwilling to offer credible legal protection to their own creditors. A ruling favorable to Argentina’s government would have allowed a government to violate its own contracts, making it even harder for poor countries to access capital.
We can simplify the case to an analogy on a smaller scale.
Try to explain to your bank that since it was you who squandered your earnings for more than a decade,you have the right to not pay the mortgage with which you purchased your home.
When the bank takes you to court for not paying your mortgage, explain to the judge that you are a poor victim of evil money vultures and that you have the right to ignore creditors because you couldn’t be bothered with changing your unsustainable spending habits.
When the judge rules against you, try to explain to the world in international newspapers how the decision of the judge is an injustice that endangers the international banking market (as the Argentine government has been doing recently).
Try now to justify the position of the Argentine government.
»
- 18043 reads
- Printer-friendly version
- Send to friend
- advertisements -
And here I thought it was by borrowing more than they collected, without access to a printing press and adequate propaganda apparatus. Maybe I need more historical context.
Argentina defaults.
http://www.planbeconomics.com/2014/07/argentina-defaults.html
Too fuckin bad you lent money to a deadbeat debtor.
Too fuckin bad you bought bonds at .02$ on the dollar with a 20 year NY judgment enforcement statute.
Too fuckin bad you write judgments not worth the paper (paid for by NY taxpayers) that it's written on.
Too fuckin bad you let crooks and hooks take over.
Too fuckin bad you spend other people's labor.
Too fuckin bad.
I say we just hire Rumsfeld and have him explain unknowns and knows to them. And if they don't get it after that, then lets just bomb the fuck out of them, kill that dumb bitch president and start over. That should work out well.
That 93 IQ thing is really a bitch. This is what attracts the tribe so much to unlimited immigration, stupid people to fuck over as needed.
good ole' Rummy! I want to call him Grampy! And then I want to kick him in the balls.
Argentina choose government debt to paying its creditors? What is unique about that?
"I say we just hire Rumsfeld and have him explain unknowns and knows to them. And if they don't get it after that, then lets just bomb the fuck out of them, kill that dumb bitch president and start over. That should work out well."
Who is Goldman's on-deck guy to run the next insolvent country? One catch, he has to have a Spanish name.
bombing starts in five minutes...
This whole situation with Argentina is getting Messi.
Change the rules then break the rules....hummmm sounds like, Barry
Fuck the moneylenders in the ass.
They'll be back for moar when there is a buck to be made.
Right, yes. The lenders have never showed any discipline to Argentina after, say, five years after a default. They loan money to an wildly irrepsonsible government, they take the consequences.
Argentina is another one of those places I would never invest in. No gracias!
they're after their assets.... they know they can't get any money....they want their "blood"
"The governments of Nestor Kirchner and Cristina Kirchner, however, in another sign of their contempt for institutions, decided to ignore the holdouts..."
What institutions is the autor referring to? Some court in NY? Why would anyone show a US court anything but contempt?
In my opinion countries should AS A RULE never pay debt that has been sold. They should always selectively default on it. A lender, by selling the debt, is transferring his responsibility away, and lack of responsibility from lenders is the last thing we need. Vulture funds are the scum of the earth and need to be eradicated. Fuck Elliott, fuck US courts (who seem to think they have global jurisdiction) and fuck hedge funds in general. And fuck Mises for letting this be posted in their name.
If the Argentine government were saying they were defaulting on the debt because no government has the right to borrow money, and then demand that the citizens within that polity - regardless of whether they voted for that government - are obliged to pay for it (or face getting thrown into a cage with real criminals)... then yes, fair enough. Let the sovereign debt market collapse, and governments raise money honestly through taxation.
But as the Argentine government will no doubt be trying to raise more money on the international market for its deficit spending, then it has to play by the rules of that market... and it didn't.
Bullshit.
The sovereign makes the rules, not the other way around.
Fuck Slinger, fuck the vulture funds, fuck the NY cangoroo courts.
