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S.&P. Says Argentina Has Defaulted
- eudox 12y agoThe worst thing about living in Uruguay is being right next to Them. Now this happens, and we're going to get the fallout.
- cjbprime 12y agoAnd here we thought you were going to say that the worst thing about living in Uruguay was the rampant nationalism between Uruguayans and Argentinians..
- janlukacs 12y agoMaybe Messi can chip in, i hear he has some dollars stashed for a rainy day: http://www.bbc.com/news/world-europe-22877408 http://www.bbc.com/news/world-europe-22877408
- jambo 12y agoI don't see how this adds to the conversation. Also, Argentina and Uruguay have similar racial composition & as far as I can tell see themselves as the same people of the Rio Plata.
- cjbprime 12y agoI've visited Uruguay, and on one trip when I told my hosts I planned to go over to Buenos Aires for a day, they said I shouldn't go because "the people there are on crack" and I would get kidnapped. I'm pretty sure there's a significant nationalism (you're right, not racism) problem, which the capitalization of "Them" in the post I replied to felt evocative of.
- djKianoosh 12y agoNot to bring too many facts into the discussion, but Uruguay and Argentina dont have similar racial composition: http://www.indexmundi.com/uruguay/demographics_profile.html http://www.indexmundi.com/uruguay/demographics_profile.html http://www.indexmundi.com/argentina/demographics_profile.html http://www.indexmundi.com/argentina/demographics_profile.htm... Uruguay have 12% non-white, Argentina only 3% That's not what I would call "similar".
- jambo 12y agoSorry, I should have been clearer: they are predominantly white. When I was last in each country, I didn't get any real sense of deep hatred of each other. Though there was some seemingly good natured ribbing about who was better at e.g. asado.
- djKianoosh 12y agoright on.. i grew up in Argentina. and yes there's a rivalry, predominantly friendly, among things like asado, futbol, mate, etc. :) and yes, between arg/uru/bra people are very friendly with each other as long as it doesn't involve futbol ;-)
- rabble 12y agoIt's so friendly that Uruguayans and Argentines don't identify the other as foreign. Uruguayans didn't want to be their own country when their started their independence war, it was an attempt to not be part of Spain or Brazil and to be joined with what would become Argentina. It was the British who decided Uruguay would be an independent country. Since then in the last 200 years, they've developed somewhat distinct institutions and cultures. It's similar to the relationship between the US and Canada.
- miguel3000 12y agoYou can also use this link if you want to see how the countries compare side by side: http://www.indexmundi.com/factbook/compare/argentina.uruguay/demographics http://www.indexmundi.com/factbook/compare/argentina.uruguay...
- rabble 12y agoI think it's a matter of definitions. Demographically the countries are actually more similar, there is just differences in how people identify. The biggest difference between the two countries and cultures is Uruguayans are secular both in personal culture and with regard to the state. Where as Argentines are Catholic. There's also a big difference in political culture, structures of political parties and faith in institutions. Uruguay has much less corruption.
- mobiplayer 12y agoGuys, don't fight here. Also, everybody knows the best thing from Argentina is Uruguay (or "how to piss off argentinians and uruguayans in one sentence"). :)
- feca 12y agoA lot of Argentinians visit Uruguay for vacations, and many also keep their savings in Uruguayan banks. I think this won't affect Uruguay negatively. Also, it's sad that you have such a negative view on your neighbors, given that you are very much alike and that they boost Uruguay's economy.
- Trufa 12y agoI don't know why this is being down voted, take a look at what happened in the year 2001, we're terribly dependent on them (thought we're trying not to), this news scares the hell out of me since I don't want it to happen again, last crisis was terrible for us too.
- demian 12y agoUruguay is completely dependent on Argentina, in both good times and bad times.
- pibefision 12y agoWell, Chile is being in the left, and does not have any problem. Your argument is not very strong. In true, Uruguay has it owns problems.
