Argentina defaults for second time

Vox Populi Vox Dei

Vox Populi Vox Dei

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Argentina has defaulted on its debt - for the second time in 13 years - after last-minute talks in New York with a group of bond-holders ended in failure.

So-called "vulture fund" investors were demanding a full pay-out of $1.3bn (£766m) on bonds they hold.

Argentina has said it cannot afford to do so, and has accused them of using its debt problems to make a big profit.

A US judge had set a deadline of 04:00 GMT on Thursday for a deal. The crisis stems from Argentina's 2001 default.

Late on Wednesday evening, Argentina's Economy Minister Axel Kicillof said the investors had rejected the government's latest offer.

"Unfortunately, no agreement was reached and the Republic of Argentina will imminently be in default," Daniel Pollack, the court-appointed mediator in the case, said in a statement on Wednesday evening.

The fresh default is not expected to affect Argentina's economy in the same way it did in 2001, when dozens were killed in street protests and the authorities froze savers' accounts to halt a run on the banks.

"The full consequences of default are not predictable, but they certainly are not positive," Mr Pollack said.

Speaking at a news conference in New York, Mr Kicillof said Argentina would not do anything illegal.

Bond reaction
The investors, also known as "hold-outs", are US hedge funds that bought debt cheaply after Argentina's economic crisis.

They never agreed to the restructuring accepted by the majority of bond-holders.

President Cristina Fernandez de Kirchner has described as vultures the minority bond-holders - including Aurelius Capital Management and NML Capital.

She accuses them of taking advantage of Argentina's debt problems to make large profits.

Ratings agency Standard & Poor's (S&P) downgraded the country to "default" earlier on Wednesday, although the price of the bonds did not react.

S&P noted that it could revise the rating if Argentina were to find some way to make the payments.

The hedge funds are demanding Argentina make interest payments on debt which it defaulted on in 2001, even though it was bought at less than face value.
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http://www.bbc.com/news/business-28578179
 
Ninja'd said:
If only they had access to oil from the Falklands. :whistle:
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Why not go plunder Chilies or Brazil's oceans instead? Why the Falklands?

Argentina once used to be the 6th largest economy in the world. Unfortunately corruption, nationalization and maladministration have ruined their economy.
 
Ninja'd said:
If only they had access to oil from the Falklands. :whistle:
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Lol... :D

No wonder that crazy Argentinian president is focusing her energy on reclaiming the Falklands (very unlikely to happen) rather than the more important task of improving Argentina's stuttering economy.
 
Those funds must have had some awesome hedging instruments / insurance to be willing to force default
 
ghoti said:
Why not go plunder Chilies or Brazil's oceans instead? Why the Falklands?

Argentina once used to be the 6th largest economy in the world. Unfortunately corruption, nationalization and maladministration have ruined their economy.
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But comrade, we in South Africa now know what they did wrong so we can make it work!
 
ghoti said:
Argentina once used to be the 6th largest economy in the world. Unfortunately corruption, nationalization and maladministration have ruined their economy.
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I don't think Argentina's real economy ever get into the top 10 in terms of size - and part of the problem is the a mismatch within the economy
but more to the point more than corruption etc ... it has been the consequence of a toxic mix of induced "supply side" economics (I always am torn between a lol and a gut wrenching cringe when "free market 'Mises proponents'" advocate shock treatment type interventions - there is a particularly toxic streak in US discourse that produces banana Republics as a natural consequence) and neo-Keynesian fiscal policies.
 
Paul Hjul said:
I don't think Argentina's real economy ever get into the top 10 in terms of size - and part of the problem is the a mismatch within the economy
but more to the point more than corruption etc ... it has been the consequence of a toxic mix of induced "supply side" economics (I always am torn between a lol and a gut wrenching cringe when "free market 'Mises proponents'" advocate shock treatment type interventions - there is a particularly toxic streak in US discourse that produces banana Republics as a natural consequence) and neo-Keynesian fiscal policies.
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Someone, please tell me I am not the only one that feel like a complete fcking moron when Paul posts????!!!!!!!!! :confused::confused:





:D
 
Paul Hjul said:
I don't think Argentina's real economy ever get into the top 10 in terms of size
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My information is according to free market proponent Tony Leon (in his book). But it was back in like the 30`s or 40`s. When Argentina was building its middle class.
 
ghoti said:
My information is according to free market proponent Tony Leon (in his book). But it was back in like the 30`s or 40`s. When Argentina was building its middle class.
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Top 8 - close enough:

A century ago, there were only seven countries in the world that were more prosperous than Argentina (Belgium, Switzerland, Britain and four former English colonies including the United States), according to Angus Maddison’s historic incomes database. In 1909, per capita income in Argentina was 50 percent higher than in Italy, 180 percent higher than Japan, and almost five times higher than in neighboring Brazil. Over the course of the 20th century, Argentina’s relative standing in world incomes fell sharply. By 2000, Argentina’s income was less than half that of Italy or Japan.
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http://economix.blogs.nytimes.com/2009/10/06/what-happened-to-argentina/
 
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