Argentine Economy

[Tres3]

Argentina fails to tell folks that the bank cannot comply with the judge's order to not pay the "interest" owed the exchange bond holders, and return the money, because Argentina refuses to issue the required transfer instructions to the bank for the return of the money to Argentina. As a result, the money sits in limbo, and the bank is caught in a "catch 22". Meanwhile Argentina falsely claims that it is not in default because it has made the required "interest" payments to the exchange bond holders. Argentina also continues to cloud the issue by citing the RUFO clause. RUFO only applies to "voluntary" payments, and there is nothing voluntary about a court order.

Meanwhile, the Argentine LIVs applaud Cristina for standing up to the "vultures". Argentina has stolen from the international financial community on seven previous occasions by defaulting on debt. You would think that the lenders would learn that Argentina is a bad credit risk. Unfortunately, the Argentine government will keep stealing as long as some fool is willing to lend them money. P. T. Barnum said it all.

http://finance.yahoo.com/news/argent...000052587.html

Tres3.

[Esten]

We don't know how many, if any, Supreme Court justices wanted to hear this case when Argentina tried to appeal it. However, given that they decided 7 to 1 to allow bondholders to issue subpoenas to banks to trace Argentine assets abroad, I suspect most or all of the justices would have sided with Griesa and the Second Circuit Court of Appeals. In other words, this probably wasn't even close. Apparently RUFO is only triggered if the payment to the holdouts is voluntary, and compliance with a court order is not voluntary. It will be interesting to see if Argentina will settle after December 31, when the RUFO clause expires. I seriously doubt the Peronists will settle before the next election.

Yes it will be interesting to see what happens after the RUFO clause expires. It appears to be Argentina's only (legal) leg to stand on. If Argentina still doesn't pay the holdouts, I will be more inclined to agree with the characterization of theft. Apparently some banks have expressed interest in buying out the holdouts bonds; this may be a practical approach to deal with two sides who are stubbornly determined not to bend to the other.

[Tiny12]

How can government prevail over the rule of law, or vice versa, when government creates laws?

Dickhead, You are right. That said, Gandolf50 below provides excellent examples of what I was trying to express.

And who determines what are 'individual rights'? Just curious here.

I do, because I'm omniscient. Here's a description: http://en.wikipedia.org/wiki/Civil_liberties.

[Gandolf50]

How can government prevail over the rule of law, or vice versa, when government creates laws? And who determines what are 'individual rights'? Just curious here.

For the past few years Cristina has been changing the law by issuing "decree's" . She has never been restricted by the law because she changes it to suit herself. When ever she wants to do something that is illegal (like sack the reserves to use as a checking account) she issues a decree. Some of her most popular social programs are decrees and as she has repeatedly pointed out, they are likely to stop when she leaves office because the next president is not obligated to continue the plans (as they would be if they were laws). This is one reason she has so much support among the poor. There is a lot of pressure on the vice president lately for illegal dealing before he became the vice. There is even more evidence of theft and corruption against Cristina and her Ex. Yet I don't see any one investigating her because she controls the judges. The truth is, there is no law here. Its more who you know and how much money you have.

[Dickhead]

government should prevail over individual rights and the rule of law.

How can government prevail over the rule of law, or vice versa, when government creates laws? And who determines what are 'individual rights'? Just curious here.

[Tiny12]

Rockin Bob, You're arguing about things that happened ten years ago, and I don't disagree with you. Argentina couldn't repay its debt. With respect to the current issue, there are two reasons Argentina doesn't pay the holdouts:

1. Because the Kirchneristas believe refusing to pay will improve their electoral prospects, and

2. Because the Kirchneristas, like Esten, believe it's more important to punish hedge funds than to do what's best for Argentina and best for people in developing countries. See my post #1592 below.

To answer your question, anti-liberals believe government should prevail over individual rights and the rule of law.

[Rockin Bob]

Is it just me or does this not make a hell of a lot of sense?

Rockin Bob like other anti-liberal leftists believes it's OK to steal, as long as it's government doing the stealing. When that happens you blame the victim. It's the victim of the serial defaulter that's using "legal chicanery."

Hedge funds aren't the only holdouts. There are Argentine and European pensioners who also refuse to take a haircut. The Kirchneristas refer to them as mini-vultures.