About time someone says "fuck it" to this usury madness, and it came from an unlikely source. Good on you girl.
taraxias, while your argument is usually valid, the case around those Argentine bonds that were put on the market 10 years ago is slightly more complex
they made hundreds of "vehicles", in all kinds of currencies, and under all kinds of jurisdictions. a bit like they were thinking about providing a lot of income to all kinds of advisors and legal counsels in the future. and that future... is now
"Fuck" is, I believe, the correct word, here
Do hen...
Actually it is a VERY GOOD TIME to be buying land and properties.
buy low sell high kind of shit.
Tishman Speyer defaulted on billions, too. They still get credit, and so will Argentina.
Hey, where else you gonna get a decent coupon?
Balance sheet always looks better immediately after a debt write-off. Agreed, they will be back in the market again in no time.
+ 1
Three years max. History shows this.
China will be ready and waiting with DIP financing. This is just a skirmish in the war over the USD and the ROW
Those poor, poor creditors... they were forced to lend to Argentina.
I think it should be called the Ludwig von Misses Institute
ha. i got the most 'reddys' i ever got the other day with an anti-austerity rant. was reading through this article and thread picking up on the vibe, but not having noticed its' source. hehe. i can't wait to see the anti-free shit army hit the streets banging on their pots and pans.
Every time you lend money there is risk!! If I was Argentina's president I would give this pleople the finger too. Just for fun :)
GO ARGENTINA!! ....oh wait, is the World Cup over? Ok, so what? GO ARGENTINA!!
Neither a lender nor a borrower be?
Neither a lender or a borrower be,
And you have no central bank or fractional reserve economy.
Certainly a good personal motto but it doesn't make sense for a company. Clients WILL pay you late and insist that you provide services on time. This automatically makes you both a borrower and a lender. You cannot run a business without a credit line unless you have plenty of cash available which few companies do. Once you're listed this option disappear as shareholders will not allow you to have cash "sleeping" on your bank account.
Prepaid. payment first, then recieve the goods or services. Would only work if everyone did it.
Durden, better think more.
I am Brazilian and I know that Argentina has 4 nuclear power plants (Brazil has two), the best beef in the world, does not depend on oil (exports), is self-sufficient in food, has a well-established industry.
Received open arms many Germans after IIWW (hehe)
Ah, is part of Mercosur (per table, BRICS).
Putin been there recently.
If Argentina solve show ring finger may believe they are supported and, at worst, no one (the people) will difficulty.
Wait.... what?
Here you go, I fed it through the translator three times, English to Spanish to English to Spanish to English:
If Argentina resolves Show ring finger may believe they are compatible and in the worst case, nobody (the people) will make it difficult.
Your last sentence makes no sense. Sounds like Word Salad. Please re-phrase.
It is WAYYYYYY more than self sufficient in food.
Brasil decime lo que se siente .......
Durden, better think more.
I am Brazilian and I know that Argentina has 4 nuclear power plants (Brazil has two), the best beef in the world, does not depend on oil (exports), is self-sufficient in food, has a well-established industry.
Received open arms many Germans after IIWW (hehe)
Ah, is part of Mercosur (per table, BRICS).
Putin been there recently.
If Argentina solve show ring finger may believe they are supported and, at worst, no one (the people) will difficulty.
This article is utter bollocks. Argentina is solvent; it is formaly defaulting to prevent a legal precedent that might (will) cost it billions more than it has negotiated. It is doing the sensible thing. Bugger the HF community. They will soon forget and play the +ve carry game again, sooner than you think. How do I know? Because HF's are like drunk gamblers; they simply cant help themselves.
The IMF is shoveling money into Ukraine, now how does that look set to work out?
IMF can't do that. They can't support a country at war since any money given will be siphoned for other purposes.
Am I the only one around here that gives a shit about the rules!!!
http://youtu.be/-z0Pm7tccvc
The legal case is cristal clear. Paripassu exist for a reason and it is no suprise that almost all bond issues have it. Otherwise all new debt would contain better terms than old to make it more attractive.
What makes this case interesting is that if you focus on the long term then clearly Argentina is wrong as the article argues. But if you focus on the short term, then the vulture funds are just mis-using a clause to make a killing: asking dollars of return for cents.
