Archive for 30 septiembre 2014

BAPRO: MONEDA VIABLE

30 septiembre, 2014

ARGENTINA SALVAJIZADA

El BAnco PROvincia de Buenos Aires no esta regido por la Ley Nacional, segun lo convenido en 1859 como condicion para que Buenos Aires entrara en la conformación de la Republica Argentina, y se firmara la reforma de 1860: el Estado Federal no tiene jurisdiccion sobre el Banco de la Provincia, y ésta constitucionalmente puede emitir papel moneda provincial, que es argentino, y el Estado Federal debe forzosamente aceptarlo. Con  esta garantia constitucional, la nueva moneda alternativa  alentará el ahorro y el crédito que hoy falta  por la prohibición nacional de usar el dolar para  conservar el valor de sus ahorros, ya que la experiencia enseña la ventaja de ahorrar en dinero confiable, hoy por desgracia,  solo extranjero.

Emitir “Bapros” ( billetes bancarios del Banco Provincia), es una  legal y constitucional  alternativa que tiene el gobernador Scioli para resistir el problema de falta de moneda nacional confiable en su territorio gigantesco, que…

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BANCO CENTRAL DESTRUCTIVO

30 septiembre, 2014

ARGENTINA SALVAJIZADA

  Desde el año 1935 hasta hoy, incluyendo a la licenciada Marcó del Pont, transcurrieron 56 Presidencias distintas en el Banco Central, algo que funciona mucho peor que el INDEC, a los fines programados de defender el valor de la moneda y controlar (superintendencia) al sistema financiero nacional. 

Si tenemos en cuenta que desde 1947 circa hasta el 1 de abril de 1991 al dinero argentino fue necesario suprimirle trece CEROS, llegamos a la evidencia de que es el aparato mas ineficaz que se haya inventado en materia de economía, porque gastó fortunas, permitió abusos y negociados, y varias veces fue necesario renegociar las deudas del Estado. En este período siniestro, transcurrieron tan solo cuarenta y cuatro años. El dinero nacional solo se estabilizó con la convertibilidad, pero en 2002 los dirigistas fascistas volvieron a las andadas, nos dejaron sin moneda, y de un peso a un dólar, llegamos…

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CRISTINA PROVOCA INSEGURIDAD

29 septiembre, 2014

La Presidenta tiene dominados a los Congresistas y a los Jueces Supremos, y eso le ha permitido violar en forma permanente la Constitución y las Leyes, con impunidad, hasta ahora y mientras siga en el cargo. Este modelo daña al 99% mínimo de los argentinos, y nuestro país hoy en conjunto, económicamente vale menos, porque Ella es la que dicta medidas equivocadas para la población, aunque algunas benefician a sus amigos. Entre tantas equivocaciones, una de las peores consiste en tener un tipo de cambio “oficial” respecto al valor del dinero argentino, que consiste en fijar la Presidenta vía sus incondicionales, la relación del peso argentino con el dolar estadounidense. El daño es tan grave, que insisto sobre el tema, porque muchísimos se perjudican, la economía se transforma en misión imposible para ciertos sectores que encuentran que exportar al cambio oficial  (casi la mitad del valor real del dolar, cuando el cambio oficial es un dolar = 1 peso argentino oficial  8,45 , pero el peso real o paralelo esta en 15,70  x dolar, según la oferta y la demanda, que muestra como la inflación cristinista empobrece en forma creciente el valor del dinero argentino y por ende el valor de todo lo que en Argentina está. Hasta el día que Cristina termine su mandato, y entregue el Poder a otro Presidente. Momento en el que el valor de Argentina, nuestra moneda y nuestra economía podrá seguir igual, o mejorar, o empeorar, según el desempeño del próximo gobierno. Para explicarlo: si en Cuba hoy propiedad de la familia Castro hubiese un cambio de modelo, y el comunismo se abandonase (socialismo bolivariano, quizás hoy se llame) todo lo que existe en la mejor isla del Caribe valdrá en dolares nortamericanos muchas  veces mas, porque el país habría reingresado al “mundo global”, y tanto la gente como los productos podrían ingresar y salir del país, sin dificultades. O sea, un cambio radical, digamos un viraje de 170% porque cuesta creer que a Castro lo suceda algún Estadista perfecto, algunos errores el hipotético estadista soñado cometerá y la economía no llegará a igualar a la de los paises mas avanzados del planeta, porque el nivel cultural cubano requerirá tiempo para que sus habitantes progresen. Como ejemplo, hubo un cubano Capablanca campeón mundial de ajedrez en el siglo XX, antes de Fidel, y creo no lograron otro, ni siquiera aplicando los conocimientos de la Unión Soviética, a la cual se vendieron con el argumento de que la libertad de Estados Unidos no les gustaba por elegir Fidel Castro el modelo comunista, que a él lo benefició, pero que a una tercera parte de los cubanos motivó emigrar a Estados Unidos y otros lugares, donde se destacaron porque pudieron trabajar con libertad en un país con Estado de Derecho, donde la Constitución se respeta  mas que en el resto del planeta.

Argentina no tenemos Constitución real, porque  la Presidenta abogada exitosa y los jueces lo impiden. Es tonto e inconstitucional intentar fijar el valor oficial del dolar, y mucho mas cuando esto implica forzar a que un peso argentino cristinista horadado por los ladrones tenga el mismo valor adentro del país que en el exterior. Los uruguayos desprecian a nuestro peso, casi con la misma fuerza con la que nuestro blog la desprecia, porque una moneda destruida por la inflación muestra que Argentina está siendo robada en forma creciente por emisión monetaria NO AUTORIZADA por la Constitución y por el Congreso obsecuente.

Ergo, país sin moneda creíble está desgobernado, porque su Presidenta prefiere engañar a la gente, y aumentar su Poder. Por suerte, Cristina no es reelegible, los políticos opositores tarde acordaron no reformar la constitución nacional para que ella tenga otro tercer mandato o permiso para seguir desgobernando. Cuando el Papa Francisco dicen que a Cristina hay que cuidarla, podemos interpretarlo de varias formas. No creo el ex cardenal Bergoglio desee que Ella modifique la Constitución, sino todo lo contrario: aspira a que NO LA ECHEN como hicieron con otros incapaces gobernantes, porque aspira a que Argentina volvamos a ser un país normal, donde la Constitución se cumpla. Y por eso, recordemos que la función de la Constitución es proteger a los habitantes del Amo Presidente de turno, ya que somos geográfica y culturalmente un país sudaca. La Constitución Norteamericana funciona desde hace largo tiempo, porque está para proteger a los norteamericanos de sus gobernantes locale (Presidente, Gobernadores y Alcaldes Municipales). Del resto del mundo, a los yanquis los protegen sus Fuerzas Armadas. Los Argentinos fuimos durante décadas sometidos por nuestros propios militares traidores, y no fuimos nosotros los que nos liberamos de ellas, sino la Guerra de Malvinas derrotó a nuestros corruptos inútiles insensatos militares, que creyeron posible seguir manteniendo un poder que los beneficiaba a costillas de la mayoría, y para evitarlo, cometieron el error y horror de invadir de noche las Islas Malvinas, con la excusa de recuperarlas. Desde 1982 hemos vimos lo bueno de no tener militares que nos opriman, algo que Costa Rica logró el siglo pasado. Espero desde diciembre 10 de 2015 tengamos la posibilidad de que nunca mas otro Presidente nos siga dañando para beneficiarse él o ella y sus amigos…

MORALEJA: intentar controlar desde la Presidencia el valor del dinero argentino es traición a la Patria, aunque la Corte Suprema lo acepte, por ser mayoritariamente peronista.