- gyardley 12y agoChile is separated from Argentina by 'the Great Wall of Chile' - the Andes mountains - and unlike Uruguay, has an economy dominated by mineral resource extraction to China and the United States, not agricultural exports to its immediate neighbors. It's not the same situation at all; context matters.
- sciurus 12y agoTo understand background and potential implication, I found http://dealbook.nytimes.com/2014/07/30/q-a-whats-behind-the-battle-over-argentinas-debt/ http://dealbook.nytimes.com/2014/07/30/q-a-whats-behind-the-... helpful.
- blowski 12y ago> Argentina issued bonds under New York law. Until I read this, I assumed that international bonds were issued under international law, with the World Bank as the arbitrator. With the US as both lender and arbitrator, it seems to give them a lot of power.
- dmarusic16 12y agoYeah, that's very much not what the World Bank is about.
- blowski 12y agoWell, I hadn't given it much thought. I just assumed that some international body (WTO, IMF, UN) would resolve disputes like this.
- mikecb 12y agoYou're both partly right: http://en.wikipedia.org/wiki/International_Centre_for_Settlement_of_Investment_Disputes http://en.wikipedia.org/wiki/International_Centre_for_Settle... The World Bank itself gives loans, advice, and research. But there are a large number of semi-associated agencies, under their own treaties, that do other things, such as settling investment disputes. But it's important to note, as rayiner said elsewhere, that contracts are private law, and you get to choose how to settle disputes unless some public policy decides otherwise.
- gizmo686 12y agoI am not a lawyer. My understanding of this type of clause is not that it makes New York the arbitrator, but rather clarifies for whoever does arbitrate that New York laws should be used. This seems important when working across national (or state) boundries do prevent ambiguity as to what set of laws is being used. I suspect that it is simmilar to copying the relevent laws into a contract and signing that, which is to say that local laws still apply.
- manishsharan 12y agoWow ! Just one investor can bring a country to its knees !
- deleted 12y ago[deleted]
- turnip1979 12y agoYup. It shows the power of creditors when they take to the courts. It seems odd that that all the other creditors accepted a haircut ... and the one who didn't is causing the present situation.
- sp332 12y agoI think the original creditors also got a "haircut" when they sold to the current bond holders. It's the new owners, who paid about 1/3 of the nominal value, who are holding out for a huge return.
- john_b 12y agoThere is nothing odd about it. Argentina agreed to a debt contract without a collective action clause so that they could sell bonds at a higher premium. When they later needed a collective action clause to enforce the majority will on the minority, they complained that the agreement was unfair. But it was an agreement the country's leadership agreed to; the law in this case is fairly straightforward.
- wslh 12y agoThese funds are like the patent trolls. The difference is that with patent trolls you are trapped in a inneficient patent system while in this case Argentina has a big part of the responsability in the way the government reestructured 93% of the debt.
- deleted 12y ago[deleted]
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- walshemj 12y agoTime to reinforce the Falkland's garrison
- the_af 12y agoSigh. Argentina is currently a democracy and has been one since the early 80s after our last military dictatorship. We are not a warlike country. Any issue with the Malvinas Islands is being handled via diplomacy. Please stop spreading mindless FUD.
- drcross 12y agoI don't mean to sound like an evangelist but i've been waiting for a currency to fail to see how/if crypto-currencies have the ability to get the country up and running again. In theory the tools are there if they can wrestle value out of their slumping traditional currency.
- lclarkmichalek 12y agoThe peso has been all but failed for some years now, due to the falsification of inflation figures by the central bank, and the divergence between the real/market exchange rate and the "offical" exchange rate. The result has been fairly simple: people use USD.
- tomp 12y agoWell, the recent Greek default seems to have been handled quite gracefully... (but of course, Greece is part of the EU zone, so there was a lot of help available) http://www.economist.com/node/21550271 http://www.economist.com/node/21550271
- lclarkmichalek 12y agoThis is the second default in 13 years, with (as you mention) no strong regional bank to support them, and (most likely) in a country without the political willpower to push through reforms to prevent this kind of thing happening again.
