Argentine Economy

[QUOTE=AllIWantIsLove;441011]Does anyone know if Singer's interest in this is purely personal, or is he perhaps fighting on behalf of investors in his hedge fund? Was the Clarin article about people who hold the bonds directly or about people who have investments in the Singer hedge fund? Usually hedge funds have investors, right? Some of whom might be fat cats but some of whom might not be.

Bob.[/QUOTE]He has investors as well as his own money involved. As far as the Argentine bonds are concerned who knows what the percentages are. Cristina makes it look like it is just him. They tend to over look that there are other hold outs. Many of them Argentinos.

[QUOTE=Esten;441005]There are good, positive purposes of Wall Street. But there are some Wall Street activities that are bad, and some that are sleazy.

No one is questioning the legality of the actions of Paul Singer and the vulture funds. But just because it's legal doesn't make it right. And that's where many people have an issue with the vulture funds, not just in Argentina. They buy distressed debt, and instead of working with the debtor, they work against the debtor to extract as much profit as possible. In Singer's case, Argentina could yield a 1600% profit. Even better than the profits he made off Peru and the Congo, from whom he forced payments with similar tactics. Even though the debtors could pay him, they are worse off because of his actions.

So what category do the vulture funds fall under: Good, Bad or Sleazy? Here's what another hedge fund manager, Kyle Bass, has to say about Paul Singer:

[URL]http://www.businessweek.com/articles/2014-08-07/argentinas-vulture-paul-singer-is-wall-street-freedom-fighter[/URL][/QUOTE]Argentina is worse off because of Argentina's actions. Argentina could have easily paid Singer a long time ago and been done with this issue without any damage to their credit. But no, they had to throw a hissy fit, blame everyone else and refuse to negotiate in good faith. Argentina and Argentina alone is responsible for the default.

I regard Kyle Bass as one of the top money managers in the world, but Argentina's US attorney was Kyle Bass's attorney and he released him to work with Argentina. Why would Bass do that? Bass's fund has made a significant investment in Argentinian bonds. Bass also went on record that Argentina would win in court. He was wrong. Kyle Bass is just a little prejudiced in this situation.

[QUOTE=AllIWantIsLove;441012]Good point Esten. I agree. But how do we make business decisions on what's right rather than what's legal? Who would make those decisions? And how? Based on their own moral code? Or maybe they would take a poll for each case?

And how would people make any kind of agreement with any level of confidence that it was consistent with the moral code that would be applied should some third party need to arbitrate a disagreement?

I guess we could write down a moral code, but isn't that exactly what our legal code is supposed to be?

Bob.[/QUOTE]What is right or moral about Argentina reneging on a debt when they have the assets to pay the debt? Argentina isn't someone who went bankrupt because of an unexpected medical expense. They spent money like drunken sailors, didn't pay their bar tab even though they had money in their pockets and now they whine to the world about being forced to pay a small percentage of the tab. Argentina is a serial defaulter and deserves no one's pity or help. Argentina should get their act together or else continue to suffer the consequences of their reckless spending. Anyone loaning money to Argentina right now should have their partner wear an I'm with stupid t shirt.

Apparently Cristina and her cohorts want to practice a scorched earth policy.

[URL]http://www.bloomberg.com/news/2014-08-26/argentina-revoked-bny-mellon-s-banking-license-capitanich-says.html?cmpid=yhoo[/URL]

Tres3.

More on Argentina debt default.

[URL]http://www.bloomberg.com/news/2014-08-26/soros-s-bond-bet-revealed-in-lawsuit-in-london-argentina-credit.html[/URL]

Tres3.

[QUOTE=Tres3;441029]Apparently Cristina and her cohorts want to practice a scorched earth policy.

[URL]http://www.bloomberg.com/news/2014-08-26/argentina-revoked-bny-mellon-s-banking-license-capitanich-says.html?cmpid=yhoo[/URL]

Tres3.[/QUOTE]Revoking the authorization for two officials. Man these geopolitical repercussions Esten warned us about are really something. It will take BNY Mellon all of five minutes to authorize two other officials to act in their capacity in Argentina.

Anyone notice in the second article that Hayman Capital (Kyle Bass) are mentioned as suing to get interest income payments on the bonds?

The interesting fact that the media does not report, and the Argentine government conveniently overlooks, is that Bank Mellon NY has received NO instructions from Argentina, to wire transfer the money in compliance with the federal district judge's order. The only instructions that BMNY has received is to pay the bond interest to the "haircut" bondholders, but not the "hold out" creditors. The judge has ordered BMNY that if they pay one, they must pay all, or be held in contempt. Contrary to the Argentine government, BMNY will not break the law, and cannot legally return the money to Argentina, because Argentina refuses to give them wire transfer instructions. BMNY finds itself between a rock and a hard place. Something tells me that once this debacle is all over, BMNY will not do any more business with the Argentine government.