GENTE, PUEBLO Y RESENTIDOS

29 septiembre, 2014

ARGENTINA SALVAJIZADA

Dicen es el re-sentimiento un sentimiento muy feo, que daña mas al resentido que a su objeto o blanco. Porque lo normal es que el resentido sea realmente inferior (moralmente hablando) y que el sujeto pasivo ni se entere, o no le importe, o se ría, o lo comprenda como cosa propia de seres menos evolucionados (niños molestos contra sus padres, o incluso comunidades VERDADERAMENTE víctimas de opresión política y social.

En alguna de estas categorias del resentimiento debe inscribirse el de los provincianos de muchisimas provincias hacia el pequeñísimo territorio delimitado por la avenida General Paz y el rio de la Plata, que hoy es Ciudad Autonoma de Buenos Aires, pero que fue amputado por el INTERIOR a la Provincia de Buenos Aires por la fuerza, a la fuerza y con

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Cachanosky: “ABOGADOS PRESIDENTES y DECADENCIA ECONOMICA”,

29 septiembre, 2014

ARGENTINA SALVAJIZADA

En La Nación, un artículo interesantísimo que recomendamos leer. Pero demuestra cuán despistados están incluso nuestros mejores economistas, si realmente creen que fracasamos por culpa de Presidentes porque fueron abogados desde 1983 a hoy. Si lo dice para defender el fracaso de sus colegas economistas, lo comprendemos: la defensa corporativa profesional existe en todos lados.
Nuestros primeros economistas graduados suponemos tuvieron falta de formación en Ciencias Sociales, ya que Economía como Facultad de la Universidad de Buenos Aires, comenzó hace relativamente poco, en épocas de Perón, para formar contadores públicos graduados, en reemplazo de los clásicos tenedores de libros. O sea, expertos en ciencias Exactas, que se entrenan en números y estadísticas.
Argentina ya había caído totalmente en manos del dirigismo económico que surgió en la Década Infame, como consecuencia del fascismo militar que arrasó en 1930 con la Constitución, y con el ultimo Presidente estadista tuvimos en Argentina, que…

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CRISTINA ¿MALVENDE recursos de Vaca Muerta?

29 septiembre, 2014
<h3 “”=”” id=”yui_3_16_0_1_1412004655557_3176″>Domingo Cavallo

Domingo Cavallo

Para

Hoy a las 10:04 A.M.

Domingo Cavallo


El gobierno se apresta a malvender los recursos de Vaca Muerta

Posted: 28 Sep 2014 06:10 PM PDT

El proyecto de nueva ley de Hidrocarburos que ha presentado el Poder Ejecutivo deja entrever que el gobierno se propone malvender los recursos de Vaca Muerta para hacerse de dólares. El proyecto de ley prevé que en el caso de los recursos hidrocarburíferos no convencionales, el gobierno podrá conceder su exploración y explotación por negociación directa (es decir sin licitación) con la posibilidad de que esas concesiones se renueven sine die, es decir a perpetuidad. Sería muy perjudicial para los intereses del País que se firmen concesiones sin licitación con el propósito de hacerles aportar capitales financieros a los concesionarios en lugar de crear condiciones para que hagan inversiones eficientes y aporten al país la máxima renta posible en una perspectiva de mediano y largo plazo.

A principios de la década de los 90s, los acreedores querían que vendiéramos las empresas del Estado como monopolios, con el argumento que de esa forma se obtendrían más recursos para afrontar el pago de las deudas. Yo siempre me opuse a esa propuesta porque las privatizaciones, como las concesiones, deben llevarse a cabo para asegurar un proceso eficiente de inversión y de producción sostenible de bienes y servicios al mínimo costo social. Así lo planeamos a partir de 1991. Las privatizaciones que se hicieron durante 1990, cuando todavía había alta inflación y no se había creado un clima de inversión, enfrentaron muchos inconvenientes y sus contratos debieron ser renegociados luego de la puesta en marcha de la convertibilidad, porque en medio de una gran incertidumbre, habían tenido que aceptarse condiciones inconvenientes para el país.

El rumor de que George Soros podría comprar la deuda de los fondos buitres, pedir el stay a Griesa  y conseguir a cambio un contrato de concesión de Vaca Muerta otorgado en forma directa y en condiciones diferenciales a otros contratos como para compensarle la pérdida en la que incurriría, conformaría una pseudo -solución al problema de la deuda mucho peor que la que la Presidenta frustró cuando los banqueros locales estuvieron a punto de hacer la misma operación esperando una eventual compensación de SEDENSA.

Decidí escribir este post luego de leer la valiosa conferencia que Carlos Bastos pronunció en el CARI sobre Política de Hidrocarburos.

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DEBATE Cavallo vs. Gonzalez Fraga

29 septiembre, 2014
Domingo Cavallo

Para

sep28 a las 10:25 A.M.

Domingo Cavallo


Mi debate con Javier Gonzalez Fraga

Posted: 27 Sep 2014 06:56 PM PDT

Un visitante del blog me alertó sobre las declaraciones de Javier Gonzalez Fraga en una radio de Buenos Aires. Esas declaraciones no fueron recogidas por la prensa independiente pero sí por los medios kirchneristas. Vale la pena que los visitantes del blog las lean antes de seguir mi argumento.

En una parte de sus declaraciones Javier dice textualmente: “No coincido con Cavallo desde hace más de 40 años. Desde que fue presidente del Banco Central en 1982 lo he descalificado permanentemente y tuve el raro mérito en el primer año y medio de Menem de demorar la convertibilidad porque yo estaba en desacuerdo. Estuve toda la vida a favor de un tipo de cambio flotante y siempre he desautorizado a todos los que están atrás de esas medidas mágicas”

En primer lugar yo nunca me sentí descalificado por Javier. Por el contrario, recuerdo enorme cantidad de veces escucharle elogiar lo que yo estaba haciendo. Para no ir más lejos, hace pocos días, en ¨Duro por Domar¨, un programa kirchnerista, pasaron un video de mediados de 2001 donde Javier Gonzalez Fraga apoyaba las medidas que yo estaba tomando. Por supuesto que lo hicieron para desprestigiarlo. Para mí lejos de desprestigiarlo, fue una forma de demostrar que en algún tiempo, él pensaba bien.

Por supuesto, yo nunca lo descalifiqué, porque no acostumbro a descalificar a nadie. Me gusta sí, discutir las ideas, pero sobre todo, con quienes tienen ideas diferentes a las mías. El diálogo y la discusión  civilizadas son siempre enriquecedoras. Como lo fue nuestro semi-frustrado debate en la UCA. La verdad que allí no le escuché decir nada parecido a lo que dice en este reportaje radial. Por el contrario, me pareció que estuvimos de acuerdo en varias cosas. Incluso al final me dijo sorprendido: ¨no sabía que la convertibilidad que proponés es flotante y no con tipo de cambio fijo¨. Ahí me dí cuenta que no había leído mi libro ¨Camino a la Estabilidad¨ ni ninguno de mis artículos de los últimos 10 años. Espero que para un próximo debate, los haya leído.

Pero vamos al grano. En sus declaraciones a la radio confiesa que ¨durante el primer año y medio de Menem, él demoró la convertibilidad porque estaba en desacuerdo¨. Y lo señala como un mérito. Fenomenal mérito! Yo le había propuesto la convertibilidad a Menem y a Erman Gonzalez el 1 de enero de 1990, cuando lanzaron el Plan Bónex. Haber forzado la dolarización de los depósitos, junto a una re estructuración de los mismos, sin lanzar la convertibilidad, es decir sin poner al dólar en competencia con el Peso y comenzar a defender férreamente el valor del Peso, significó que entre marzo de 1990 y marzo de 1991, la inflación fuera todavía del 1000% anual. A causa de esa alta inflación, las privatizaciones que se hicieron durante ese período, fueron muy dificultosas, se consiguieron términos muy desfavorables y fue necesario renegociarlas íntegramente a partir de abril de 1991. Además, para Enero de 1991 el Gobierno de Menem tenía una popularidad del 20 % y todo el mundo apostaba a que el Gobierno iba a perder las elecciónes del segundo semestre de ese año. Haber demorado la convertibilidad, es decir la aplicación de un plan integral de estabilización y desarrollo, fue una necedad. No un mérito.