- tomp 12y agoFrom another article linked in the HN comments, it seems that this is really a finalization of the 2001 default. Argentina is not able to pay the (current) bond holders only because the courts won't let it do so.
- PeterisP 12y agoArgentina is able to pay the current bondholders, it's simply choosing not to pay them because part of that money will go also to those bondholders Argentina dislikes.
- encoderer 12y agoIn the story they said Argentina has transferred $500MM to pay bond holders, but the bank refuses to transfer it because the court ruled they could not selectively pay and any cooperating banks would be in contempt. Is there another layer to the story I'm missing?
- PeterisP 12y agoThat's the exact thing - they have the money to pay, but they have to give a proportion of that money to the holdout bondholders (the "not selective" part), and they refused to do that, despite all the negotiations. Courts didn't rule that they can't pay, courts ruled that they can't ignore the other bondholders when paying. [edit] A car analogy - if a court says you can't drive until you pay your parking fines, then it doesn't mean that you're maliciously completely prevented from driving, it simply means that you're compelled to pay the fine at last.
- jstalin 12y agoA decent article on the mechanics of why these holdouts were able to force Argentina's hand: https://mises.org/daily/6825/Understanding-Argentinas-Coming-Default https://mises.org/daily/6825/Understanding-Argentinas-Coming...
- opendais 12y agoArgentina should never have handled the bonds under NY law and without control of the bondholder's list. That mistake is costing them dearly. The only reason they can't pay everyone but the holdouts [e.g. selective default] is because of the fact they handled them under NY law after the 2001 default. :/
- preinheimer 12y agoWith their economic history, they would have had a much harder time issuing the bonds elsewhere.
- opendais 12y agoYes but at this point they are still being screwed over because of a decision made in 2001 and so they are getting hit multiple times with the "untrustworthy borrower bat" instead of just once. For a single incident.
- PeterisP 12y agoIf they hadn't ceded the legal control to NY law, then they either wouldn't have gotten the money they wanted, or at the very least had a much higher interest for it. That's the whole point - if you're a trustworthy borrower, then you can get money on decent terms; but if you're like Argentina then every lender needs all the protection they can get, to try to prevent cases like this one.
- opendais 12y agoThe point is, they are getting hit multiple times with the "untrustworthy borrower bat" for a single incident in 2001 and are now being forced to screw all of their borrowers and not just the ones who refused to play ball in 2001. Because NY law. That is like saying "Oh, you can pay none of your debts until you pay the ones you defaulted on already in 2001." Nope.jpg. That is f'ed up. They defaulted in 2001. You don't get to come back and say "Oh, but you have to pay us anyway or we will not let you pay the debts since then either." EDIT: I'm amused by the downvotes given that is how bankruptcy law works most places. You default one time. The zombie borrowers don't get to come back later and demand money later, enforced by the courts.
- scardine 12y agoBrazil and Argentina had very similar economic plans to get out of hyperinflation from the 80's - both created a new currency whose value was attached to the USD. There was a subtle difference: Brazil forbade domestic contracts in dollar (with a few exceptions, mainly leasing contracts for imported vehicles). So when the market forces kicked in and Brazil was forced to devalue its artificially priced new currency, the impact was not that big. In Argentina, most contracts were underwritten in dollars, so the government delayed devaluation as much as possible. As the result, when it finally adjusted the exchange rate to more realistic values, the guy who bought one home was bound to pay 3 or 4. The government solution was the first default (by passing a law saying you could pay these contracts with a huge discount). This is why they are in this mess, some creditors are fighting to receive the full value.
- epx 12y agoAlso, Brazilian Real was born to be around 1:1 with USD, but the exchange rate was never fixed, it floated from day one. Argentinian coin (don't remember the name) was 1:1 by force, which made the delay even more catastrophic.