There are no good guys here! Bankrupt country with dishonnest government battling vulture funds. Whoever wins doesn't matter but for the sparks it sends on the over-dry financial system.
"Yes, asking dollars of return for cents". Why the hell didn't Argentina (read the free shit army) just buy up the debt for cents on the dollar and be done with it. Ever loan a cocaine head money who says they will pay you back next week. The Argentines thought they could just fuck over the hold-outs on those bonds. Just wait until they try not paying the Chinese and/or Ruskis!
It is the judge that caused this by letting the holdouts block the settlement. The settlement is the result of free market negotiations of bond holders who were stupid enough to lend money to Argentina. The result is a haircut for the bond holders. The judge's ruling does NOT lower borrowing costs because it emboldens more speculators to dive in cheap - then hold out - this will be RAISING the chance of future defaults (since there can be no settlements or haircut negotiations)!
I have no idea who down votes that. Whatever. Great reasoning.
Edit: Ahhh. Everybody got a red on the thread. Some jokester trolled by and shit all over the place. Cleanup isle 12!!!
I think her name is Kirchner.
You are more-or-less correct. However, the one thing that you haven´t considered, nor has Captain von Mises, is the role of Credit Default Swaps in the negotiations. We will probably never be sure (since ZH is the only place that reports on such things and they apparently hold some of Elliot´s bonds, given their reporting on Argentina), but I am willing to bet Elliot and some of the other funds had CDS on either their debt or on the debt that had already been negotiated. Thus, they most likely had a vested interest in default (did they tell you about this.... Tyler?). The reality is... in the "new" Wall-Street normal of CDS´s, rehypothecations, and shadow-banking, there is always someone betting on and trying to encourage default... sometimes even the debt holders themselves. Since, everyone can just expect a bailout if the company on the hook for the CDSs is "too-big-to-fail," the capacity for perverse incentives is everywhere. Probably nothing... in any of this... is at it seems.
Pay your f__king bills is the solution. You sound like one of those union pension guys at GM when they fucked over the senior bond holders for the fuhrer rein and don't borrow more than you one can handle and yes that should apply to US.
Boo Frickitty Hoo! Earn a living like a real man you parasitic lowlife! Fuck em' in the other ear Argentina!
But wait -- isn't the President of Argentina hot? If so, then give her a pass. She shouldn't have to be bothered with debts. Party on, Argentina!
paying its obligations ?
To some nice lads in New York who control the worlds capital flows..........(in their interest)
Zero Hedge showing its true colours me thinks.........
yeah, zh sides with the maggots entirely too much imo
I'll certainly buy the next 10y bond that Arg will issue. 10y, just to be safe.
Interesting.
On a comparative note, the People's Republic of China repudiated China's full faith and credit external sovereign debt in 1983, and then engaged in an exclusionary settlement with U.K. bondholders in 1987 (which settled only those bonds held by UK Nationals) ... all without any adverse effect on China's sovereign credit rating. Even though the PRC is in 'selective default', it enjoys an investment grade credit rating.
Unfortunately for Argentina, and unlike China, it lacks a sufficient number of corporate issuers to provide ratings revenue to S&P and Moody's via the issuer-pay revenue model, to protect its sovereign credit rating from being relegated into selective default.
http://www.globalsecuritieswatch.org/DOJ_Antitrust_Complaint
I think that XYZ country owes me 100 bln dollars. They do not know about this and even if they knew they would have refused to pay me. So in my opinion XYZ country is in Default.
It only depends if my opinion is can be enforced.
Is that bag full or can we get some more shit in it?
Thank you for a clear, concise summary of the facts. This should be required reading for all who want a clear understanding of what has taken place.
Since when have facts mattered?
There are some deductions of major importance which can be made from these premises.