Tres3.

[URL]http://finance.yahoo.com/news/argentina-says-us-based-bny-164656114.html[/URL]

Argentina is revoking BNY Mellon's authorization to operate in Argentina. Oh wait,

"BNY Mellon has no retail operations in Argentina".

Tres, I doubt Mellon wants to do any business with Argentina.

[QUOTE=Dccpa;441038][URL]http://finance.yahoo.com/news/argentina-says-us-based-bny-164656114.html[/URL]

Argentina is revoking BNY Mellon's authorization to operate in Argentina. Oh wait,

"BNY Mellon has no retail operations in Argentina".

Tres, I doubt Mellon wants to do any business with Argentina.[/QUOTE]LOL! I doubt any one in New York or even any one in the USA Wants anything more to do with Argentina! Except for a few of us of course. .

[QUOTE=AllIWantIsLove;441012]Good point Esten. I agree. But how do we make business decisions on what's right rather than what's legal? Who would make those decisions? And how? Based on their own moral code? Or maybe they would take a poll for each case?

And how would people make any kind of agreement with any level of confidence that it was consistent with the moral code that would be applied should some third party need to arbitrate a disagreement?

I guess we could write down a moral code, but isn't that exactly what our legal code is supposed to be?[/QUOTE]Well we all make our own decisions in life, don't we. I imagine a criteria of right action is some combination of motive and effect. Our legal code is the law, but it is imperfect and incomplete, and should not be the sole basis of our actions.

Per Bloomberg [URL]http://www.bloomberg.com/news/2014-08-28/deeper-default-pain-looms-as-reserves-shrink-argentina-credit.html[/URL] expect peso weakness until January when Argentina is expected to reach an agreement.

[QUOTE=RetireNTrave;441067]Per Bloomberg [URL]http://www.bloomberg.com/news/2014-08-28/deeper-default-pain-looms-as-reserves-shrink-argentina-credit.html[/URL] expect peso weakness until January when Argentina is expected to reach an agreement.[/QUOTE]Don't expect to see the Peso strengthen in January. That's right in the middle of summer vacations. People can't get nearly enough dollars to travel with from the official sites and that scarcity always drives the peso down.

The rate in late January is consistently the weakest peso of the year.

I'm not an economist nor do I play one on TV but there are a finite number of actual dollars in the country and competition for them is never higher than January. With everything that has happened this year we have just now pulled past where they were in early February. Adjusted for inflation, this 14.1 is still less than the 12.4 or so of January / February.

DR.

[QUOTE=DaddyRulz;441073]Don't expect to see the Peso strengthen in January. That's right in the middle of summer vacations. People can't get nearly enough dollars to travel with from the official sites and that scarcity always drives the peso down.

The rate in late January is consistently the weakest peso of the year.

I'm not an economist nor do I play one on TV but there are a finite number of actual dollars in the country and competition for them is never higher than January. With everything that has happened this year we have just now pulled past where they were in early February. Adjusted for inflation, this 14.1 is still less than the 12.4 or so of January / February.

DR.[/QUOTE]DR. Great insights.

Since Kiciloff left New York with no deal (no surprise) and the reek of the "independent" private banking sector proposal started to emanate, you could tell that the fix was in and the CFK Mob showed its hand. One of the reasons why the holdouts are pressing so hard is to force the country's hand before it gets more freedom of movement when the key restriction lapses come the end of the year. Logically, you'd think that they'd have been better off with a wink and a nod and just waiting until January but, they needed to put real consequences in CFK's path and they knew that Argentina being Argentina, there was the possibility of s sweetheart deal (I. E. CFK violates the provision through smoke, mirrors, slight of hand and complete lack of integrity and thumbs her nose at the saps that accepted the swap).

Now, the consequences have been meted out and CFK and company seem to be weathering the storm (remember, they don't give a sh*t about anyone other than themselves) so, it'll be interesting to see how the viper deals with the holdouts come January. The country is in default, what more can Griesa do?

I had thought (and I think I posted to this effect) that I expected the bottom for the peso to be 10:1 (ish). The markets all expect further devaluation and the spreads between the official and blue rates have been widening drastically (an indication of market expectations for the official rate to fall). Last January (going from memory), the spread between the official and blue rates was between 300 and 400 basis points, before the devaluation. Right now, the spread is around 600 basis points.

