6 ms·

It's more like, if you keep defaulting on bonds by saying you don't have to pay them because you changed the rules, eventually no on will buy them unless you le

by smackfu 12y ago

It's more like, if you keep defaulting on bonds by saying you don't have to pay them because you changed the rules, eventually no on will buy them unless you let someone else set the rules.

pessimizer 12y ago
That's what it would be like if this were anything but a holdup. The US government is intervening in the market and preventing bondholders who have agreed on a change in rules from receiving their bond payments, rather than letting the market set the prices. That's the opposite of what you describe here. edit: What I'm saying is only crazy within the bubble of this thread. It's also the opinion of the US government and the American Bankers Association. http://www.bloomberg.com/news/2013-01-04/bankers-group-supports-bond-trustee-in-argentina-appeal-1-.html http://www.bloomberg.com/news/2013-01-04/bankers-group-suppo... "'Permitting injunctions against these trustees that preclude them fulfilling their pre-existing obligations whenever expedient to enforce a judgment against the debtor will have significantly adverse consequences for the financial system,' the ABA said in its brief." http://www.reuters.com/article/2012/12/13/argentina-debt-usa-idUSL1E8NDFJJ20121213 http://www.reuters.com/article/2012/12/13/argentina-debt-usa... "U.S. government lawyers reiterated their position that the court's interpretation of the 'equal treatment' clause in Argentina's defaulted bonds 'may adversely affect future voluntary sovereign debt restructurings, the stability of international financial markets, and the repayment of loans extended by international financial institutions.'"
- blowski 12y ago
  I can see both sides here. What surprised me is not that a judge has decided, but that a US judge has decided. It looks like an American judge decided in an American corporation's favour, and against a poorer country, to hell with the damage it will do the world's economy. On the other hand, if the US doesn't uphold the law, then the world economy would be damaged because lending would become more unpredictable. As it stands, though, it's easy to portray this as the US bullying Argentina in the interests of a small group of rich American citizens who behave like loan sharks. It just seems like it would be better to have an international body of law under which all international lending takes place, and when there is a dispute, a judge is chosen from an independent third party. Is there any serious effort to make that happen? I have no idea.
  - pessimizer 12y ago
    I just edited my comment to double down due to downvotes, but this ruling will ultimately damage the US more than Argentina. If we establish that it will be impossible to restructure debt if you issue your bonds in the US, we've established that there's no reason to issue your bonds in the US. edit: it's important to keep in mind that 93% of bondholders have agreed to the restructuring. The courts look like they're saying that the decision must be unanimous. That's completely unworkable.
    - blowski 12y ago
      I actually downvoted you because the world `holdup` made it sound a bit inflammatory. Having read the links, I see where you're coming from, and changed to an upvote. This is certainly one of those topics that sensationalists will try to reduce to easy answers, when it's clear there aren't any.
      - pessimizer 12y ago
        http://www.cepr.net/index.php/blogs/the-americas-blog/argentina-vs-the-vultures-what-you-need-to-know http://www.cepr.net/index.php/blogs/the-americas-blog/argent... Here's another link. edit: and another - http://www.forbes.com/sites/realspin/2013/12/19/the-real-facts-on-argentinas-sovereign-debt-restructuring-a-rebuttal/ http://www.forbes.com/sites/realspin/2013/12/19/the-real-fac...
      - chimeracoder 12y ago
        > Having read the links, I see where you're coming from, and changed to an upvote. How do you change a vote on HN? Any time I upvote or downvote, both arrows disappear, so I always assumed they were permanent.
        blowski 12y ago
        Good point. I thought I did - perhaps I'm thinking I'm on StackOverflow. I thought I clicked 'back' so the arrows were there. I don't remember. Even if I haven't actually changed it to an upvote, then it deserves it.
- blowski 12y ago
  Thanks for the links, btw - interesting to see the complexity involved here.
- sseveran 12y ago
  They can not like it all they want, the judge enforced the law. Since there was no clause to force restructuring in the original bonds and there was a clause to prevent any bond holders from getting a better deal then the restructured bonds, Argentina was left with no option but to pay the original debt. The issue is entirely one of their making.
  - pessimizer 12y ago
    The judge didn't enforce the law, the judge interpreted the law, and could have just as easily interpreted it in a way that you didn't agree with.
    - sseveran 12y ago
      It turns out that is what judges do. When there is a disagreement about the terms of a contract a judge or jury has to decide what to do.
- rahimnathwani 12y ago
  These restructured bonds (on which the judge is preventing payment) weren't 'pre-existing agreements' as claimed by the statement you quoted. They were agreements made _after_ the original bonds had been issued and after the government had defaulted on those bonds. The equal treatment thing being enforced by the court is something Argentina specifically put into the bond contracts, no? Why should we expect the court not to enforce this condition? (I haven't read the contracts, so am only going from memory of what I've read elsewhere.)

