Thread: Argentina debt plan. Illegal?

Originally Posted by 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.

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.

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.

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

Originally Posted by Lotz-A-Landies

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

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.

Originally Posted by 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

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

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$.

Originally Posted by Chucaro

John, I am well informed the majority of my family live there, it is corruption at its best!
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

Originally Posted by JDNSW

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.