The Supreme Court voted 7 to 1 to issue subpoenas to trace Argentine assets. Based on that, if they had decided to hear the appeal of Griesa's decision, you'd expect they'd vote 7 to 1 or 8 to 0 to uphold Griesa's ruling.

What the hell is an anti-liberal leftist? Start right in with the labeling and name-calling. He's a leftist. Therefore he's wrong.

Where did I say it's ok to steal? Argentina defaulted on its bonds for a number of reasons, and sure, a corrupt government siphoning off money was one of the reasons. But you make it out as if they intentionally defaulted. They had no other choice to default. Why would they want to default if it keeps them out of capital markets in the future? It's in their interest to keep getting IMF loans so they can keep diverting the money into their own pockets. They defaulted originally from a combination of mismangement, bad policies, and a contraction of the economy.

Again, to make it clear: sovereign debt is subject to risk, especially since if there's a default there's not much you can do but get an unenforceable judgment. Nobody put a gun to anybody's head and forced them to buy Argentine bonds. For a few extra percentage points, people take the risk, but it's not exactly a prudent decision in a case like Argentina.

Countries, like individuals, go bankrupt for a variety of reasons, some their own fault, others not. Would you like to go back to the days of debtor's prisons?

To say Paul Singer is a victim is laughable. He's just a bottom feeding shyster who's only stock in trade is getting the courts to issue a ruling in his favor. He never lent money to Argentina, he just picked up the debt for pennies on the dollar. Vulture is the perfect description for him.

In individual bankruptcy, you reach a settlement in accordance with procedures set out in the law and then you move on. That's the way sovereign debt should be dealt with, and pretty much what happened: Argentina was broke, so they defaulted, and then reached a deal with the creditors to pay them back what they could. And they have made the payments, are making the payments, but the payments are in a New York bank which can't distribute them because of the judge's ruling.

If I'm a holder of the exchange bonds, I want my money, and I don't want to see it held up because of the chicanery of speculators. Why should one speculator manage to defeat the interests of all the other bondholders?

As for saying the Supreme Court would have upheld Griesa's ruling, well, yeah. Not hearing the case is the same thing.

[El Perro]

Jeez, Tres3, you think SCOTUS couldn't come to a wrong conclusion based on a faulty interpretation? That's precisely what Roberts, Alito, Thomas, Scalia were put on the court to do!

Here's the way I see it: Paul Singer / ECM are bottom feeders, like debt collection agencies that buy up debts for pennies on the dollar and harrass people for the money. Here, what they need is to convince some judge to go along with a twisted interpretation of the law and then arrange it so that the legitimate holders of the exchange bonds are held hostage to their demands. Extortion, as Axel Kicillof put it.

Everybody got screwed equally by Argentina. They defaulted on all their bonds. 93% of the bondholders decided half a loaf (or a quarter, whatever) was better than none, and so they went for the exchange bonds. And they have been paid off equally under the new arrangement. Pari passu.

As for the holdouts, they should just accept the fact that they got screwed. Argentina is a serial defaulter, who the hell would buy their bonds in the first place? Default is the risk you take when you buy an Argentine bond. The holdouts are stuck with worthless bonds, they have been defaulted on, and now they come up with this legal chicanery to try and get some money (actually, a lot of money) out of them.

Seems what I read in the financial press is that most lawyers who deal with these issues are concerned that the rulings go against precedent and upset what till now was a stable system to deal with these matters. Many if not most question Judge Griesa's decision.

A contract is a contract is a contract. Boy, did everybody forget that in a New York minute a few years back in the financial crisis when the government bailed out the banks to the tune of how many trillions of dollars?

A flower in the desert.

[Tiny12]

As for the holdouts, they should just accept the fact that they got screwed. Argentina is a serial defaulter, who the hell would buy their bonds in the first place? Default is the risk you take when you buy an Argentine bond. The holdouts are stuck with worthless bonds, they have been defaulted on, and now they come up with this legal chicanery to try and get some money (actually, a lot of money) out of them.

Is it just me or does this not make a hell of a lot of sense?

Rockin Bob like other anti-liberal leftists believes it's OK to steal, as long as it's government doing the stealing. When that happens you blame the victim. It's the victim of the serial defaulter that's using "legal chicanery."