Sigue diciendo que estuvo toda su vida a favor de un tipo de cambio flotante. Si es así, ¿porque no criticó la política de tipo de cambio virtualmente fijo a 3 pesos por Dólar que impuso Nestor Kirchner y aplicaron Lavagna y Redrado dersde 2003 en adelante? Ese es el momento en que si el tipo de cambio hubiera sido realmente flotante, la inflación hubiera bajado a menos del 5 % anual, como lo hizo en Brazil. A ésto yo lo vengo explicando desde principios de 1993.

Apuesto a que si Roberto Lavagna o Javier Gonzalez Fraga inspiran la política del próximo gobierno, primero van a a provocar una muy fuerte devaluación y luego impedirán que la moneda se aprecie. Su particular concepto de flotación es asimétrico: les gusta que la moneda flote para depreciarse, pero prefieren intervenir en el mercado y mantener alto el tipo de cambio nominal cuando la tendencia del mercado es a la apreciación. Lo que ellos pregonan es una política de salarios reales bajos. Como no se animan a decirlo con todas las letras, lo disfrazan de la estrategia del ¨tipo de cambio alto¨ o ¨competitivo¨.

Puede ser que Javier tenga razón cuando afirma que el próximo gobierno (inicialmente agrego yo) no va a tener en cuenta mis ideas. Ocurrió también con el gobierno de Menem. No descarto que el próximo gobierno, sea liderado por Mazza, Scioli, Macri o Cobos, comience manejando la economía según los consejos de Roberto Lavagna, Javier Gonzalez Fraga y los economistas que han comenzado a pensar como ellos. Yo lo lamento, porque si ello ocurre, perderán entre un año y un año y medio, con lo cual pondrán en peligro las elecciones de medio término de 2017. Pero, para ser más optimista, pienso que estando a mano mi libro ¨Camino a la Estabilidad¨, mientras se sufra el fracaso de esa política inicialmente errada, habrá gente cercana al gobierno que se estará preparando para hacer algo parecido a lo que hicimos a partir de febrero de 1991.

El único propósito de mi libro Camino a la estabilidad, es evitar que pierdan ese año o año y medio inicial. Claro que si quienes asesoran a los candidatos a la presidencia, ni siquiera se toman el trabajo de leerlo, a pesar de que se los envíe dedicado a todos ellos, van a despreciar la única experiencia de lucha exitosa contra la inflación que registra nuestra historia.

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Carlos Alberto Montaner re Argentina

27 septiembre, 2014

Montaner nos conoce bien y escribe MUY bien, ver su artículo http://opinion.infobae.com/carlos-alberto-montaner/2014/09/27/quienes-son-los-idiotas/

CRISTINA derrotada en “abogados del interior”