[QUOTE=Tres3;441034]The interesting fact that the media does not report, and the Argentine government conveniently overlooks, is that Bank Mellon NY has received NO instructions from Argentina, to wire transfer the money in compliance with the federal district judge's order. The only instructions that BMNY has received is to pay the bond interest to the "haircut" bondholders, but not the "hold out" creditors. The judge has ordered BMNY that if they pay one, they must pay all, or be held in contempt. Contrary to the Argentine government, BMNY will not break the law, and cannot legally return the money to Argentina, because Argentina refuses to give them wire transfer instructions. BMNY finds itself between a rock and a hard place. Something tells me that once this debacle is all over, BMNY will not do any more business with the Argentine government.

Tres3.[/QUOTE]This is why so few large US financial institutions actively invest in Argentina.

More on the Argentina debt fiasco.

[URL]http://www.bloomberg.com/news/2014-08-29/argentina-s-abnormal-default-still-hurts-as-losses-swell.html?cmpid=yhoo[/URL]

Tres3.

The below link says that CFK's "Paradise" leave something to be desired.

[URL]http://www.bloomberg.com/news/2014-08-29/corn-heists-turning-grain-port-into-argentina-s-chicago.html[/URL]

Tres3.

[QUOTE=Tres3;441105]The below link says that CFK's "Paradise" leave something to be desired.

[URL]http://www.bloomberg.com/news/2014-08-29/corn-heists-turning-grain-port-into-argentina-s-chicago.html[/URL]

Tres3.[/QUOTE]I don't see the Chicago comparison. One is a bunch of gang cliques killing each other and the other is a weak government giving rise to opportunist thugs.

[QUOTE=WildWalleye;441075]This is why so few large US financial institutions actively invest in Argentina.[/QUOTE]Another reason banks don't like Argentina is that Argentina requires that all banks "invest" 50% of their deposits in Argentine paper. And then the Government (Argentina) tries to micromanage how the bank operates. That and there is a tax on all deposits over $1. 000 p and a tax on checks, and then there is a additional IVA charge on each credit card payment (after you have already paid IVA on the purchase!) , etc. Etc. Its a accounting nightmare and then most Argies won't use the banks because of a mandatory monthly "fee" (state mandated "insurance" etc. Etc.) that is more then 50 pesos a month last time I checked.

[URL]http://www.buenosairesherald.com/article/168626/minimum-wage-increased-31-to-4760-pesos[/URL]

Today La Presidenta announces the minimum wage will increase 31% to 4760 ARS per month.

Up from 200 ARS in 2003.

Argentina's minimum wage now "highest in Latin America and that, measured in dollars, Argentine workers could purchase much more than their counterparts in Brazil or Uruguay. ".

[QUOTE=Canardly;441113][URL]http://www.buenosairesherald.com/article/168626/minimum-wage-increased-31-to-4760-pesos[/URL]

Today La Presidenta announces the minimum wage will increase 31% to 4760 ARS per month.

Up from 200 ARS in 2003.

Argentina's minimum wage now "highest in Latin America and that, measured in dollars, Argentine workers could purchase much more than their counterparts in Brazil or Uruguay. ".[/QUOTE]That's bullshit (but you knew that). That might be true if you converted to dollars at CFK's rate but not at the market rate. Costa Rica and Panamá are both higher, at the market rate.

Not sure where to post this, but I'm just wondering if you expats are all secretly wishing for an economic collapse? Seems you would all be empowered by your hard currency and the misery of Argentinians.

I think most ex-pats are [B]openly[/B] wishing for an economic collapse. That's how I discovered the place to begin with.

[QUOTE=Riina;441157]Not sure where to post this, but I'm just wondering if you expats are all secretly wishing for an economic collapse? Seems you would all be empowered by your hard currency and the misery of Argentinians.[/QUOTE]I personally would like to see that house of cards collapse only so Cristina can eat her words. I already feel bad for the average Argie family. As for my "empowerment" , I was better of when the rate was three to one. I lived very well on 500 U $the a month then.

[QUOTE=Dickhead;441160]I think most ex-pats are [B]openly[/B] wishing for an economic collapse. That's how I discovered the place to begin with.[/QUOTE]I think it is more along the lines of waiting for the inevitable Argentina economic collapse. It is like waiting for the sun to come up, except that you don't know the exact time.

[QUOTE=Riina;441157]Not sure where to post this, but I'm just wondering if you expats are all secretly wishing for an economic collapse? Seems you would all be empowered by your hard currency and the misery of Argentinians.[/QUOTE]Inever felt any advantage vis a vis how things were back then for me in 2007 - my first ever trip to BA.