- chimeracoder 12y ago> Brazil forbade domestic contracts in dollar (with a few exceptions, mainly leasing contracts for imported vehicles). This is an interesting and often overlooked aspect of monetary policy in the US. In the US, we are used to the dollar being the single currency domestically for virtually all domestic transactions, and even used to it being used abroad (which extends our purchasing power greatly) as well as in most black market transactions (which essentially acts as a free loan to the government). It makes monetary policy changes that much more effective, because there is no other currency to compete with directly (not by fiat, as in Argentina, but by custom). If alternative currencies like Bitcoin take off, the US government will have a very strong incentive to regulate them directly or manipulate them indirectly, because their very presence and widespread use would weaken the ability of the government to use monetary policy as an economic tool.
- skj 12y agoIf only they had won the world cup, this whole mess might have been avoided.
- Nursie 12y agoSo in the coming days we'll be hearing a lot more about 'Las Malvinas' and how Britain is an evil colonial power and stole the islands? That usually seems to be what happens when Argentina has internal problems that need to be distracted from.
- arethuza 12y agoRather off topic - I watched the World Cup Final in a large crowd at a German owned resort in Turkey, with a lot of Germans, English, Turks and a handful of Scots (us). Everyone supported Germany apart from the English who supported Argentina - which rather surprised me :-)
- mkohlmyr 12y agoProbably has more to do with how Brits feel about Germany than Argentina
- bedane 12y agoTo the more knowledgeable people around: can this trigger a credit default swaps crisis? Are all the Argentina CDS bought in the last decade really known to the public?
- sz4kerto 12y agoNot really -- it's an event that has been expected for a while. CDS dominoes usually start falling when a significant AND unexpected event happens ('black swan'). Argentina in default is moderately significant but not unexpected. In other words, sudden changes in valuations cause a problem. Their government bond valuations have slowly approached zero therefore there's no sudden jump. The value of the CDSs does not change suddenly when Argentina is formally considered default if everybody has expected that outcome.
- pessimizer 12y agoI don't understand why S&Ps rating matters, except for in the cases of US state or federal investments where some of the ratings agencies have been written into statute. Everybody is as familiar with the Argentinian situation and how it has developed as S&P is, and they have the ability to make their own judgements about whether they want to buy Argentinean bonds. The danger to Argentina is that the US government has declared that they're holding hostage the bond payments that Argentina has agreed to and wishes to make.
- deleted 12y ago[deleted]
- pessimizer 12y agoThe S&P isn't New York law. I don't understand what you're saying.
- opendais 12y agoI deleted because the other people explained far better before I could explain. xD
- sz4kerto 12y ago> I don't understand why S&Ps rating matters Because it's part of many private contracts and financial products. (E.g. 'in case the S&P rating of entity X drops below Z, then [...]').
- pessimizer 12y agoThanks. Is this generally something that's written in to qualify for doing business with the state, or something that private investors look for?
- arjunnarayan 12y agoBoth. A lot of large institutional investors (like pension funds) have statutory limits on the percentage of the portfolio that can be allocated to riskier investments. Risk is sometimes defined by the S&P rating.
- Spooky23 12y agoWhy does Argentina struggle so with these sorts of problems? It seems like a country with enormous potential. Lots of resources, limited security threat, amazing climate.
- bayesianhorse 12y agoHorrible judgement in political leadership seems to be one major problem.
- the_af 12y agoDisclaimer: I'm from Argentina. One batch of politicians and lobbyists sells the country for short-term gain. Later politicians inherit the problem, and maybe compound it with their own batch of mistakes. The "problem" in this particular case is a tiny group of foreign speculative capital creditors holding the whole country hostage. It has little to do with the country's potential. Note these so-called "vulture funds" are doing what they do: acquire debt at low prices while a country's economy is down, then attempt to recoup it at disproportionate interest rates when the country's economy recovers. That they are attempting this now, if anything, is a sign Argentina's economy isn't in such a bad shape. The vulture funds aren't run by fools; they wouldn't attempt to extract money where there is none.