27 septiembre, 2014

ARGENTINE UPDATE – Sep 26, 2014

27 septiembre, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1. HEDGE FUNDS TO BACK CITIBANK PAYMENT REQUEST IN ARGENTINA BOND DISPUTE (The Wall Street Journal Online)
By Taos Turner
25 September 2014
BUENOS AIRES—A group of hedge funds that sued Argentina in the U.S. has agreed to support a request by a Citigroup Inc. unit to allow the bank to make an interest payment due Tuesday to holders of restructured bonds governed by Argentine law, people familiar with the matter said Thursday.
Allowing Citibank to make the $5 million payment should ease the pressure on the parties and give the court more time to litigate new legal issues recently raised by Citibank, before Argentina has to make a $262 million interest payment on the local-law bonds on Dec. 31, one of people said.
Citibank couldn’t immediately be reached for comment. The bank has said employees at its Argentine unit could face “severe civil, regulatory and criminal risks” if the bank didn’t make the payment.
U.S. District Judge Thomas Griesa, who has been overseeing a yearslong dispute between the hedge funds and Argentina, is expected to decide at a hearing on Friday if Citibank can make the payment.
Last week, federal appeals court judges said Argentina was refusing to obey U.S. law and that the country was essentially holding a gun to the head of Citibank’s branch in Argentina, which was trying to comply with Argentina and U.S. law.
Thursday’s development could ease tensions, at least momentarily, between Argentina and a small group of hedge funds led by Elliott Management Corp.’s NML Capital Ltd. and Aurelius Capital Management LP, which are suing to collect on debt Argentina repudiated in 2001. The so called holdout creditors have successfully argued in U.S. courts that the Argentina owed them full payment on those defaulted bonds.
Argentina’s refusal to pay the holdouts led Judge Griesa to block banks, including Citibank, from transferring Argentina’s interest payments to investors who own bonds that Argentina issued as part of the restructuring of its defaulted debt, until the country pays hedge funds the roughly $1.6 billion they have won in litigation.
Judge Griesa’s order led Argentina to default on some of its current bonds on July 30. Argentina has repeatedly accused the judge of siding with the hedge funds and said it wouldn’t comply with his order because doing so would violate Argentine law and add billions of dollars to the country’s debt by forcing it to make similar concessions to investors who own restructured bonds.
Argentina’s latest default could eventually affect almost $29 billion in bonds the country issued overseas as part of heavily discounted restructurings in which investors swapped about 92% of eligible defaulted bonds for new debt in 2005 and 2010.
The default is also preventing President Cristina Kirchner’s government from borrowing abroad to alleviate hard currency shortages that are pushing the economy deeper into recession.
Argentina has moved to sidestep Judge Griesa’s ruling that blocked bond payments by passing a law to change the jurisdiction of its bonds that are currently governed by U.S. and U.K. law to Argentina or France. If the plan were to work, Argentina would be able to pay the restructured bondholders without having to obey Judge Griesa’s order to also pay the hedge funds. Judge Griesa, however, has repeatedly said this would be illegal.
2. ARGENTINA TRIES TO PAY DEBT OUTSIDE US (Financial Times)
By Vivianne Rodrigues in New York and Benedict Mander in Buenos Aires
September 25, 2014
In its latest attempt to circumvent US courts, Argentina will seek to pay nearly $200m due on its restructured bonds by disbursing the money to investors next week via a local bank instead of Bank of New York Mellon, its trustee.
In response, holders of the country’s defaulted bonds have asked US District Judge Thomas Griesa to find the nation in contempt of court and fine it $50,000 for seeking to evade legal rulings that require Argentina to pay them in full if it also services its restructured debt.
“Argentina has blatantly and repeatedly violated the court’s orders, making it abundantly clear that it has no respect for those orders, the court or the US judicial system,” the holdout creditors, led by hedge fund NML Capital, a subsidiary of billionaire investor Paul Singer’s Elliott Management, said in a Manhattan court filing on Wednesday.
Argentina was forced into default on its performing debt on July 30 after BNY Mellon, complying with US court orders, refused to pass on to bondholders a $539m payment. This week, Argentina took out full page adverts in the Financial Times and Washington Post asking BNY Mellon to resign as trustee, saying it was no longer “eligible”.
According to people familiar with Buenos Aires’ strategy, Argentina may replace BNY Mellon and turn instead to Nación Fideicomisos, a fiduciary agent affiliated with Grupo Nación, the country’s largest state bank. The almost $200M deposit is expected ahead of a September 30 payment deadline. Officials at Fideicomisos were not available for comment.
Argentina’s plan to switch trustees “won’t work,” warned Alejo Costa, head of strategy at Puente, an investment bank in Buenos Aires. “The way things are right now, this is just going to work as an escrow account, not as a payment.”
One problem Mr Costa identified is that it will not be possible for Fideicomisos to distribute the funds as it will be unable to identify the bondholders without the co-operation of BNY Mellon. Argentina’s central bank last month revoked BNY Mellon’s authorisation to operate an office in the country.
Ultimately, all the back and forth with these bonds has become a big distraction. Argentina’s economy has bigger problems to address
– Gabriel Torres, Moody’s
“BNY Mellon remains eligible to serve as Trustee,” the bank said in a statement. The bank “will continue to comply with binding court orders that govern its actions as Trustee in this matter.”
Separately, Buenos Aires is also threatening Citigroup’s Argentina branch with civil and criminal liability if it fails to make payments on another group of dollar-denominated bonds, worth about $8.4bn.
Citigroup has requested Judge Griesa to allow it to proceed with the payments on the local law debt, also due on September 30. A hearing on the matter is scheduled for September 26. Judge Griesa has also set September 29 for a court hearing on the holdout creditors’ request to declare Argentina in contempt of court.
Regardless of the outcomes, analysts say the tit-for-tat dispute over the payment mechanisms does little to help the country solve its broader economic challenges, such as a recession and rising inflation.
“Ultimately, all the back and forth with these bonds has become a big distraction,” said Gabriel Torres, a senior Latin America sovereign analyst for Moody’s. “Argentina’s economy has bigger problems to address.”
3. COULD ARGENTINA BONDS RALLY AFTER FRIDAY HEARING? (Barron’s Blog)
By Dimitra DeFotis
25 September 2014
A U.S. judge has ordered Argentina to show in court Friday afternoon why it is not in contempt for violating orders favoring bond holders — especially U.S. hedge funds — that refused to accept terms on restructured bonds.
After Argentina’s latest debt default, in July, it passed legislation that moved the bond jurisdiction from U.S. courts. Deutsche Bank fixed income analysts Drausio Giacomelli, Robert Burgess and Hongtao Jiang write about the possibility that new “local law bonds” may be treated differently. They quote NY District Court Judge Thomas Griesa thusly, from a recent hearing:
“It was my view … that the Argentine law bonds issued in Argentina, payable in Argentina, subject to Argentine law, are different from the bonds subject to the 19 February 23 order. And whether they’re payable externally or not, the factors I’ve talked about make them different. Now, if the Court has the responsibility of dealing with any issue about the payment due in Argentina September 30 or December 31, etc., then that will have to emerge from requests to the Court and briefing to the Court as necessary…”
Citibank ( C) asked to pay $5 billion in interest to Argentine bondholders on Sept. 30, but the U.S. court ruled against the idea, even on appeal (see ” Court Dismisses Citibank Appeal in Argentina Case,” The New York Times Dealbook). Judge Griesa scheduled a hearing for this Friday at 2 p.m. Deutsche analysts continue:
…it seems now more likely that Judge Griesa will allow the payments of local law bonds to be processed in the future, sans any new persuasive arguments the holdouts could use in the hearing to sway the Judge once again. This, once affirmed, will most likely fuel a strong recovery of the local law bonds, which have insofar significantly underperformed, relative to the global bonds. Interestingly, a main downside risk stems from that, to our surprise, the new Citibank filing seems to have broadened the universe of bonds under debate to all local law bonds (not just the Discounts and the Pars), so if Judge rules against this it could result in a wider range of default.”
The Global XFTSE Argentina 20 ETF ( ARGT) is down 1.4% today, but up 10.5% year to date.
4. ENOUGH MAY BE ENOUGH – ARGY CONTEMPT HEARING (New York Post)
By Michelle Celarier
25 September 2014
It looks like the Manhattan judge overseeing Argentina’s long-running war with billionaire Paul Singer may finally have had his fill.
Federal judge Thomas Grisea has agreed to hold a hearing Friday to decide whether to find the country in contempt for passing a law to allow bondholders to swap their bonds into local Argentine law bonds to avoid paying a small group of so-called holdout creditors, including Singer, some $1.6 billion.
The hearing was requested by the holdout group, which has proposed sanctions of $50,000 a day and attorney’s fees, which at this point probably are in the tens of millions of dollars.
Most Argentine bondholders did not get the $539 million in interest payments due in June because Argentina refused to follow the court’s order that the country pay the holdouts at the same time they paid the others.