The first is that money is nothing but an effect- (131) tive demand. It is not wealth, it is
not production, and it has no inherent and indissoluble connection with anything
whatever except effective demand. That is the first point, and it would be difficult to
overrate the importance of a clear grasp of it. It lies at the root of the question as to the
true ownership of credit-purchasing-power. The second point is that, so far as we can
conceive, the co-operative industrial system cannot exist without a satisfactory form of
effective-demand system, and the result of an unsatisfactory money system (that is to say,
a money system which fails to function as effective demand to the general satisfaction) is
that mankind will be driven back to the distinguishing characteristic of barbarism, which
is individual production. And the third point, and the point which is perhaps of most
immediate importance at the present time, is that the control of the money system means
the control of civilised humanity. In other words, so far from money, or its equivalent,
being a minor feature of modern economics, it is the very keystone of the structure”
CH Douglas – speaking during the interwar years
"... is that the control of the money system means
the control of civilised humanity"
No, no, no, ... !!!!!!
It's the control of FIAT MONEY!
The ability to have the sheep accept pieces of worthless paper as money.
There is no such thing as a "money sytem".
Money is gold or silver, period.
Money is a mechanism.
It is not a specific thing.
The money changers of medieval England were kicked out of dodge if I remember correctly.
They controlled Specie in their own interest.
Cromwell and the lads allowed them back in.
every fucking shylock learns early on, 'you only lend to ready, able and WILLING borrowers'.
these lenders are big boys, they know the game. tough titty said the kitty, the milk is all gone.
There is a case to be made for calculated default on sovereign debt in a world in which the reserve currency printer's hegemony is faltering. "That which is failing should also be pushed" What will the shylocks, as aptly put by a commenter above, gonna do about it? Another false flag bombing in BA? A US State Department National Endowment For Democracy-style destabilisation?
If this prompts Argentina to complete its move away from the USD entirely (as it has already taken many steps in that direction), then I think that it is safe to say there will be a full-blown $5 billion USD CIA-funded destabilization effort commencing in Argentina.
That is what the US has done in the past, so it stands to reason it is what they will do this time around. However, this time there seems to be a greater level of cooperation between South American countries. In the 60's, when the US installed Dictators in pretty much all of Latin America, the countries were isolated.
in a just world, buyers of US treasuries ought be accused of financing terrorism.
"This should be required reading for all who want a clear understanding of what has taken place"
I want "Money for nothing and chicks for free ..." Dire Straits
Can't they just steal from savers? Surely they can find someone to steal from.
Ok... Von Mises... I´m your Huckleberry. Argentina, like any debtor, does not have to pay any debts to anyone. The onus is on the creditor to enforce collections. Since the Argentina´s credit rating was already at nearly the lowest level and Argentina, now, has little or no access to international credit markets, the question then follows: why should Argentina repay Elliot Capital Management or any of its hold-out creditors, especially when we consider that much of this debt was accrued by a former and now defunct government?
The consequences of an Argentine default fall more heavily on the creditors than on Argentina. As another poster observes, Argentina has plenty of food, most of the products it needs are manufactured in the country (thanks to import tariffs that encourage domestic manufactures), and is mostly energy independent. How much "international" capital does von Mises think Argentina needs? Like Europe with Russian energy, China needs Argentine soy more than it needs more funny-money U.S. dollars. Therefore the creditors should have been willing to negotiate. Since they were not willing to negotiate, we can only assume that they had insured their debt via Credit Default Swaps.
Thus, it seems likely that, they used Argentine debt to swindle insurance companies, most likely, just as U.S. sub-prime home mortgages were used to swindle insurance companies- a nation and a people used so that a few Elliot Management people can ride around in limos on Wall Street blowing coke up their nose and fondling high-priced prostitutes. While one can bang a holy drum about contracts, the rule of law, and the moral obligations of paying back debts all one wants, Argentina is perfectly within her rights to tell them all to go to hell. And the Fed-financed, funny-money world of Wall Street bankers and hedge funds has no moral high-ground here, no matter how many contracts, laws, and rights you bang on the table.
Last I heard, a lot of people haven´t been paying their debts lately, like 75 million American citizens, for example, or General Motors, for example, or Detroit, for example, or Harrisburg, Pennsylvania, or Greece, or Iceland, or any number of banks and insurance companies in 2008, when the Fed had to print money to bail everyone on Wall Street and everyone in Europe out, or even the U.S. government, which is some 17 trillion in the hole, or France, or Italy, or Espiritu Santo, or various Chinese entities. So stop with your sanctimonious blather about the morality of contract-law and the repayment of debts. The system itself is corrupt and broken beyond repair. Look at how one nation has appropriated for itself the ability to print international money, look at how the CIA and NSA run about the world causing havoc in every nation that tries to opt out of this system, and then explain to me again how the world is built upon the sacrosanct nature of laws and contracts: debts and repayments.
