S.&P. Says Argentina Has Defaulted • Hacker News Board

Re: S.&P. Says Argentina Has Defaulted

#101

Post by growlix » Thu, Jul 31, 2014, 3:00 PM UTC

chimeracoder wrote: post #46

scardine wrote: post #27

Brazil 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, th…

> 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 b…

Can you (or someone) explain how black market transactions in USD act as a free loan to the US government? This isn't intuitive to me.

Re: S.&P. Says Argentina Has Defaulted

#102

Post by mobiplayer » Thu, Jul 31, 2014, 3:00 PM UTC

cjbprime wrote: post #8

eudox wrote: post #2

The worst thing about living in Uruguay is being right next to Them. Now this happens, and we're going to get the fallout.

And here we thought you were going to say that the worst thing about living in Uruguay was the rampant nationalism between Uruguayans and Argentinians..

Guys, 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").

:)

Re: S.&P. Says Argentina Has Defaulted

#103

Post by sseveran » Thu, Jul 31, 2014, 3:00 PM UTC

pessimizer wrote: post #63

smackfu wrote: post #45

Earlier quoted context omitted.

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.

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 a…

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.

Re: S.&P. Says Argentina Has Defaulted

#104

Post by cpwright » Thu, Jul 31, 2014, 3:01 PM UTC

lmm wrote: post #57

johnnyg wrote: post #9

Earlier quoted context omitted.

Wouldn't it be more fair to say endemic corruption and decades of misguided plans that swung too hard to socialist, then capitalist and then again socialist policies created this? The idea that the root cause of this is that a group of investors come along, buy debt on the open market and then expect that debt to be paid seems overly simplistic.

> Wouldn't it be more fair to say endemic corruption and decades of misguided plans that swung too hard to socialist, then capitalist and then again socialist policies created this? It would be fair to say that those caused the 2001 default. Which was a real default, but not a catastrophe; defaults happen sometimes, Argentina negotiated a settlement with (most of) its creditors (who had known all along that their inv…

You might say that it is a "technicality", but it is the contract the government of Argentina agreed to. The only thing you have with a financial arrangement of this magnitude is the contract.

It is perfectly reasonable for the creditors to do all they can to get paid. It isn't a failure of their risk management, because they probably figured this was risky all along.

If Argentina didn't want the bonds to be subject to the US legal system, they shouldn't have issued them governed by NY state law.

They could also have included clauses preventing holdouts, but they didn't. In hindsight, they clearly made mistakes issuing the debt, but that doesn't mean they should get off without paying for the consequences of those mistakes.

Re: S.&P. Says Argentina Has Defaulted

#105

Post by dysoco » Thu, Jul 31, 2014, 3:03 PM UTC

simonebrunozzi wrote: post #82

I'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 opp…

Correct 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.

Re: S.&P. Says Argentina Has Defaulted

#106

Post by kaonashi » Thu, Jul 31, 2014, 3:04 PM UTC

chimeracoder wrote: post #46

scardine wrote: post #27

Brazil 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, th…

> 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 b…

Well, I'm not convinced a Bitcoin lending facility could really scale into any kind of inter-bank system that handles a fraction of the volume of our current system (since monetary policy works on lending channels).

Re: S.&P. Says Argentina Has Defaulted

#107

Post by pessimizer » Thu, Jul 31, 2014, 3:05 PM UTC

sseveran wrote: post #103

pessimizer wrote: post #63

Earlier quoted context omitted.

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 a…

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.

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.

Re: S.&P. Says Argentina Has Defaulted

#108

Post by chimeracoder » Thu, Jul 31, 2014, 3:06 PM UTC

blowski wrote: post #91

pessimizer wrote: post #86

Earlier quoted context omitted.

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 s…

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.

> 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.

Re: S.&P. Says Argentina Has Defaulted

#109

Post by encoderer » Thu, Jul 31, 2014, 3:07 PM UTC

PeterisP wrote: post #87

tomp wrote: post #33

Earlier quoted context omitted.

From 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.

Argentina 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.

In 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?

Re: S.&P. Says Argentina Has Defaulted

#110

Post by blowski » Thu, Jul 31, 2014, 3:08 PM UTC

pessimizer wrote: post #99

davidw wrote: post #93

Earlier quoted context omitted.

A portion of the bondholders who had renegotiated their debts are from the US too, and are now wondering what's going to happen.

I'm wondering along with them. Is there any question that this will nullify their agreements and force Argentina to pay them in full also, or were the restructuring agreements written well enough to prevent that? I have no idea - I wish I knew more about the details. edit: it's conceivable that Argentina could blink and pay the vultures off, but if they're then liable for all of the debt (which they can't pay) that m…

So is there any way that, if Argentina completely defaults, the 93% who have agreed the restructured payments can sue the 7% who haven't? Can S&P's opinion just be ignored while Argentina renegotiates with 100% of them? Can this still end up in international arbitration?