The case stems from Argentina’s debt default in 2001. After the default, 93 percent of the bondholders agreed to exchange their debt for bonds with a 70 percent haircut, while a few hedge funds held out for the full 100 percent.
On Friday Argentina will have to show why it should not be held in contempt for violating the US federal court orders. Even as it was appealing Grisea’s order, which expressly forbid taking any evasive action, Argentina talked about finding an alternative way to pay the exchange bondholders.
In a previous contempt hearing, on Aug. 21, Grisea stopped short of finding the country in contempt but warned that passing the debt swap would be illegal. But, he asked Singer’s lawyers, “How does a finding of contempt contribute to the settlement of the case?”
There have been no settlement talks since then, and Argentina has become more defiant.
Citigroup is stuck in the middle. The bank, which is a custodian for some $8.4 billion in domestic Argentine bonds, is asking Griesa to reconsider his recent ruling that it can’t make a $5 million interest payment to its clients at the end of September.
Citi would be in violation of Argentina law if it doesn’t make the payment and fears getting kicked out of the country. The holdouts are worried that excluding Argentine law bonds sets a bad precedent for the debt swap.
Griesa will consider Citibank’s plea following the contempt hearing Friday.
5. WILL CONTEMPT SANCTIONS GET ARGENTINA TO YIELD? (Reuters News)
By Alison Frankel
25 September 2014
(The opinions expressed here are those of Alison Frankel, a columnist for Reuters.)
NEW YORK (Reuters) – Argentina’s contempt for the U.S. court system is not even debatable. Argentine officials have openly jeered at court orders enjoining them from making payments to bondholders who participated in Argentine sovereign debt restructurings without also paying more than $1.5 billion to hedge funds that hold defaulted bonds.
Argentina has run newspaper ads vowing not to capitulate, has attempted to bring an action against the United States at the International Court of Justice in The Hague and, most recently, pushed through legislation authorizing its government to replace BNY Mellon with a state-controlled bank in Buenos Aires as the exchange bond trustee, after BNY Mellon made clear that it would not process payments for fear of violating the U.S. injunctions.
Contempt, as it’s ordinarily defined, practically drips from the words of Argentine politicians when they talk about U.S. District Judge Thomas Griesa of Manhattan, who has presided over their standoff with the holdout hedge funds for nearly a decade.
Those funds, led by NML Capital and Aurelius Capital, asked Griesa on Wednesday to make Argentina’s contempt official. They filed a motion to hold the government in contempt and impose sanctions on it. Griesa has scheduled a hearing Monday on the motion.
This isn’t the first time that the funds have proposed a contempt finding after the U.S. Supreme Court refused in June to review the injunctions requiring Argentina to pay them.
So far, Griesa has delivered plenty of stern warnings to Argentina, via its lawyers at Cleary Gottlieb Steen & Hamilton, but hasn’t held the government in contempt, presumably in the hopes that court-ordered mediation would produce a settlement.
The hedge funds’ new motion argues that Griesa’s admonitions haven’t worked. Argentina has only cemented its defiance with the new legislation and followup newspaper ads billed as legal notices of its demand for BNY Mellon’s resignation as exchange bond trustee.
Sooner or later, unless Argentina changes course, Griesa is going to have to find that the country has violated court orders. Otherwise, he’ll be conceding that the federal court system must bow to the stubbornness of a foreign sovereign – even one that has voluntarily submitted to the jurisdiction of U.S. judges.
THE LIMITS OF U.S. COURTS As I’ve said before, Argentina’s intransigence has already exposed limits on the power of U.S. courts. The questions now for Griesa are whether he can impose sanctions on Argentina, and whether those sanctions can change Argentina’s behavior.
I’m pretty sure the answer to the first question is yes. Argentina – and possibly the U.S. State Department – will argue otherwise, but there’s strong precedent that federal courts have the authority to impose sanctions on a foreign sovereign that violates their orders.
The Supreme Court’s latest discussion of the Foreign Sovereign Immunities Act – a ruling last June in a different case involving NML and Argentina, as it happens – strengthens arguments that the law doesn’t shield foreign sovereigns from sanctions.
The justices said that FSIA only protects foreign sovereigns from having their U.S. assets seized to satisfy a judgment against them and from submitting to the jurisdiction of U.S. courts.
The second protection is irrelevant in the Argentine bond litigation because Argentina granted jurisdiction; it has, of course, benefited mightily from the FSIA’s protection of its assets.
Under the Supreme Court’s holding, because FSIA doesn’t address contempt sanctions, it doesn’t shield foreign sovereigns from them.
THIRD PARTIES So let’s assume Griesa has the authority to find Argentina in contempt and to impose sanctions. What can those sanctions accomplish? The hedge funds’ brief proposes a daily fine of $50,000 and asks that Griesa order Argentina to pay some of their legal fees.
But even the hedge funds acknowledge that Argentina – which has a long history of thumbing its nose at U.S. judgments in litigation against the holdout hedge funds – isn’t going to pay those fines. If Griesa only issues monetary sanctions, he risks underscoring the federal courts’ ineffectuality over foreign sovereigns.
The hedge funds know that – which is why, in a footnote, they suggest that if Argentina ignores a court-ordered fine, Griesa “can then impose additional sanctions – including non-monetary sanctions.”
That could be the most important sentence in the brief.
Remember: The hedge funds were able to force Argentina into default because they persuaded Griesa, the 2nd U.S. Circuit Court of Appeals and the Supreme Court that the courts had the authority to block third parties – such as bond trustees BNY Mellon and Citigroup – from processing Argentina’s payments to exchange bondholders.
Institutions with operations in the United States don’t have Argentina’s foreign sovereign immunity, so they are much more reluctant to defy U.S. court orders.
If the hedge funds can convince Griesa to implicate third parties subject to U.S. jurisdiction in non-monetary penalties against Argentina, sanctions could be a real lever for Argentina’s debtors.
Argentina still depends to some extent on the U.S. financial system. What if, for instance, Griesa held that Argentina cannot process dollar transactions through U.S. banks? Or that its Central Bank cannot do business with the Federal Reserve? Argentina’s refusal to pay the hedge funds has withstood the country’s isolation from the market for sovereign debt. Can it withstand exile from U.S. finance?
This is all incredibly speculative, of course. There’s very little precedent on monetary sanctions against foreign sovereigns, and, as far as I can tell, no precedent at all on non-monetary sanctions. Even if the hedge funds sell Griesa on a punishment that will actually impact Argentina, Argentina will appeal all the way to the Supreme Court – which means years of litigation.
My guess is that the hedge funds’ lawyers are hoping to float potential sanctions that will scare Argentina into settlement talks. It’s a dim hope, but at least it’s something.
6. ARGENTINA’S FIRST LOCAL BOND ISSUE SINCE JULY DEFAULT FULLY SUBSCRIBED (Reuters News)
25 September 2014
BUENOS AIRES, Sept 25 (Reuters) – Argentina on Thursday sold two-year bonds worth 10 billion pesos ($1.19 billion), the economy ministry said, in a strongly bid auction that was its first in the domestic market since the South American country defaulted on its debt in July.
The government will pay a yield of the benchmark Badlar rate – the interest rate that private banks pay on wholesale deposits of more than 1 million peso – plus 200 basis points.
The Badlar rate in pesos as of Tuesday was 20.125 percent, according to the central bank.
The ministry said it received bids worth a total 10.61 billion pesos after offering notes worth 10 billion.
Argentina has been locked out of international capital markets since it defaulted on a record $100 billion of debt in 2002.
It then issued bond swaps in 2005 and 2010 and had been servicing the debt until it failed to complete a payment in July because of a legal battle with U.S. investors who spurned the restructuring.
The government has relied heavily on the central bank to finance its spending and pay for energy imports.
7. ARGENTINA’S BALANCE OF TRADE CONTRACTS 9% AS HIGH INFLATION AND FALLING PRODUCTIVITY PUT PRESSURE ON EXCHANGE RATE (IHS Global Insight Daily Analysis)
By Paula Diosquez-Rice Mario Guillen
25 September 2014
According to its National Statistical Office (INDEC), Argentina’s balance of trade recorded a surplus of USD899 million in August, which represents a contraction of 9% since January 2014, despite being up 145% year on year (y/y). The values of exports and imports fell by 12% y/y and 20% y/y, respectively. For exports, this signals the eighth consecutive month of contraction on an annual basis, mostly due to the downward trend of soy prices and the productive sector’s limited access to foreign currency. The strongest decreases in the country’s exports were in the categories of fuel and energy (down 21% y/y), as well as industrial and agricultural manufacturing, both down by 13% y/y. On the imports side, the ongoing automotive crisis was signalled by a drop of 60% y/y, while the fuels and lubricants category decreased 31% y/y, along with a 29% y/y fall for the pieces and accessories for capital goods category.
This suggests a further drop in internal demand due to the country’s current recession.
