Argentina debt plan. Illegal?

[bob10]

Where to from here? Bob


BBC News - Argentina debt plan ruled 'illegal' in US court (http://www.bbc.com/news/business-28891208)

[sheerluck]

Falklands MkII would unfortunately be my guess Bob.

[bob10]

Falklands MkII would unfortunately be my guess Bob.


They would not dare, .....would they? Bob

[Chucaro]

The sooner that the Argentinias remove the present government the better :mad:

The vulture funds that corner Argentina also come for Spain (http://www.voltairenet.org/article184957.html)

[sheerluck]

There's a lot of similarities between 1981/2 and now in terms of Argentina's financial woes, Bob. And now the Falklands have been proven to be richer in natural resources than previously thought...might be tempting for a broke government, and would perhaps fly under the radar with all the other current ills of the world.

[bob10]

There's a lot of similarities between 1981/2 and now in terms of Argentina's financial woes, Bob. And now the Falklands have been proven to be richer in natural resources than previously thought...might be tempting for a broke government, and would perhaps fly under the radar with all the other current ills of the world.


That is all the World needs, right now. Bob

[Chucaro]

Dave, back then Argentina was under the dictatorship of a military junta which did not have any idea about economics and was so unpopular that they were looking for a way out.
They invaded The Malvinas and for Margaret that was not very popular in England the conflict worked in her favor.
It is different now, I do not think that the government will have the support (domestic and within other countries in the continent)to start a conflict.
Argentina does not need the wealth in the Malvinas , that it is a different issue for the Argentinias. The country it is immensely rich and if it was not because the corrupt governments it should be well into the top 20 world economies.

[jimr1]

Bob when you think that one country can take another to court , over a debt . After all would you invest or loan to the Argies any money , those that did took a punt ,and got burned . I'm no fan of that country , or It's government , but then I don't have any sympathy for bankers . They are the greediest businesses of all .There seems to me to be something wrong when banks feel as tough they can hold whole nations to ransom ..Jim

[Chucaro]

There not always the banks, the banks sell the bonos to people like Paul Singer, the billionaire whose investment funds brought the suit and popularized the tactic of buying distressed sovereign debt on the cheap and litigating until collection.

[PhilipA]

So what would have happened if the hedge funds didn't buy the debt.
the country would have no money to pay police, civil servants etc.
The currency would have collapsed then.

The hedge funds buy debt like this expecting to get their money back, after the country promises to mend its ways.

I was in Argentina last September and the writing was on the wall then.

Unfortunately nobody told me to take USD cash as even back then you could get 30% or so more, as all the people with money were desperately trying to get foreign currency as they saw that the Austral would be worthless.

It's a slow motion train crash, but to blame the lenders is just crazy.
Its all Argentina's work.
Regards Philip A

[Chucaro]

I agree with you, the corruption there it is terrible but at the same time I do not have much sympathy for people like Paul Singer.
He like to purchase bonds from banks for peanuts and risk, well it is his lost.
The value of the Austral it is not important any more, people just operate with dollars and many of them took the money to Uruguay and Brasil.
I have a huge family there and know well how it is the situation.

[Lotz-A-Landies]

I agree with you, the corruption there it is terrible but at the same time I do not have much sympathy for people like Paul Singer.
He like to purchase bonds from banks for peanuts and risk, well it is his lost.
The value of the Austral it is not important any more, people just operate with dollars and many of them took the money to Uruguay and Brasil.
I have a huge family there and know well how it is the situation.If a country cant pay its debts, then it should sell assets. Perhaps Mr Singer could become the dictator of Argentina until it pays the debt.

If I take a mortgage on my home and don't front with the repayments they will foreclose, it shouldn't be any different with sovereign debt.

[3toes]

I have sympathy for Argentina on this one. They borrowed and then the world economy went down causing their economy to follow. When they borrowed its was not a lot compared with the income to pay it. Their financial circumstances changed and despite robbing their citizens individual bank accounts were not in a position to repay. They then did what anyone does in those circumstances when there is nothing left they made an arrangement to repay what they could. Where the problems started was some of those who held this debt were offered cash by the 'vulture' funds to take the debt off there hands just before the deal was finalised. They were never involved in lending to Argentina just bought in on the basis they could make a profit on what they could realise from the debt over what they paid. They paid less than Argentina agreed to pay back so there was an immediate profit there for the taking. They then opted not to be part of the deal and have been demanding full payment ever since. They saw a loop home in the international debt law and have been attempting to exploit it ever since. The only good thing to come out of this is that the loan agreements are now written to stop this kind of activity as it is seen as wrong even by banking standards.