Hedge funds aren't the only holdouts. There are Argentine and European pensioners who also refuse to take a haircut. The Kirchneristas refer to them as mini-vultures.

Jeez, Tres3, you think SCOTUS couldn't come to a wrong conclusion based on a faulty interpretation? That's precisely what Roberts, Alito, Thomas, Scalia were put on the court to do!

The Supreme Court voted 7 to 1 to issue subpoenas to trace Argentine assets. Based on that, if they had decided to hear the appeal of Griesa's decision, you'd expect they'd vote 7 to 1 or 8 to 0 to uphold Griesa's ruling.

[Rockin Bob]

Are you saying that three separate courts, including SCOTUS, all came to a wrong conclusion based on a faulty interpretation? You are also conveniently forgetting that it was Argentina who put pari passau in the bond indenture and also subjected themselves to USA Law. Even with pari passau Argentina has successfully stolen a large sum of money.

Tres3

Jeez, Tres3, you think SCOTUS couldn't come to a wrong conclusion based on a faulty interpretation? That's precisely what Roberts, Alito, Thomas, Scalia were put on the court to do!

Here's the way I see it: Paul Singer / ECM are bottom feeders, like debt collection agencies that buy up debts for pennies on the dollar and harrass people for the money. Here, what they need is to convince some judge to go along with a twisted interpretation of the law and then arrange it so that the legitimate holders of the exchange bonds are held hostage to their demands. Extortion, as Axel Kicillof put it.

Everybody got screwed equally by Argentina. They defaulted on all their bonds. 93% of the bondholders decided half a loaf (or a quarter, whatever) was better than none, and so they went for the exchange bonds. And they have been paid off equally under the new arrangement. Pari passu.

As for the holdouts, they should just accept the fact that they got screwed. Argentina is a serial defaulter, who the hell would buy their bonds in the first place? Default is the risk you take when you buy an Argentine bond. The holdouts are stuck with worthless bonds, they have been defaulted on, and now they come up with this legal chicanery to try and get some money (actually, a lot of money) out of them.

Seems what I read in the financial press is that most lawyers who deal with these issues are concerned that the rulings go against precedent and upset what till now was a stable system to deal with these matters. Many if not most question Judge Griesa's decision.

A contract is a contract is a contract. Boy, did everybody forget that in a New York minute a few years back in the financial crisis when the government bailed out the banks to the tune of how many trillions of dollars?

[Tres3]

Here again, one more blanket assertion without any evidence to back it up. And then a little name calling. The logic here is, I say so, so you're wrong.

Here's a couple of articles that examine the pari passu clause in depth.

http://www.lse.ac.uk/fmg/events/fina...R15L_Buchheit-(Pari-Passu-Clause-in-Sovereign-Debt-Instruments-Emory-Law-Journal). Pdf.

http://papers.ssrn.com/sol3/papers.c...act_id=2397929

Seems to me the clause is very much open to interpretation.

From the Emory Law journal article:

"This leads us to the final question: how could a fallacious interpretation of.

A boilerplate clause-without a basis in law, or practice or commentary-have.

Taken even a shallow root in the minds of some market participants? It is true.

That the text of the pari passu clause itself is remarkably unconfiding about.

What the drafters were seeking to achieve with the provision, but that only.

Explains why it presented such an attractive target for creative explanations by.

Litigants in search of an effective remedy against a sovereign debtor. ".

Are you saying that three separate courts, including SCOTUS, all came to a wrong conclusion based on a faulty interpretation? You are also conveniently forgetting that it was Argentina who put pari passau in the bond indenture and also subjected themselves to USA Law. Even with pari passau Argentina has successfully stolen a large sum of money.

Tres3

[Rockin Bob]

Esten, what do you think pari passu means? It is not open for interpretation as you falsely allege.

Here again, one more blanket assertion without any evidence to back it up. And then a little name calling. The logic here is, I say so, so you're wrong.

Here's a couple of articles that examine the pari passu clause in depth.

http://www.lse.ac.uk/fmg/events/fina...R15L_Buchheit-(Pari-Passu-Clause-in-Sovereign-Debt-Instruments-Emory-Law-Journal). Pdf.

http://papers.ssrn.com/sol3/papers.c...act_id=2397929

Seems to me the clause is very much open to interpretation.

From the Emory Law journal article:

"This leads us to the final question: how could a fallacious interpretation of.