But lately in last 2 months or so, I have felt the advantage for the very first time ever. In the sense, the inflation in prices ( be it chica rates or grocery) is not equally proprotional to the blue rate :- to my advantage.

Mind you. This is for the for the first time ever in last 2 months and don't know how long it is going to last, this way.

Looks like Judge Griesa accomplished little more than creating a lose-lose situation for everyone.

The holdouts still aren't getting paid.
Interest payments were blocked to several creditors.
Those creditors are suing the banks to get their money.
The banks now risk losing business in Argentina.

What a mess. Oh wait, Griesa's actions will help Wall Street collect about $1 Billion in swaps payouts. Which were triggered by Griesa's forced default when he blocked Argentina's payments.


Here's what some are saying:

Financial Times writer Martin Wolf
[QUOTE]Argentinas creditors should make every effort to protect themselves from the vagaries of American judges. Fleeing US jurisdiction would seem an extremely sensible move.[/QUOTE]
Investment Advisor and Economic Trend Blogger Mike Shedlock
[QUOTE]The problem in this case is US judges think they can tell sovereign nations whether they can or cannot default. I find that both arrogant and ridiculous.
[/QUOTE]

[QUOTE=Esten;441173]Looks like Judge Griesa accomplished little more than creating a lose-lose situation for everyone.

The holdouts still aren't getting paid.
Interest payments were blocked to several creditors.
Those creditors are suing the banks to get their money.
The banks now risk losing business in Argentina.

What a mess. Oh wait, Griesa's actions will help Wall Street collect about $1 Billion in swaps payouts. Which were triggered by Griesa's forced default when he blocked Argentina's payments.


Here's what some are saying:

Financial Times writer Martin Wolf


Investment Advisor and Economic Trend Blogger Mike Shedlock[/QUOTE]What a crock. You're down to using an investment adviser to justify saying Griesa has failed? Do you have any clue how ridiculously easy it is to become an investment advisor? It takes a massive score of 73 out of 100. For those who haven't been in school in a long time, that is a D score on an A-F scale. The holdouts will get paid and the bank doesn't even have a branch in Argentina. These guys sound like the Federal Reserve officials that blame American for hoarding cash. I am not kidding. Throughout the world saving is a considered a good thing, but now it is being blamed for low inflation. The fallacy there is that low inflation is being considered a bad thing. With Fed officials like this, who needs ISIS.

Griesa's actions will help the holdouts get paid, because Argentina damn sure wasn't going to do it without being forced to.

I was in Newport over the Labor Day holiday. While driving down Bellvue Avenue, and looking at the beautiful old mansions, could not help but think of Esten. If Esten were in charge, the mansions would be bulldozed down and replaced with cookie cutter housing projects. Of course all this would be done in the name of "income equality". Suing to stop this, would not be a problem because the Federal Judiciary would have been banned from having jurisdiction over Federal projects.

Tres3.

[QUOTE=Tres3;441178]I was in Newport over the Labor Day holiday. While driving down Bellvue Avenue, and looking at the beautiful old mansions, could not help but think of Esten. If Esten were in charge, the mansions would be bulldozed down and replaced with cookie cutter housing projects. Of course all this would be done in the name of "income equality". Suing to stop this, would not be a problem because the Federal Judiciary would have been banned from having jurisdiction over Federal projects.

Tres3.[/QUOTE]No, citing historical preservation, environmental protection, recycling, etc. , Esten would advocate that the mansions be partitioned into rent-controlled and / or rent-subsidized apartments for low income tenants who, following thousands of historical examples, would slowly destroy the properties until they were uninhabitable, at which point Esten would vociferously deplore the sub-standard living conditions in which these poor unfortunate individuals were subjected and demand that they be given new houses to destroy, all in the name of "Social Justice".

In the mean time, property tax receipts would plummet, no doubt leading the city into a fiscal morass i.e. Detroit.

Of course this doesn't make any sense EXCEPT to liberals who are buying the votes of "these poor unfortunate individuals".

My bet is that liberals could completely destroy any city's historic mansion neighborhood in less than a decade, all while being repeatedly re-elected to office.

Thanks,

Jax.

[URL]http://247wallst.com/energy-business/2014/09/04/soros-signals-argentinas-shale-is-biggest-place-to-be/[/URL] - interesting article on Chevron and George Soros looking past current problems.