Significance: The ongoing contraction in exports responds to a fall in competitiveness, which has been lost due to rampant levels of inflation within Argentina. This fuels speculation of a possible devaluation in the near future, as the government struggles to preserve historical low levels of foreign currency reserves from falling further. Meanwhile, the differential between the official exchange rate and the parallel “blue dollar” has reached 80%, a strong signal of economic distortion coupled with undermined credibility in the central bank’s ability to defend the rate. With policy change unlikely and access to international debt markets far from sight, Argentina’s woes will worsen in the short term.
8. TELECOM ITALIA SAYS FINTECH ASKS FOR EXTENSION ON ARGENTINA DEAL (Reuters News)
By Danilo Masoni and Juliana Castilla
25 September 2014
* Telecom Italia board to examine Fintech’s proposal Friday
* Argentine regulator has not yet decided on deal -source
* Deal completion deadline has already been pushed back twice
* Italian junior minister says unaware of Trujillo bid plans
MILAN/BUENOS AIRES, Sept 25 (Reuters) – Investment company Fintech has asked Telecom Italia to further extend an agreement to buy the Italian group’s controlling stake in Telecom Argentina, Telecom Italia said on Thursday, in a last-minute attempt to ensure the sale does not fall apart.
Telecom Italia agreed to sell its 22.7 percent stake in Telecom Argentina to the investment company of Mexican billionaire David Martinez for $960 million almost a year ago. In a statement late on Thursday, it said it would examine Fintech’s proposal at a board meeting on Friday.
It gave no details about Fintech’s proposal and a Telecom Italia spokesman was not immediately available to comment.
Italian daily La Repubblica said on Thursday Fintech and the Italian company had agreed on a compromise whereby the deadline for completion of the deal would be extended by 2-1/2 years, with penalties attached if it does not go through.
Closing of the deal was originally due by early August but it has already been delayed twice, awaiting regulatory approval in Argentina.
This month Telecom Italia CEO Marco Patuano said the group would rethink the deal if local regulators did not approve it by September. 25, raising the possibility it could fall apart.
Should this happen, it would leave the heavily indebted Italian group with less cash to invest in faster networks and 4G services, a major plank of Patuano’s strategy.
Late on Wednesday a source at Argentina’s competition watchdog said the regulator had not yet decided whether to approve the deal.
“They (regulators) might let the deal collapse. But a last-minute compromise solution cannot be ruled out,” a source familiar with the situation said on Thursday.
A default by Argentina and a devaluation of the peso have distracted authorities in Buenos Aires and are seen as factors in the delay.
Adding to the uncertainty was a Bloomberg report that U.S. businessman Sol Trujillo was seeking to raise as much as 7.5 billion euros ($9.6 billion) to bid for a stake in Telecom Italia.
According to the report, Trujillo has not approached Telecom Italia directly but has discussed his “Adriano project” with New York-based financial advisers and with Italian officials, including junior minister Antonello Giacomelli.
Giacomelli said, however, that he was not aware of Trujillo’s bid plans and added that the Italian government would use its special powers to defend the company if necessary.
“The only Adriano I know is the one who plays for (soccer club) Inter,” Giacomelli said.
The company declined to comment on the report.
The sale of Telecom Argentina is part of a broader 4 billion euro plan by Patuano to help cut net debt of more than 27 billion euros and fund investments in Italy and Brazil to keep up with competitors.
Some Telecom Italia investors led by Italian businessman Marco Fossati have criticized the terms of the deal, which was agreed under a previous board controlled by an investor group led by Telefonica, which also operates in Argentina.
Since then, Patuano has remained at the helm of the group, but the board has been renewed, while Telefonica and other core investors have taken steps to exit their seven-year investment.
Fossati, the second-biggest investor in Telecom Italia, told Reuters earlier this month the company should consider keeping its stake in Telecom Argentina.
If the deal fell apart, Telecom Italia, whose credit rating was cut to “junk” status last year, would own an asset whose profits and revenues rose more than 20 percent in the first half. A failed sale would not compromise Telecom Italia’s debt- cutting plans since Telecom Argentina is cash positive.
Shares in Telecom Italia ended up 0.11 percent, outperforming a 0.5 percent loss in the European index of telecoms stocks, after retracing from earlier strong gains triggered by the talk of new investment.
9. SHAREHOLDERS CHALLENGE TELECOM ITALIA’S EXIT FROM ARGENTINA (Reuters News)
26 September 2014
MILAN, Sept 26 (Reuters) – Telecom Italia should hang on to its controlling stake in Telecom Argentina, a group of small investors said on Friday, reflecting growing unease among shareholders about a planned exit.
The comments added to pressure on the Telecom Italia board which was meeting on Friday to discuss the deal.
Telecom Italia agreed to sell its 22.7 percent stake in Telecom Argentina to investment company Fintech almost a year ago for $960 million but the deal has been delayed awaiting regulatory approval.
Late on Thursday Telecom Italia said Fintech had asked it to further extend the agreement to buy the stake in a last-minute attempt to ensure the sale does not fall apart.
However, investor group Asati has challenged the sale.
“Telecom Italia should maintain (control of) the unit, the positive financial impact of which has already been booked in first-half results,” Asati said in a letter it sent to Telecom Italia’s board on September 22.
“There should be no discounted sale to Fintech,” Asati said.
The group says it represents around 6,000 small Telecom Italia investors with a combined stake of around 1 percent.
Its comments chime with the views of Telecom Italia’s second-biggest investor Marco Fossati, who has a holding of just under 5 percent. Fossati told Reuters earlier this month the company should consider keeping its stake in Telecom Argentina.
Telecom Italia CEO Marco Patuano has said the group would rethink the deal if local regulators did not approve it by a deadline of Sept. 25.
Failure to clinch the sale would leave the heavily indebted Italian incumbent with less cash to invest in faster networks and 4G services, a major plank of Patuano’s strategy.
In its letter Asati also said there was no need for Telecom Italia to sell its Brazilian unit TIM Participacoes.
10. THE LEGAL BUSINESS: THE DEFAULT CHOICE (The Economist)
27 September 2014
Don’t cry for sovereign borrowers’ favourite law firm
RARE is the finance minister of a developing country who does not have Cleary Gottlieb Steen & Hamilton on speed-dial. Cleary, based in New York, has long been the go-to law firm for governments in debt crises. Since 1983 the firm has advised 28 sovereign debtors in 54 restructurings. Its recent clients include Greece and Iraq, as well as sturdier places like South Korea. Cleary’s lawyers have reaped both fame and fortune as a result: a survey of 17,000 lawyers by Vault, a jobs site, ranked it America’s seventh most prestigious firm. Its profit per partner of $2.9m last year ranks it 12th, according to American Lawyer magazine.
In 2014, however, the firm’s sovereign litigation clients have had a year to forget. In July arbitrators in The Hague ruled that Russia had illegally expropriated Yukos, a big oil company. They ordered the government to pay shareholders $50 billion, 20 times the previous record for arbitration. Argentina has suffered three setbacks at America’s Supreme Court. In March the justices reinstated a $185m award against the country. Three months later, they let a ruling stand that banned Argentina from servicing the bonds it issued in debt swaps in 2005 and 2010, unless it also paid the full claim of “holdout” investors who rejected those deals. The decision led Argentina to default. The court also approved the holdouts’ use of American subpoenas to hunt for Argentine assets abroad.
Other parts of Cleary’s practice are also having a rough year. This week an appeals court in New York ruled that a lower court was wrong to dismiss lawsuits that victims of terrorist attacks in Israel had brought against Cleary’s client, National Westminster Bank (see “Arab Bank: Consorting with terrorists”). A charity linked to Hamas, a Palestinian militant group, had held an account at the bank. Cleary also represented Google in a failed effort to prevent a new “right to be forgotten” being established in Europe, forcing the company to block some search results. And press reports have identified Cleary as one of the firms said to have given advice to BNP Paribas, a French bank, on transactions with Iran, Sudan and Cuba, over which BNP later had to pay a $9 billion settlement. (Cleary has declined to comment on this.)
In any other industry, such a string of losses would send customers scurrying. Indeed, in Argentina opposition lawmakers have proposed a bill to make the government switch firms. However, the relationship between a law firm’s income and its success in court is murky. Clients know that in a high-stakes suit they and their opponents will both hire skilled and costly counsel, and one side will lose. Unlike in college debating contests, real-world results depend mainly on the merits rather than the ingenuity of the arguments. Furthermore, governments are sometimes more motivated by the political benefits of pursuing a case than by their chances of winning. Attempts by President Cristina Fernández de Kirchner (pictured) to make political hay out of Argentina’s restructuring case seem to have annoyed the judge, making Cleary’s job harder.