A boilerplate clause-without a basis in law, or practice or commentary-have.

Taken even a shallow root in the minds of some market participants? It is true.

That the text of the pari passu clause itself is remarkably unconfiding about.

What the drafters were seeking to achieve with the provision, but that only.

Explains why it presented such an attractive target for creative explanations by.

Litigants in search of an effective remedy against a sovereign debtor. ".

[Tres3]

The language in the pari passu clause is clearly general and non-specific. It's right there in Yujin's link. It does not authorize blocking one creditor's payments to help another creditor. Doppel's claim that the judge just read the contract is more crapola. If the language was so clear, the judge's decision would not be challenged by the Euro bondholders.

What the judge did was interpret the clause to mean that if Argentina paid one creditor, it had to pay all, which in this case meant paying some creditors 30 cents on the dollar and others 100 cents. That's a biased interpretation of "equal treatment", clearly benefiting the holdout hedge funds.

The judge's bias was again on display in demanding a settlement with the holdouts despite the RUFO clause. If there was no other option, the judge's hard line would be more reasonable, because the holdouts do have a legal right to their payment. However there were other options, not the least of which was simply waiting until Dec. 31 for the RUFO clause to expire. The holdouts have waited a decade for payment, surely they could wait another 5 months. But apparently the judge couldn't.

Of course, some judicial bias is to be expected. But here, the judge was willing to risk harm not only to Argentina, but also the other creditors by blocking their payments. Why did the judge force events in the direction of default, knowing Argentina would never risk violating the RUFO clause? Aside from the bias, spite, arrogance and ideology are all likely factors as well. Complicity in helping Wall Street make $1 Billion on credit default swaps? Unproven, but given the bizarre rigidity demonstrated here, it seems like a possibility.

Esten, what do you think pari passu means? It is not open for interpretation as you falsely allege. Argentina wrote the clause and must live by the literal meaning, not an "interpretation". RUFO only applies if the payment is VOLUNTARY, not if the government is complying with an order. The order in the instant case was Judge Griesa's, supported by an Appeals Court, and the Supreme Court. We know that you hate Wall Street, but do not let your hatred lead to the same obfuscation as the Argentine Government. No one is blocking one person's payment to help another, and credit default swaps are nothing more than a form of insurance. In simplistic terms, which maybe you will understand, one insures his automobile against collision loss, and one insures his sovereign bonds against default loss.

Tres3.

[HappyGoLucky]

Washington Post today on the "weird default". Point number "3" is interesting considering the insurance the hedge funds bought against default.

http://www.washingtonpost.com/blogs/...weird-default/

[Tiny12]

The language in the pari passu clause is clearly general and non-specific. It's right there in Yujin's link. It does not authorize blocking one creditor's payments to help another creditor. Doppel's claim that the judge just read the contract is more crapola. If the language was so clear, the judge's decision would not be challenged by the Euro bondholders.

The judge's bias was again on display in demanding a settlement with the holdouts despite the RUFO clause. If there was no other option, the judge's hard line would be more reasonable, because the holdouts do have a legal right to their payment. However there were other options, not the least of which was simply waiting until Dec. 31 for the RUFO clause to expire. The holdouts have waited a decade for payment, surely they could wait another 5 months. But apparently the judge couldn't.

Of course, some judicial bias is to be expected. But here, the judge was willing to risk harm not only to Argentina, but also the other creditors by blocking their payments. Why did the judge force events in the direction of default, knowing Argentina would never risk violating the RUFO clause? Aside from the bias, spite, arrogance and ideology are all likely factors as well. Complicity in helping Wall Street make $1 Billion on credit default swaps? Unproven, but given the bizarre rigidity demonstrated here, it seems like a possibility.

We don't know how many, if any, Supreme Court justices wanted to hear this case when Argentina tried to appeal it. However, given that they decided 7 to 1 to allow bondholders to issue subpoenas to banks to trace Argentine assets abroad, I suspect most or all of the justices would have sided with Griesa and the Second Circuit Court of Appeals. In other words, this probably wasn't even close. Apparently RUFO is only triggered if the payment to the holdouts is voluntary, and compliance with a court order is not voluntary. It will be interesting to see if Argentina will settle after December 31, when the RUFO clause expires. I seriously doubt the Peronists will settle before the next election.