tag:blogger.com,1999:blog-6896989063397229776.post4724184044555318094..comments2024-03-20T06:19:44.160-03:00Comments on Geopolitical Analysis and Monitoring: ARGENTINE DEFAULT, TO BE OR NOT TO BE Ray Storchhttp://www.blogger.com/profile/08595613391056833393noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-6896989063397229776.post-35084643157070224042014-07-26T15:23:08.576-03:002014-07-26T15:23:08.576-03:00Hi Roy,
From my point of view, the vulture funds ...Hi Roy,<br /><br />From my point of view, the vulture funds vs Argentina issue roots on political reasons rathen than on a financial or technical one, with the clear aim at tearing down the successful debt restructuring of 2005 and 2010, a process that became a serious danger for a big part of the International banking community (a country that restructures its debt without falling into further indebtment). <br /><br />Two key events proove so:<br /><br />1) NLM Capital and other holdouts ("vultures") rejected the proposal presented by Gramercy funds (the largest holder of Argentine structured bonds) last February that could have find a common ground on the holdouts and the Argentine government. Also, apparently Gramercy and Fintech proposed to intermediate between holdouts and Argentina in order to solve this issue without triggering the RUFO clause. <br /><br />http://www.pagina12.com.ar/diario/economia/2-238721-2014-01-29.html<br /><br />2) The US Supreme Court could have consulted the US government before overturning the Argentine appeal. That'd have given Argentina the 5 additionnal months necessary to reach the RUFO clause expiration and then easily proceed to pay the vulture funds. I cannot believe that the SCOTUS didn't assess the consequences of not consulting the US government before.<br /><br />As of the article, some precisions and corrections:<br /><br />- Buenos Aires as the site of payment is ruled out not because of corruption but because many US institutional funds (retirement, 401k, etc.) are required by US law to only buy bonds under US legislation.<br /><br />- The following paragraph is priceless:<br /><br />"ARGENTINA may be depicted as a bad payer a serial defaulter or an outlaw state by the global finance propaganda, however if ARGENTINA would pledge to accept the sentence of NY courts and therefore forced to default and repay, lenders would be ready to sign the check and lend again as it has been always the case thus swamping once again the country in debts with the guarantee of the ARGENTINEAN state."<br /><br />Well... that's all about: It doesn't matter if Argentina is a good or bad borrower to those who were "cheated" before; it only matters if the country will continue being overindebted, situation that will force the incumbent Argentine government to accept the conditionalities of new borrowing: . These conditionalities include the failed recipies that Argentina experienced in the past and that Europe is suffering: Reduce wages, reduce pensions, devalue the peso, open markets to let goods from developed countries take over the domestic market, privatize juicy entreprises (YPF, railroads, municipal water supply, etc)<br /><br />- The following paragraph is very unfair with Peron:<br /><br />"The ARGENTINIAN establishment (this include Peron,the trade Unions,left and the right) have mismanaged their country for 50 years (or more).This is not only a "debt" problem,but more a very human desire to escape macro economic rationality.This made things worse for them in the long run."<br /><br />Peron kept Argentina unindebted until his outs in 1955. It was the government that toppled him who made Argentina join the IMF and start a path of overindebtment that dind't end until our days. I understand that many people don't like Peron, but it was those anti-Peronist who were the most responsible ot the current situation, not Peron.<br /><br />Thanks<br /><br />AndresAndréshttps://www.blogger.com/profile/14888899932269902235noreply@blogger.com