by smackfu 12y ago

It's more like, if you keep defaulting on bonds by saying you don't have to pay them because you changed the rules, eventually no on will buy them unless you let someone else set the rules.

pessimizer 12y ago

That's what it would be like if this were anything but a holdup. The US government is intervening in the market and preventing bondholders who have agreed on a change in rules from receiving their bond payments, rather than letting the market set the prices. That's the opposite of what you describe here. edit: What I'm saying is only crazy within the bubble of this thread. It's also the opinion of the US government and the American Bankers Association. http://www.bloomberg.com/news/2013-01-04/bankers-group-supports-bond-trustee-in-argentina-appeal-1-.html http://www.bloomberg.com/news/2013-01-04/bankers-group-suppo... "'Permitting injunctions against these trustees that preclude them fulfilling their pre-existing obligations whenever expedient to enforce a judgment against the debtor will have significantly adverse consequences for the financial system,' the ABA said in its brief." http://www.reuters.com/article/2012/12/13/argentina-debt-usa-idUSL1E8NDFJJ20121213 http://www.reuters.com/article/2012/12/13/argentina-debt-usa... "U.S. government lawyers reiterated their position that the court's interpretation of the 'equal treatment' clause in Argentina's defaulted bonds 'may adversely affect future voluntary sovereign debt restructurings, the stability of international financial markets, and the repayment of loans extended by international financial institutions.'"

blowski 12y ago
I can see both sides here. What surprised me is not that a judge has decided, but that a US judge has decided. It looks like an American judge decided in an American corporation's favour, and against a poorer country, to hell with the damage it will do the world's economy. On the other hand, if the US doesn't uphold the law, then the world economy would be damaged because lending would become more unpredictable. As it stands, though, it's easy to portray this as the US bullying Argentina in the interests of a small group of rich American citizens who behave like loan sharks. It just seems like it would be better to have an international body of law under which all international lending takes place, and when there is a dispute, a judge is chosen from an independent third party. Is there any serious effort to make that happen? I have no idea.
- pessimizer 12y ago
  I just edited my comment to double down due to downvotes, but this ruling will ultimately damage the US more than Argentina. If we establish that it will be impossible to restructure debt if you issue your bonds in the US, we've established that there's no reason to issue your bonds in the US. edit: it's important to keep in mind that 93% of bondholders have agreed to the restructuring. The courts look like they're saying that the decision must be unanimous. That's completely unworkable.
  - blowski 12y ago
    I actually downvoted you because the world `holdup` made it sound a bit inflammatory. Having read the links, I see where you're coming from, and changed to an upvote. This is certainly one of those topics that sensationalists will try to reduce to easy answers, when it's clear there aren't any.
    - pessimizer 12y ago
      http://www.cepr.net/index.php/blogs/the-americas-blog/argentina-vs-the-vultures-what-you-need-to-know http://www.cepr.net/index.php/blogs/the-americas-blog/argent... Here's another link. edit: and another - http://www.forbes.com/sites/realspin/2013/12/19/the-real-facts-on-argentinas-sovereign-debt-restructuring-a-rebuttal/ http://www.forbes.com/sites/realspin/2013/12/19/the-real-fac...
    - chimeracoder 12y ago
      > Having read the links, I see where you're coming from, and changed to an upvote. How do you change a vote on HN? Any time I upvote or downvote, both arrows disappear, so I always assumed they were permanent.
      - blowski 12y ago
        Good point. I thought I did - perhaps I'm thinking I'm on StackOverflow. I thought I clicked 'back' so the arrows were there. I don't remember. Even if I haven't actually changed it to an upvote, then it deserves it.
blowski 12y ago
Thanks for the links, btw - interesting to see the complexity involved here.
sseveran 12y ago
They can not like it all they want, the judge enforced the law. Since there was no clause to force restructuring in the original bonds and there was a clause to prevent any bond holders from getting a better deal then the restructured bonds, Argentina was left with no option but to pay the original debt. The issue is entirely one of their making.
- pessimizer 12y ago
  The judge didn't enforce the law, the judge interpreted the law, and could have just as easily interpreted it in a way that you didn't agree with.
  - sseveran 12y ago
    It turns out that is what judges do. When there is a disagreement about the terms of a contract a judge or jury has to decide what to do.
rahimnathwani 12y ago
These restructured bonds (on which the judge is preventing payment) weren't 'pre-existing agreements' as claimed by the statement you quoted. They were agreements made _after_ the original bonds had been issued and after the government had defaulted on those bonds. The equal treatment thing being enforced by the court is something Argentina specifically put into the bond contracts, no? Why should we expect the court not to enforce this condition? (I haven't read the contracts, so am only going from memory of what I've read elsewhere.)