- estebank 12y agoThat they are attempting this now might also be a sign that they expect Argentina's economy to take a nose dive.
- yread 12y agoTLDR; When restructuring defaulted bonds, Argentina agree to borrow in US dollars. They further agreed: - to pay all bond holders equally. - to be governed by New York state law. - to NOT include a collective action clause in the bond agreement which would have forced minority recalcitrant bondholders to enter a restructuring agreement, if a super majority of the bondholders agreed. A small minority (2.5-3%) refused to accept the 70-75% haircut the Argentina government was forcing on the bondholders (fyi: previously the largest haircut in sovereign debt was 30%) (from one of the dealbook article's comments)
- fonosip 12y agoSmall corrections: - Holdouts are 7.6% - Haircut was around 75% nominal, but in practice was more around 40% since there were some GDP growth incentives and better interest rates
- raphar 12y agoAdditionaly, the hedge funds weren't among the original creditors. They bought the defaulted bonds on the cheap, just to pursue legal battle. There are other creditors holding defaulted bonds, but these funds are the only ones that got a favorable ruling.
- neeks 12y agoWe really should have evolved by now to using a monetary system that doesn't revolve around debt.
- bayesianhorse 12y agoWhich is impossible, because any economic activity that takes some time to come to fruition is already a sort of debt. If you can't use a currency to increase the "money" supply, other forms of credit and investment emerge, and you get the same problems.
- neeks 12y agoRight, because there isn't numerous examples throughout history where debt-free fiat currency flourished. We have been conditioned by neoclassical economics and have refused to confront the pyramid scheme.
- bayesianhorse 12y agoCan you name one such debt-free currency? Preferably one that works in a modern economy? Don't forget: A lot of our risk-management and wealth today depends on derivatives and a well running financial market. To say that a completely different but unproven system works better is a very tough point to defend.
- neeks 12y agoWell let me preface with this: I'm not an economist and of course harbor my own bias(just like everybody else), but I'm educated enough to recognize when systems and people are being gamed. Why can't our government(or any government for that matter) print their own money and issue it to its people, which is then freed from the private central bank's interest? Instead, we allow the banking industry to self-regulate and it in turn does what's in its self-interest. I've heard historians and anti-neoclassic-economists refer back to the success of Tally Sticks(1100 - 1854), Colonial Script(1764 –– 1776), and Roman currency before they switched to a gold standard. But, I'm not an authority on this and sincerely would appreciate any literature that contradicts it. The only modern example would be cyprtocurrency, and the verdict is still out on that. Hell, even if more states and nations moved to North Dakota's banking approach we'd be better off. I don't have all the answers, but I know humans can do better and it starts with the average-person continually investing time to educate themselves about monetary policies and the history of currencies. The current monetary system has feed global wars, imperialism and possibly the worst financial inequality in mankind's history. Unless you're a banker or in the financial industry, I don't understand why you wouldn't want to try something new?
- Grue3 12y agoI wonder what highly esteemed economics expert Paul Krugman thinks about this. http://krugman.blogs.nytimes.com/2012/05/03/down-argentina-way/ http://krugman.blogs.nytimes.com/2012/05/03/down-argentina-w...
- bmelton 12y agoI don't usually upvote sarcasm, and I'm not even sure if that is sarcasm, but regardless, I don't understand this statement. > But why exactly is Brazil an impressive “BRIC” while Argentina is always disparaged? Actually, we know why — but it doesn’t speak well for the state of economics reporting. What is it that we know? Why is, in Krugman's mind, Argentina always being disparaged?
