Argentina president Cristina Kirchner blasts European debt as she repays controversial bond

The Telegraph ^ | 8/3/2012

[bruinbirdman]

Bond payoffs are supposed to be boring, but Argentina's president is celebrating Friday's final $2.3bn payment on a bond given to people whose savings were confiscated a decade ago, calling it a lesson for European countries now mired in foreign debt.

The nation's economic disaster left thousands with a grim choice after the government seized their dollar-denominated deposits to stop bank runs in 2002. They could switch to devalued pesos and regain access to what was left of their savings, or accept a piece of paper promising to repay the money in dollars over the next 10 years.

Few had any faith in the government's promises back then. Argentina had just defaulted on more than $100bn in foreign debt, banks were shuttered, the economy was in ruins and streets were filled with pot-banging protesters whose chants of "throw them all out" would send five presidents packing.

But Argentina has mostly paid up after all, making good on 92.4p of that defaulted debt so far, including $19.6bn in US currency over the years to cancel the Boden 2012 bond. Most of the hard-luck account-holders later sold the bonds at a loss, but as the government makes its last $2.3bn payment on Friday, the few stalwarts who kept the faith have been made whole, while earning a modest 28pc profit over the years.

"It was good business" for anyone who got the bonds early and held them, said Jorge Oteiza, a bond trader with Banco Comafi in Argentina. "To have the same buying power you had back then isn't bad."

President Cristina Fernandez de Kirchner praised her government for meeting its commitments and blamed multinational financial institutions for the debt crises that afflicted Argentina back then and threaten Europe today.

"This is the money that the banks should

[agere_contra]

“To have the same buying power you had back then isn’t bad.”

Good job the buying power of the dollar hasn’t decreased sharply in the last ten years.

Dollar depreciation (of course) is why this bond could be repaid. (Not having a go at the dollar here - all fiat currencies have depreciated)

The depreciation aside, what about ten years of opportunity cost? This business is as dishonest as the General Motors ‘taxpayers have made a profit’ scam.