Skip to comments.Argentina faces tough choices after U.S. debt ruling
Posted on 11/10/2012 5:43:56 PM PST by Lorianne
Argentina could face a credit crisis a decade after its $100 billion default due to a U.S. court ruling that says the country must pay creditors, who still hold defaulted bonds, every time it services its restructured debt.
About 93 percent of Argentine bondholders agreed to swap their defaulted debt for new issues in 2005 and 2010, but "holdout" creditors who rejected the swaps continue to press in courts worldwide for full repayment on the bonds.
Late last month, a federal appeals court in New York ruled that Argentina violated bond provisions to treat all creditors equally when it made payments to creditors who accepted the swaps while refusing to pay the holdouts.
The decision sparked a sell-off in Argentine bonds, sent the price of protection against an Argentine default sky-high, and prompted Standard & Poor's to downgrade the country's sovereign credit rating.
Argentina has stayed out of global credit markets since its 2002 debt debacle partly due to fears the holdouts could block a new issue. It relies instead on the central bank's foreign reserves to pay debt, but its efforts to safeguard those funds using capital controls and import curbs have worsened an economic slowdown.
The government will appeal this latest court ruling and try to stave off its implementation for as long as possible.
U.S. judges have already ordered that Argentina pay holdouts several billion dollars in compensation for the default. But the creditors have largely been unable to collect since most Argentine assets are protected by U.S. sovereign immunity laws.
(Excerpt) Read more at reuters.com ...
Remember that we’ll be in Argentina’s shoes before long.
yes, yes we will
Coming soon, to a country near you!
Guess Argentine creditors are much more important than those sucker GM creditors.
Kind of an amusing story about the Argentine Naval Vessel docked in Ghana. The authorities attempted to board her in accordance with a court order and the Argentine crew was basically ordered to “all hands on deck!” They repelled boarders so to speak, under threat of arms. In retaliation, Ghana cut off water and electricity to the ship. What to do, what to do...
You sound like a Paulbot conspiracy theorists with this "globalist" nonsense.
Saying that, I am not sympathetic with these creditors. They take a risk loaning countries like Greece, Argentina, etc, money and if they default, well, too bad. Creditors should be looking more closely at the country, how they vote and how fiscally responsible the people are as a nation before buying their bonds. Countries that are building massive social welfare states should be eyed suspiciously.
A very good heads up on what we may be instore for. This guy has lived it every day. Surviving Argentina!
Think about our case. What are ten aircraft carrier battle groups + planes worth? At $50B a piece, and I don't think they are worth that much, that is $500B. That is not even 1/2 of 1 years' deficit.
I apologize for frightening the children.
The guys in the storeroom looking for our size.
Can’t get blood from that turnip, then its our turn to become the turnip when China starts collecting.
What country is not? Even South Korea is about to head in that direction, if they vote the wrong way real soon.
Very astute point
5. When trading partners sell more stuff to the US than the US sells to them, the difference creates a balance of payments deficit. The USA needs to either borrow through a line of credit or buy the country's home currency from someone else at LIBOR exchange rates with US dollars. The largest creditor of the US Government is the FED who holds over $6 trillion of US debt in its account. The second largest creditor is Communist China with about $900 billion. Altogether, the United States owes obout 60 percent of the total debt of all other debtor nations combined.
There’s also the Monroe Doctrine. There’s much revisionism about that in paraphrasing around the Net, but European nations were forbidden to rob nations south of our southern border. But there they were, Spain, Italy and others (probably even US globals), owning up Argentina’s means of production and regulating against Argentinians competing against them. The socialism and recirculating debt finished Argentina, and we’ll have to reckon with it, too.
So have a look at nations that now have increasing revenues from manufacturing instead of so much recirculating debt. Conspicuous, eh? We need to deregulate, starting at local government levels, zoning in rural areas first.
Why local? For example, western culture countries developed math to make it more useful by way of encouraging competition and use in every level of society (see Greece’s ancient math limits, failures of elitism). We need millions of truly educated minds here through applied uses of technologies by many Americans rather than only offerings of programs of theory from the weird gatekeepers of the socially pathological academic racket (nearing similarity with Greeks who limited their math with adjuncts of pagan/social mumbo jumbo for approved/licensed intellectual leaders).
I might have understood some of that.
No kidding. Study Argentina's politics, its society, and economics - will give you a good road-map for the future of the USA.