- evol262 12y agoBecause they already defaulted in 2001 and got into a spat with the IMF and various investors from western nations who tried to capitalize on their misfortune. In Krugman's mind, Argentina is disparaged because they don't really want to be part of the western "system" of investment in the national resources of South American nations by developed powers.
- evol262 12y agoI know conservatives don't like Krugman, but the man didn't win a Nobel for nothing, and linking a two year old article is simply misleading.
- simonebrunozzi 12y agoI'm very sorry for Argentinians - I've been there last year, visiting relatives (I'm from Italy, and my grand aunt moved to Argentina in the 50s - she was a bit over 20 - to escape an arranged marriage in Italy, and came back only in the 80s). Argentina is a beautiful country, with problems that are very similar to the ones that we have in Italy - but different scenarios, and different economies. I see this as an opportunity to consider adopting Bitcoin as a national currency, and stop being hostage of 1) banks, and 2) corrupt government officials. I don't know if it would work... But I hope so.
- thenmar 12y agoHow would that work though? Would the government hand out smart phones to everyone, and offer classes on how to prevent accidentally deleting your life savings?
- dysoco 12y agoCorrect me if I'm wrong, but Bitcoin requires you to go arround with a cellphone and internet 24/7 in order to make payments. That might be a thing in Buenos Aires but definitively not in the rest of the country. Bitcoin as national currency might work 10 years from now in Sweden or Germany, but definitively not here.
- vivab0rg 12y agoUm. Ever heard of paper-wallets[0]? [0]: https://en.bitcoin.it/wiki/Paper_wallet https://en.bitcoin.it/wiki/Paper_wallet
- lmm 12y agoBitcoin would make these problems worse. The whole reason they got into this mess in the first place was by pegging their currency to the dollar, which meant they couldn't devalue the peso when they should have done for a long time; when the eventual reckoning came it was brutal. With bitcoin it would be much much worse, because you can't ever do that decoupling, and you wouldn't even get the US government doing writedowns like QE (which at least mean that in any global financial disaster, you've got a government doing approximately the appropriate things).
- tragomaskhalos 12y agoLet's hope this doesn't precipitate that favoured bread and circuses smokescreen of Argentine politics, viz idiotic sabre-rattling over the Falklands.
- the_af 12y agoThis comment is naive. Our "sabre-rattling" over the Malvinas Islands was done during our vicious, murderous military dictatorship in the 70s/early 80s. We now have a democracy. Any dispute about the islands is done via diplomatic means (regardless of whether you believe the claim has merit, diplomacy is the only legitimate way to resolve it). No sabre-rattling is possible. Don't confuse democratic Argentina with past dictatorship-ruled Argentina.
- SaberUK 12y ago>Our "sabre-rattling" over the Malvinas Islands was done during our vicious, murderous military dictatorship in the 70s/early 80s. http://www.theguardian.com/world/2014/jan/12/argentina-falklands-oil-international-courts http://www.theguardian.com/world/2014/jan/12/argentina-falkl... http://www.theguardian.com/uk/2013/feb/05/falklands-under-our-control-argentina http://www.theguardian.com/uk/2013/feb/05/falklands-under-ou...
- the_af 12y agoThat's absurd. "Sabre-rattling" means attempting to intimidate by displays of military power (or implied military power). See: http://dictionary.reference.com/browse/sabre-rattling?s=t&path=/ http://dictionary.reference.com/browse/sabre-rattling?s=t&pa... Both links you cited specifically rule out military intervention. Allow me to quote from your first link: Quotes from your first link: ---- "Argentina will seek legal punishment, including prison sentences, for anyone who drills for oil in the Falklands and the surrounding waters it claims as its territories, the country's newly created Malvinas secretary has told the Guardian. [...] In his first interview with the international media since taking the post on Monday, Daniel Filmus also warned that companies involved in exploration of the disputed areas will be disqualified from potentially more lucrative work in Vaca Muerta (the giant shale oil deposit in Argentina's Patagonia region) and offshore areas. "We will go to the international courts. It must be known that Argentina will defend its claim," Filmus told the Guardian at his office in the ministry of foreign affairs. "Whoever doesn't obtain authorisation will not only face administrative consequences but will also face prison sentences."" ---- You may or may not like Argentina's policies and position on the matter of the Malvinas, but all this is: a- Not military posturing. b- Within legal bounds. See mentions of legal action, prison sentences, international courts. I don't see any threats of military aggression, do you? So we can rule out sabre-rattling from your first link. Let's go on with your second link. First sentence after the heading of second link: ---- "Argentinian foreign minister rules out military solution but says 'not one single country' supports UK right to govern islands" ---- So a military solution is ruled out then? I rest my case.