Since a firm’s record of suits won and lost is a poor measure of the quality of its work, clients rely instead on reputation, experience and capacity. And on these criteria, the barriers to entry in sovereign-debt litigation are formidable. Most diversified law firms are wary of advising governments, since that would prevent them from working for the hedge funds that often sue sovereign issuers for payment. Of the rest, few have the global presence to represent a government wherever its bonds are sold or creditors try to seize assets. About half of Cleary’s 1,200 lawyers work outside America, spread among 11 countries. Given Cleary’s prestige and generous pay, it would be hard for rivals to poach its lawyers.
Often, when Cleary loses it wins. If Argentina or Russia had been victorious in their recent cases, legal work for them would probably have fallen off. Instead, their defeats pave the way for years of enforcement battles, and thus lots of juicy fees for its lawyers.
11. STUDY ABROAD STUDENTS SHARE EXPERIENCES WITH ARMSTRONG (U-Wire)
By Lindsey Grovenstein
25 September 2014
‘From Under the Southern Cross: The People and Patterns of Argentina’ is on display at the Armstrong Fine Arts Gallery. The newest exhibition is inspired by study-abroad experiences in Argentina and includes artwork from students, faculty and Argentina craftspeople.
“Argentina is a beautiful and diverse country ideally suited for the study of art and anthropology from the museums and street art of its capital, Buenos Aires, to the traditional crafts of the Wichi and Calchaquí peoples of the Northwest,” Rachel Green, professor of art, said. Green accompanied the students with faculty member Barbara Bruno to Argentina.
Students developed relationships with the locals and their communities through service projects and were able to learn about the culture from the people themselves. “Students then incorporated aspects of what they experienced into their artwork and display the works in an art exhibit at Armstrong’s Fine Arts Gallery in order to share what they have learned with the Armstrong campus,” Green added.
Hoyt Ramey is studying at Armstrong for a Bachelor’s degree in Fine Arts and went to Argentina over the summer. His photographs are featured in the gallery and they capture the people of Argentina.
“I work quick,” Ramey said. “We were always moving, so I took photographs of people who stood out to me.”
One photograph that Ramey took was of an old Argentinean man with a cigarette. “We were hanging out by the bus and he was really drunk and chewing on cocoa leaves. He was all in our face and he wanted a cigarette. My friend gave one to him and I shot it,” he said.
In addition to photographs, there are sculptures, jewelry, mixed media, and graphic design pieces in the gallery that each have their own unique story. Students visited several indigenous communities to learn from master artisans. This year’s exhibit highlights the work of the Wichi and Calchaquí.
Students are auctioning select craft items in a silent auction that will end October 3 at 7:00 p.m. All proceeds will be returned to the artisans’ communities to help them maintain their culture and traditions and promote their crafts.
“To work with the Calchaquí ,” explained Green, “they traveled to a valley in the Andes mountains to spend four days on a family ranch. While there, they learned about traditional weaving techniques and took several trekking trips to photograph secret lagoons and caves. To work with the Wichi and Guarani, they traveled to the border with Bolivia, an area of tropical forests called the yungas.”
The Argentina Study Abroad program is open to students of all majors and is looking for participants open to new experiences. Previous art experience and knowledge of Spanish are not requirements. They will be leaving June 8 – June 30, 2015, and application deadlines are February 2.
“I definitely recommend study abroad,” Ramey added. “It makes an impression on you. You make lasting friends and the people that you encounter you’ll remember forever. You always remember the people.”
The exhibition will continue until October 3. The gallery is open from 9 a.m to 5 p.m on weekdays and admission is free.
12. ARGENTINA BOND STRAIGHTJACKET UNSHAKABLE AS PAYMENTS LOOM (Bloomberg News)
By Katia Porzecanski
Sep 25, 2014
The latest attempt to end Argentina’s second default in 13 years is faltering, a setback for overseas bondholders who are in jeopardy of missing out on a billion dollars more in payments through year-end.
A group of creditors may abandon an effort to get investors to waive a bond clause that Argentina says is an obstacle to resolving its decade-long dispute over unpaid debts, according to three investors with direct knowledge of the plan. The group planned to ask bondholders earlier this month to approve the waiver by Sept. 30, when about $190 million in interest comes due, said the people, who asked not to be identified because the discussions were being conducted privately.
Argentina, barred by a U.S. court order from paying bonds it renegotiated after its 2001 default until creditors who held out of the deal are compensated in full, has said it can’t comply because a clause in the restructured notes would require it to sweeten the payout to all holders. While Argentina has publicly cited the clause as a reason to avoid compromising with the holdouts, it was a lack of clarity about the government’s willingness to support the waiver that helped to stall the effort.
“I would fall off my chair if they paid in January,” after the clause expires, Siobhan Morden, the head of Latin America fixed-income strategy at Jefferies Group LLC, said in an e-mailed response to questions. “It’s not a legal constraint. It’s an ideological constraint.”
‘All Offers’
Argentina doesn’t need to guarantee a volunteer waiver of the Rights Upon Future Offers clause, the economy ministry said in an e-mailed statement.
President Cristina Fernandez de Kirchner has said the so-called RUFO clause prevents her from complying with the ruling, and that she won’t be “extorted” into offering the holdouts a better deal.
The clause, which expires Dec. 31, could trigger as much as $120 billion in additional claims, Fernandez has said.
Economy Minister Axel Kicillof said Sept. 9 that while Argentina would be “open to all offers” to waive the clause, he couldn’t say if the government would be in favor of removing it.
“I’m not saying I’d be violating the RUFO clause by saying that I’m in favor of waiving it, since it’s not very clear,” he told a lower house commission.
Debt Payments
The so-called consent solicitation to get bondholders to approve the waiver was never started, and at this point there’s probably not enough time to complete it, the people said.
The delay in starting the process was partly due to financial intermediaries, such as clearinghouses, wanting assurance that they could participate without facing legal risks, two of the people said.
Craig Batchelor and Christopher Clark, attorneys at law firm Latham & Watkins LLP, which is leading the effort, didn’t return telephone calls or e-mails seeking comment on the plan.
After Sept. 30, Argentina has an interest payment of $42 million due on Dec. 2 and about $900 million due on Dec. 31.
Bond prices indicate investors don’t expect to be paid for one to two years, according to an analysis by Barclays Plc. Dollar-denominated securities due in 2033 traded at 86.9 cents yesterday, versus a fair value of 87.9 cents in a scenario where payments resume this year, the London-based bank said in a Sept. 19 report.
Argentina’s peso was little changed today at 8.4209 per dollar as of 9:21 a.m. in New York.
In July, Argentina failed to reach an agreement with holdouts led by Elliott Management Corp., which resulted in a default after the U.S. court blocked a $539 million bond payment from being disbursed to creditors.
Bondholder Support
The waiver effort represented creditors with at least 7 billion euros ($9 billion) of restructured Argentine debt, Clark said in August. While that’s more than 40 percent of the $23 billion of notes governed by the clause, agreement from 85 percent of creditors would be needed for the waiver to take effect.
Shahriar Shahida, a co-founder of hedge fund Constellation Capital Management LLC, which accepted losses of about 70 percent by participating in Argentina’s debt restructurings in 2005 and 2010, said that he wouldn’t want to waive the clause in his bond contracts. It was included as an incentive for bondholders to accept the terms.
‘Positive Note’
“As a long-term holder of exchange bonds who accepted both the first and second exchange, who participated based on assurances of no free riders, I don’t see why we would voluntarily dilute our recovery,” he said in an e-mail. “After the expiration of the clause, they are free to do what they want. I believe this president would like her legacy to end on a positive note.”
While Fernandez may be compelled to settle with the holdouts to avoid a crisis if the economy deteriorates further, bond investors aren’t anticipating a solution before the next administration takes office, said Sebastian Vargas, an economist at Barclays.
Argentina will hold presidential elections on Oct. 25, 2015, and the three leading candidates to replace her may be more willing to negotiate, he said.
“It doesn’t seem like RUFO is the only hurdle to a negotiation,” Vargas said by phone from New York. “If the government said, ‘Get rid of RUFO and we’ll pay tomorrow,’ bonds would be at 120 and getting rid of RUFO would be a lot easier. There’s more than RUFO, and that’s what the market started to become aware of.”
13. ARGENTINA GDP DEFIES JPMORGAN AND REIGNITES DATA SKEPTICISM (Bloomberg News)
By Charlie Devereux
Sep 25, 2014
Argentina’s gross domestic product was unchanged in the second quarter from a year earlier, the government said yesterday, reviving doubts over the veracity of the data after JPMorgan Chase & Co. estimated a 1.7 percent contraction.
First-quarter figures were also revised to an expansion of 0.3 percent from a 0.2 percent contraction, the national statistics agency said. From the previous three months, the economy grew 0.9 percent after shrinking for two quarters.