[QUOTE=RetireNTrave;441186][URL]http://247wallst.com/energy-business/2014/09/04/soros-signals-argentinas-shale-is-biggest-place-to-be/[/URL] - interesting article on Chevron and George Soros looking past current problems.[/QUOTE]So is Kyle Bass. That is why Bass basically loaned his attorney to Argentina to fight the hedge funds.

More obfuscation from CFK's government.

[URL]http://www.bloomberg.com/news/2014-09-05/argentina-trumpeting-demand-for-swap-that-may-not-exist.html?cmpid=yhoo[/URL]

Tres3.

[QUOTE=Tres3;441196]More obfuscation from CFK's government.

[URL]http://www.bloomberg.com/news/2014-09-05/argentina-trumpeting-demand-for-swap-that-may-not-exist.html?cmpid=yhoo[/URL]

Tres3.[/QUOTE]She is accustomed to lying to her uneducated, unwashed masses here in Argentina. Most of them believe her, so she thinks every one else will. Its all smoke and mirrors and a awfully lot of unadulterated BULLSHIT! She tells you want SHE wants you to believe, not what is true or what is actually happening.

Read today that K & K are keeping inflation vs the alternative of a crash. Does this make sense? Any economists out there? Dickhead?

Situation in Venezuela looks unsustainable per Bloomberg [URL]http://www.bloomberg.com/news/2014-09-10/hugo-chavez-s-absence-felt-on-wall-street-bond-desks.html[/URL] and [URL]http://www.bloomberg.com/news/2014-09-09/venezuelan-inflation-slows-for-third-consecutive-month-in-august.html[/URL]. Meanwhile, oil prices continue to fall and the US dollar is getting stronger making it even tougher on Venezuela. Anyhow, if Venezuela does default the news will probably be treated as "wave of defaults hits South America" due to Argentina's current default.

[QUOTE=RetireNTrave;441241]Situation in Venezuela looks unsustainable per Bloomberg [URL]http://www.bloomberg.com/news/2014-09-10/hugo-chavez-s-absence-felt-on-wall-street-bond-desks.html[/URL] and [URL]http://www.bloomberg.com/news/2014-09-09/venezuelan-inflation-slows-for-third-consecutive-month-in-august.html[/URL]. Meanwhile, oil prices continue to fall and the US dollar is getting stronger making it even tougher on Venezuela. Anyhow, if Venezuela does default the news will probably be treated as "wave of defaults hits South America" due to Argentina's current default.[/QUOTE]I don't see how they could default with all the oil they send to the US for refinement. Griesa set the precedent.

[QUOTE=Riina;441242]I don't see how they could default with all the oil they send to the US for refinement. Griesa set the precedent.[/QUOTE]Isn't that oil refined in the US because the US refineries can process the heavy crude? I would imagine a lot of that oil is sent back to Venezuela and sold for 2 cents / litre.

Per Bloomberg Venezuela oil exports to US are very weakening greatly.

[URL]http://www.bloomberg.com/news/2014-01-30/venezuela-oil-exports-to-u-s-hit-lowest-rate-since-1985.html[/URL] a.

[URL]http://www.bloomberg.com/news/2014-02-04/venezuela-selloff-worsens-as-u-s-oil-exports-sink-andes-credit.html[/URL]

Information and views on Venezuela oil export problems - [URL]http://www.panamericanworld.com/en/article/venezuelas-oil-price-falls-its-lowest-level-three-years[/URL].

[URL]http://www.miamiherald.com/2014/09/06/4332141/andres-oppenheimer-obamas-plan.html[/URL]

[URL]http://www.miamiherald.com/2014/08/30/4319013/andres-oppenheimer-venezuela-from.html[/URL]

Meanwhile, the USA has recently passed Saudi Arabia as the largest oil producer in the world.

[QUOTE=Dccpa;441246]Isn't that oil refined in the US because the US refineries can process the heavy crude? I would imagine a lot of that oil is sent back to Venezuela and sold for 2 cents / litre.[/QUOTE]I believe the oil is processed at a cost of about $2. 50 a gallon before it's sent back to Venezuela and sold for pennies a gallon. US holders of Venezuela debt could easily lien something in that process.

[QUOTE=Dccpa;441246]Isn't that oil refined in the US because the US refineries can process the heavy crude? I would imagine a lot of that oil is sent back to Venezuela and sold for 2 cents / litre.[/QUOTE]They send crude to the US because they did not or could not maintain their own refinery's. They either fell apart, burnt or just degraded to the point they could no longer be used. They still have a few running but no where near enough to handle the output. Because their crude is heavy and low quality not every one can refine it for them. Their out put is way down also for the same reasons, neglect.