- pessimizer 12y agoThis is how much money has been spent lobbying US officials in order to make this happen. http://www.opensecrets.org/lobby/clientsum.php?id=D000047065&year=2014 http://www.opensecrets.org/lobby/clientsum.php?id=D000047065... edit: I summed the years and got $5.3 million since 2007. The UI doesn't seem to help you sum at all. edit2: http://www.cepr.net/index.php/blogs/the-americas-blog/nnfarmer-education-groups-to-anti-argentina-lobby-uh-who-are-you http://www.cepr.net/index.php/blogs/the-americas-blog/nnfarm... excerpt from WSJ article included: "Mr. Matlack is president of American Agriculture Movement, a farmers' advocacy group that was listed among about 40 members of American Task Force Argentina, whose stated mission is to help investors recoup money from Argentina's 2001 bond default and subsequent restructuring. "But Mr. Matlack and some leaders of other groups representing ranchers, teachers and farmers, are baffled about why the task force listed their organizations as members 'united for a just and fair reconciliation' of Argentina's default. "Reached while he was planting wheat on his farm, Mr. Matlack said he had never heard of American Task Force Argentina. 'We don't have anything to do with Argentina's debt,' he said. "Also perplexed are leaders of the Colorado conference of the American Association of University Professors, which was listed under members and supporters. 'This is absolutely foreign to me,' says Ray Hogler, legislative director of the academic group. "Both groups were dropped from the list after the Wall Street Journal alerted the task force to the discrepancies."
- dieg0 12y agoEverybody involved in the 2001 default knew this was going to happen. And it can even be said that Argentina didn’t plan to pay what they promised from the beginning, although I cannot attest to it. One detail I want to add to the discussion is that in the past few years the global panorama changed for Argentina, they sit on top of the second largest shale gas reserve in the world, and plan to extract it. They need money to start working and suddenly felt the urge to settle this issue. Known fact: There is the Argentinean way of doing things, not straightforward, which is why talking about the bondholders like victims sounds naïve. They saw they might get their money now, and with Argentina’s shell gas urge probably felt the call to make more. To me there is a larger scope, take a look at tech companies like Google and Facebook, they placed their head regional offices in Argentina. Both companies knew well in advance that the political and judicial system in Argentina is completely corrupt but still decided to direct their regional efforts from Buenos Aires. Why would anyone place offices in Argentina, when there is Chile, Perú or Colombia, countries that have greater political, social and economic stability, extremely better infrastructure, better weather and even tastier food. I could be going paranoid but I believe it is simple; it looks like the big guys like to get in bed with the naughty ones, rather than the honest and better-behaved gals around the corner. This makes sense to me, after all, the bigger the risk the greater the possible reward. The country is extremely wealthy, but that wealth is not getting to everyone (not that uncommon), and maybe that’s why the demonization of the international monetary funds has so much appeal locally. The certainty is that by the end of this story, it will be the Argentinean people who will be paying for this.
- brohee 12y agoColombia is in what could be called a civil war without exaggerating too much, it's not like a FARC like organization controls large swath of Argentina. Why do you call Colombia more stable?
- dieg0 12y agoYou are right, things have changed in Colombia, but might be too early to say it is more stable
- 12y ago