Actually a blessing for Argentina being unable to access capital markets - can't just piss money away like most countries.
Right. As an argentinean, I don't want my country to lend money from any usurer. Money that NEVER goes and never has gone to the people.
It is worse than usury. Elliot and the others most likely deliberately caused a "default event" to collect on CDS bets made through another legal entity either on their debt or on the debt that others had negotiated. Basically, the Argentine people and government, and the bonds that others held and were collecting payment on were used by Elliot to swindle an insurance company. Everyone else loses and Elliot wins, with what was nothing more than a scam. In the mind of von Mises, this is justice. It just shows how small and narrow minded Austrian school economics is. The really unfortunate thing about it all was that Argentina was naive to what a cess-pool Wall Street really is and played into Elliot´s hands by forcing the issue in court.
Money has a cost ??????????
Who says money has a cost ????????
Why - the money lenders of course.
There is a whole lot of real physical shit the Argies produce.
How much stuff (other then debt) is produced in New York state pray tell ???
Why does New York have claims on the worlds resources ???
Got that right.
That's the money lender's shabby secret. tell them to stick it...just watch out for US-funded NGO's operating in country.
Money and capital have ZERO cost according to the dickhead, thieving government.
Mark my words, Chile is going to be the country that causes the downfall of the US.
And you all still wonder why so many South American and Central American refugees...and they are refugees are moving north towards America. The dominos are falling, and the United States is desperate to be the last. The dollar gentlemen, the last bastian of hope in this house of cards is being held up by that same thread that held Kennedy's Sword of Damocles in reference to...well you all know what.
So what shall it be, collapse of the financial unreality. Or a nuclear war to cover up the finality that those who pull the strings fear to aknowledge.
We see it, you see it, they see it.
We are Annonymous, The Outside Agency, We the People.
...and we are prepared. Are you?
-Central Dispatch
Objective reality and the laws of mathamatics are a Mo-Fo's!
But it always pays to be a irresponsible populist, since you can always blame it on the bankers.
Its a good idea to default.
Take billions of $ from west and refuse to pay back.
Its a sweet revenge for the Falklands war with British.
Its like QE.
to the shysters, i say if you are going to be a lender you must also know how to properly reposses or arrest.
An Argentine naval ship which was detained in Ghana for more than two months has arrived back home.
http://www.bbc.com/news/world-latin-america-20966460
What can you expect from a deadbeat nation? Is it a nation still? After failing so many times maybe it's time to let it fall apart and let others take over that country.
It is easy to justify the position of any government or individual who defaults on a bank "debt" or money given to hedge funds by banks for the purpose of lending.
The bank creates money from nothing and then expects that as a result of this creation of money from nothng they have a right to sieze real wealth in the form of tangible assets and to dictate the policies of government and their people. That is insanity. The bank has given nothing, has risked nothing and should be owed nothing. What was created from nothingness and cost the bank nothing to create can go back into nothingness and will cost the bank nothing to destroy.
People should be incensed that banks are allowed to do what they do at all. It is insanity. The system of credit rating is corrupt and insane as well. And the legal system built around it is corrupt and insane ... to enforce compliance through force the handing over of tangible assets in exchange for something created out of nothing at no risk.
Stop lending money to deadbeats. I don't feel sorry for any of the creditors that lose money on this nonsense.
The article and many comments are wrong wrong wrong... Or misleading.
First,
The "Convertibility" was a path to dolarization of Argentina's Economy, thus puttig the country in the same scheme as Eurozone countriess. That is: gvt has to BUY every note by printing BONDS, paying interests over every buck in circulation TO A BANK THAT DOESN'T BELONG TO THE STATE BUT TO PRIVATE BANKERS.
Eurozone countries are not allowed to default because under this scheme, gvts are SLAVES of banksters; so comes "austerity". Gvts loose capacity of decision making.
