21–30 of 195 posts
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. :/
To understand background and potential implication, I found http://dealbook.nytimes.com/2014/07/30/q-a-whats-behind-the-... helpful.
> 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.
Earlier quoted context omitted.
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..
I 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.
http://www.indexmundi.com/uruguay/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".
Earlier quoted context omitted.
> 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.
Yeah, that's very much not what the World Bank is about.
The worst thing about living in Uruguay is being right next to Them. Now this happens, and we're going to get the fallout.
Well, 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
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.
Wow ! Just one investor can bring a country to its knees !
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.
The problem is that sovereign nations don't have clear bankrupt procedure and these hedge funds are holding country as hostage for their past mistakes despite the fact that majority of borrowers accepted debt restructuring that was arranged and accepted haircuts.
If the debt and its interest grows past what country gdp can ever grow, they can never pay back and they either became debt slaves forever or keep defaulting. This is attempt at debt slavery in national level. (if person can't pay his debt ever, should he and his family lineage be responsible for that debt forever?)
I think it's reasonable to expect that in these cases banks should accept haircuts and settle like wast majority of investors did. Upholding business deal is ethically less important than country of millions being able to continue their life. The logical cost of country not being able to pay for their dept should be higher interest rates in future, not shutting country down.
I 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.