The Empress Does Not Understand the US Federal Courts...
CFK lives is a bubble where she thinks because she is the President of Argentina that the US Courts have no power over her decisions. She is in for a very rude surprise for thumbing her nose at the Second Circuit Judges and her ministers basically telling the Court "we do not care how you rule we are not going to obey your orders". The US Courts are very powerful and there are treaties which bind other nations to enforce the decisions of the US Courts based on the doctrine of "Comity". Furthermore, the US government and all US institutions are bound by the final order of the US Court of Appeal. The Supreme Court will not hear the Argentine appeal from the Second Circuit. In other words, Argentina is fucked.
Yahoo News has a very good article today which is too long to excerpt. But, the gist is that Argentina is going to be forced to pay $1.5 billion plus interest or come to terms with its creditors or it will probably default on the new bonds, and will be foreclosed from the world capital markets for the foreseeable future causing further erosion of the Argentine economy. CFK's bubble is going to burst very soon. Any money Argentina has on deposit or is owed anywhere in the civilized world will be subject to seizure until the judgment is satisfied. China can only fund so much of the Argentine infrastructure development which is sorely needed and private foreign direct investment is drying up. Vale's withdrawal is just the first sign. Because of the position taken by the Argentine courts' with regard to the ridiculous Ecuadoran judgment against Chevron, Chevron will not move forward with development of the shale deposits and China, Russia or Brazil do not have the technology.
It will be an interesting few months here after the decision of the Second Circuit becomes final and her idiot sycophants try to explain to her why she has been checkmated. Thomas Jefferson as President had a run in with Chief Justice John Marshall early in our American history and lost which forever changed US History. CFK's bluster against the Second Circuit might have the same effect here and give the local jurists some backbone.
CFK's ego and Nestors' arrogance
Nestor defaulted on $100 billion and forced the bond holders and other creditors of Argentina to renegotiate their obligations with Argentina. Nestor was dealing in a business and financial setting. CFK is dealing with the US judicial system which has very specific rules. Nestor could tell the bond holders this is the deal take it or leave it. The Argentine bonds were contracts and the full faith and credit of Argentina as well as its government assets were pledged by Argentina to get the lower interest rates. Argentina thereby became an ordinary borrower on some of its obligations which were subject to enforcement in US courts and applying general contract principles. Just because the bonds were issued by a governmental entity does not necessary change the character of the obligation. It depends on the contract language. On the debt subject to the US courts, Argentina is an ordinary contract debtor and subject to general contract law principles.
Two different games. Nestor was playing the negotiating poker game and won..sort-of. CFK is playing the legal game in the US courts which is way over her head and that of her local advisers. She wants to look as tough as Nester... But she is not playing poker... This real with real consequences for making mistakes. This is not political and all of her bluster and posturing makes absolutely no difference to the US courts and has the just the opposite effect. No politician tells a US Circuit Court Justice how he should rule or else... There is no or else. No one in the US government has the power to set aside the judgment of the Second Circuit no matter how nice it would be for foreign policy. CFK is truly powerless in this situation and she has yet to come to grips with this reality. She must do so very shortly.
There is no substitue for class.-or should I say crass
The president and her band of clowns again demonstrate a complete inability to function in the real world outside of Argentina:
[URL]http://www.thestreet.com/story/11883654/1/salmon-argentinas-desperate-exchange-proposal.html?puc=_btb_html_pla2&cm_ven=EMAIL_btb_html[/URL]
The rest of the world are thieves and fools only the kirshnerites have a basic understanding of reality. Yes, in the past the first world has taken advantage of Argentina--there might be some thruth to that--see, confessions of an economic hit-man.
The current set of problems are still the aftermath of menem privatizing and selling off the country primarily to europeans.-in the USA bribery is a crime. Then menem stold all the proceeds and Argentina has not recovered 15 years later. Nestor and christina may not have made good decisions in terms of the international impact of policies that may have helped them politically in Argentina.
Argentina will not Fold unti Soy prices collapse.
Argentina has isolated itself from the world financial system.
As long as the export prices of its agricultural commodities remains high it can successfully do so.
There is no love for Argentina in the world financial system. There is no realistic likelihood of it borrowing internationally so its government has adopted its scorched earth policy and is unlikely to change.
Its "bail in" of bondholders was realistic if not generous. They tried to make it work. With the idea of regaining access to financial markets.
They have failed to do so and it is politically sensible not to cave in the the New York Courts who can effectively do nothing except enforce Argentina's isolation.
Good luck to us all!
WITH A MORE RATIONAL SET OF ECON POLICIES, over time Argentina would right it's economy
The agricultural wealth and good policy might fix the situation over a ten year period. Soy and corn will eventually correct down and move back-up again. Much of the third world is gaining wealth and will continue to upgrade it's food supply. This is a cycle with a general up-trend in grain prices will likely continue.
More people will eat animal protein which will require more grains. The Pompas Humidas is Argentina's gift from god. It is a shame that it is being squandered.
The Argentines are an amazing people. I will never understand their passivity in accepting the political class that runs their nation.