Second,
Argentina is not a "bad debtor" (always pays, EVEN PRIVATE, NATIONALIZED DEBTS as happened with the Brady plan and other "reestructurization programs" of the sort, aimed to make countries (people, thoug) eternal bankster's contributors. Think properly and inform yourself, reader, 'cause your country is probably such.
Almost 93% of Argentina's post 2001 defaulted public debt was renegotiated and agreements were settled. The present case about NML/Griesa involves 1% among the 7% of the remainig bonds.
If the gvt accomplishes Griesa's order, Right Upon Future Offers (RUFO) could be triggered. The RUFO stipulation held with bondholders that entered 2005 and 2010 debt swaps dictates that Argentina give restructured titles the same payment conditions as those negotiated afterwards.
Paying NML would be a nightmare for argentinians, a triumph for banksters.
Our govt can't do that: people would surely throw them out in a blink.
When the US/CIA and fellows' coup d'ete had place in 1976, Argentina's public debt was under u$s 6 billion, it represented but a small portion of GDP. Under illegal Junta, it climbed to u$s 46 billion. Then to u$s 65 when Menem took office. Menem revealed himself a banksters sponsored gvt.
In spite of all the privatizations of state-owned companies which were supposed to reduce Foreign Debt, Argentina’s Public Debt had increased to around u$s 130 billion.
Then De la Rua president, the MoE Cavallo managed to push through several Mega-Swaps of old Brady Bonds for new bond issues, the most notorious of which was the one they did in June 2001 which in just one month generated over 50 billion dollars of spurious additional new debt. By then, Argentina’s Public Debt had leapt to around u$s 180 billion and in December 2001 the country defaulted on its debt with private bondholders and only continued making essential interest payments to the International Monetary Fund (IMF) and other multilateral institutions within the framework of the usual IMF/World Bank debt restructuring and re-engineering strategies.
So please, stop the BS.
the whole purpose of debt slavery à la IMF and TBTF owners is to make nations of third world addicted to debt.
So Argentina is a BASKET CASE, especially as its elites are picked by the Oligarchy of bankers who run the world to ENSURE that defaults occur making Argentina a national and PERMANENT WHORE to the banksta system.
1° You addict them to debt.
2° You have them elect Oligarchy front men, who cry "bleeding hearts" and enjoy private fiat farts once out of office --lovely payback!
3° You rinse and repeat and you have a slave economy. All over the world.
Thats what a UNIVERSAL EMPIRE is.
Until one day...a 80 year people's war starts.
P.S.: They couldn't dolarize Argentina. The ALCA neither could be settled early in 2004.
Perhaps they decide bombing down Argentina too, who knows? "to the stonge age", as they like to say (and do).
Now the Elliot boys have to search the world for assets to take....they took a tall ship a few years ago...I hear the Falklands were once Argentinas..so they say....maybe they can take those over again...lol
When will people get it through their fucking heads: Argentina waived its sovereign immunity when it issued these bonds under NY law and tied their hands during the 2005/2009 restructurings. This is a problem of their own doing. Let them eat shit.
Now we will see how the derivative swaps will (will not) be triggered. I haven't heard anything about them yet.
Watch the term "default" be redefined so there will be no pay out, nor can there be.
I think I will stay on with this video:
Better than most of comments here...
http://bit.ly/17az4S0
Time index 12:40
Good one!
The article states :"Griesa’s ruling suggests that a default cannot be used as a political tool to ignore contracts at politician’s convenience."
Another fine example of our totally corrupted judiciary. Oh, the sanctity of the contract when it comes to banker bonuses, hedge fund agreements, and payment of Interest Rate Swaps to the "too big to fails", etc, etc, etc.
The sanctity of the contract [or even the law] is not quite so important when it comes to making even fractional payments into the New Jersey pension fund, where the argument that it would "burden" the budget was used by the judge. How about the sanctity of the contract in regards to paying Detroit pensioners, all while full payments are being made to the vultures holding the Interest Rate Swaps?
The totally corrupted judiciary upholds one law for the rich, another for the rest of the chumps who actually work for a living.