[JDNSW]

From what I understand of the situation, the reason the decision went against them was that the original bonds were sold under U.S. law in New York - simply because at the time nobody in their right mind would have bought them if sold under Argentinean law. (And this view would seem to be justified!)

The problem with the economy is, I suspect, not corruption of successive governments, but simply incompetence, although corruption does not help. Not the only time this sort of thing has happened - governments through the ages, and almost everywhere, have repeatedly tried to repeal the law of supply and demand and ignored economic reality.

John

[Chucaro]

If a country cant pay its debts, then it should sell assets. Perhaps Mr Singer could become the dictator of Argentina until it pays the debt.

If I take a mortgage on my home and don't front with the repayments they will foreclose, it shouldn't be any different with sovereign debt.

Quote: Perhaps Mr Singer could become the dictator" end of quote
I am no allowed to comment on that, this is a friendly forum :censored:

I remember very well that, Domingo Cavallo pegged the peso to the U.S. dollar in 1991 and limited the growth in the money supply. His team then embarked on a path of trade liberalization, deregulation, and privatization. Inflation dropped to single digits and GDP grew by one third in four years.

He was considered one of the best economists by "gurus"in many countries including Australia. An example to follow said many. What a mother of all craps!!!!
The assets are belong to the peole not to the corrupt governments and should never be touched.
Now, Argentina sold the jewelery, the people lost the common assets and corrupt politicians and big capitals playing with the poverty of many.

i can see that another civilian revolt is in the future if the politician do not change their attitude.

[Chucaro]

From what I understand of the situation, the reason the decision went against them was that the original bonds were sold under U.S. law in New York - simply because at the time nobody in their right mind would have bought them if sold under Argentinean law. (And this view would seem to be justified!)

The problem with the economy is, I suspect, not corruption of successive governments, but simply incompetence, although corruption does not help. Not the only time this sort of thing has happened - governments through the ages, and almost everywhere, have repeatedly tried to repeal the law of supply and demand and ignored economic reality.

John
John, I am well informed the majority of my family live there, it is corruption at its best! :mad:
When corruption rules the incompetence become irrelevant.

[Bigbjorn]

I remember about 1990 assessing incomes of pensioners who were receiving dividends from Argentine investments. The Austral was virtually worthless, several thousand Australs to the AU$.

[JDNSW]

John, I am well informed the majority of my family live there, it is corruption at its best! :mad:
When corruption rules the incompetence become irrelevant.

Corruption in itself is not necessarily inimical to a sound economy, although, as I said, it does not help. A government can be both corrupt and incompetent (or squeaky clean and incompetent), but a competent, corrupt, government will make sure that they do not kill off their source of income. Without knowing any of the details of the situation, the results seem to confirm that this is not what has happened.

As an example, reports suggest that corruption has been extensive in CHina over the last couple of decades - but the economy is certainly doing reasonably well.

John

[Chucaro]

Corruption in itself is not necessarily inimical to a sound economy, although, as I said, it does not help. A government can be both corrupt and incompetent (or squeaky clean and incompetent), but a competent, corrupt, government will make sure that they do not kill off their source of income. Without knowing any of the details of the situation, the results seem to confirm that this is not what has happened.

As an example, reports suggest that corruption has been extensive in CHina over the last couple of decades - but the economy is certainly doing reasonably well.

John

Has the corruption in China reached the level were the majority of the money was taken OS and closed the domestic industry in favor of speculation ?
I do not think so.

[JDNSW]

Has the corruption in China reached the level were the majority of the money was taken OS and closed the domestic industry in favor of speculation ?
I do not think so.

No, but that is not corruption - it is corruption plus incompetence (assuming the destruction of the economy was not intended). And I should point out that the incompetence is possibly not confined to those behaving corruptly.

John