President Cristina Fernandez de Kirchner’s government unveiled a new national consumer price index in February and then revised growth numbers after the International Monetary Fund threatened sanctions if it didn’t improve the accuracy of the data. Doubt over the statistics has resurfaced as figures diverge from analyst estimates, said Daniel Kerner, head of Latin America research at the Eurasia Group.
“They showed close to realistic numbers earlier in the year when they were under threat from the IMF and since then they’ve been gradually moving away from that,” Kerner said in a phone interview from Washington. “They never really moved towards transparency.”
The median forecast of 10 economists surveyed by Bloomberg was for a contraction of 0.4 percent in the second quarter.
Maximiliano Castillo, director of Buenos Aires-based research firm ACM, said his estimate for a 0.3 percent contraction was based on what he thought the government would say. The economy shrank by 1.5 percent from a year earlier, according to his calculations.
Recession Ahead
“It would be very difficult for the government to say that GDP will fall in 2014 because it contradicts their version of events of so many years of sustained growth,” Castillo said in a telephone interview.
Imports fell 10.5 percent, while exports slid 3.7 percent, the government said in a statement.
The economy will deteriorate further in the second half of the year as the second default in 13 years puts pressure on dwindling reserves that are forcing the government to cut imports, said Miguel Kiguel, director of Buenos Aires-based consultancy EconViews.
“The economy began slowing from the first quarter because of a lack of reserves,” Kiguel, a former deputy economy minister, said in a telephone interview. “The default complicated a situation that was already bad.”
Peso Slump
The July default has spurred demand for dollars, pushing the peso down 23 percent against the dollar on the black market to a record 15.95 pesos per dollar. The widening gap with the official rate of 8.42 pesos per dollar is fueling speculation the government will have to devalue.
Seeking to preserve international reserves that have declined 19 percent in the past year to $28.2 billion, the government has increased import limits.
The limits and weaker domestic demand pushed imports down 20 percent to $5.7 billion in August from a year earlier, the biggest decline since October 2009.
The drop in consumer spending and a flagging Brazilian economy cut Argentine vehicle sales by 43 percent to 51,000 units in August from a year earlier.
In response to falling demand, the government signed an accord with credit card companies including Visa Inc. and MasterCard Inc. to provide shoppers with interest-free credit payable in 12 monthly installments to buy domestically-produced household appliances, bicycles and clothing.
Growth Estimate
The government this month revised down its growth estimates for 2014 to 0.5 percent from 6.2 percent. The economy will grow 2.8 percent in 2015, Economy Minister Axel Kicillof said Sept. 15 while presenting next year’s budget in Congress.
JPMorgan said in a note to clients Sept. 19 that growth figures may diverge from market expectations. While the government is likely to report a contraction of 0.4 percent this year, the New York-based bank expects the economy to shrink 1.6 percent.
A record soy harvest helped cushion what could have been a worse second quarter with the economy growing 0.5 percent from the previous quarter on a seasonally-adjusted basis, the government report said.
“As recession lingers the risk of a setback in the normalization of economic data reporting increases,” analysts Vladimir Werning and Iker Cabiedes wrote in the report.
14. ARGENTINA INCREASES TRAVEL BUREAUCRACY AS RESERVES RUN LOW (Bloomberg News)
By Charlie Devereux
Sep 25, 2014
Argentina will oblige airlines to provide detailed information about passengers on international flights in what analyst Luis Secco called an attempt to discourage overseas travel amid dwindling foreign reserves.
The tax agency published a resolution requiring airlines to answer 32 questions about passengers that include travel itineraries, the method of payment for flights and the number of no-shows and last-minute bookings.
The requirements are designed to deter Argentines who haven’t paid all their taxes or who obtained their foreign currency through the black market from traveling abroad, said Secco, the director of Buenos Aires-based research company Perspectiv@s Economicas. It’s the latest in a series of measures to halt the exit of dollars out of the economy following Argentina’s second default in 13 years in July, he said.
“It’s a way for the tax agency to obtain information it couldn’t get before and that obviously deters people who work in the informal economy,” Secco said in a phone interview. “It’s additional bureaucracy that acts as a deterrent.”
Reserves have fallen 19 percent in the past year, fueled in part by the $2.7 billion spent by Argentines abroad in that period, according to data compiled by the national statistics agency. The government last year increased a tax on credit card purchases abroad to 35 percent from 20 percent in a bid to deter Argentines spending dollars on holiday.
The measure is designed to modernize and improve the country’s immigration policy, Ricardo Echegaray, head of the tax agency, said in an e-mailed statement, dismissing “politicized” interpretations by local media. “Passengers won’t have to provide a single extra piece of data,” he said.
Demand for dollars has increased after the default on July 30. In the black market that Argentines turn to when they can’t get dollars from the government, the peso has weakened 22 percent to 15.7 pesos per dollar since the default, according to ambito.com.
15. SOUTH AMERICA’S BOOM TIME IS OVER, NOW FOR THE POLITICAL HANGOVER (Financial Times)
By John-Paul Rathbone in London
September 25, 2014
Venezuela may be teetering on the brink of a default. The Argentine economy is on the ropes. And Brazilians, fed up with corruption and a recession-bound economy, may soon elect an opposition candidate as president.
What do these countries have in common? They are straws in the wind. As South America’s most vulnerable economies, they are clear signs that the region’s decade-long boom is drawing to a close. And this may well force important political changes.
A decade ago, the Chinese-driven commodity price boom coincided with a rising “pink tide” in the region. Hugo Chávez was the socialist president of Venezuela, Argentina had the husband-and-wife double act of Néstor Kirchner and Cristina Fernández, while Brazil had the charismatic Luiz Inácio Lula da Silva.
Real wages rose, so did employment, while inequality fell across the continent as the middle class expanded alongside the bonanza. The good times, it seemed, would never end – including for the governments that presided over them. Venezuela’s Bolivarian revolution has been in power for 16 years; Ms Fernandez’s coalition for 12; and Mr Lula da Silva’s Workers’ party for 12 years as well. But any government in power that long risks losing touch.
That is especially so as the economic times change. China’s economy is cooling and commodity prices are falling – so exposing fragilities, such as wider current account deficits. Higher US interest rates will meanwhile make those deficits harder to finance. Moreover, the expanded middle class is flagging after a long consumer credit binge.
The least vulnerable countries today are those that prioritised investment. Peru and Colombia, for example, are investing at Asian-style rates of 28 per cent of output. The most vulnerable, by contrast, are those such as Venezuela and Argentina which mismanaged the boom and now face possibly traumatic political change.
Brazil, where voters go to the polls on October 5, crystallises the situation. It is a neck-and-neck presidential race. On the one hand, there is Dilma Rousseff, the president, a well-intentioned technocrat, handpicked by Mr Lula but whose mind unfortunately appears stuck in the 1970s. Her statist policies have led to stagflation and impeded Brazil’s transition away from its reliance on commodities.
Her principle competitor is Marina Silva, an environmentalist who has promised a supply side programme to boost investment and greater central bank autonomy.
A Ms Silva victory would be remarkable in many ways.
For one, it could reshape Brazil’s foreign relations. For 12 years, the Workers’ party has supported other leftist countries in the region, so withdrawal of that support could reshape South America’s political map and thus relations with the rest of the world. Ms Silva’s advisers are already talking about seeking trade deals with the US and Europe, and degrading the protectionist Mercosur trade bloc that includes Argentina and Venezuela.
Second, a Ms Silva victory would be the first time in 10 years that a Latin American incumbent has lost a re-election bid to an outsider. That might signal a new political trend as the region’s economies slow.
One factor shaping that trend is the 70m Latin Americans who have risen out of poverty over the past decade to form a new petty bourgeoisie that is less interested in state handouts than in opportunity. Another factor is the coming of age of a generation disenchanted with the status quo.
Over half of Latin America’s population is under the age of 27. They are well-connected, interested in new ideas rather than old nostrums and are as suspicious of crony capitalism of the left as of crony capitalism of the right.
As it happens, Ms Silva’s support is greatest among both these groups. That may be because the upwardly-mobile and young are more susceptible to her Barack Obama-esque promises of “hope” and “change”. But it may also be the shape of things to come as the region’s boom times end.
 

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Presidents who launch retrenchment after stalemated wars always do so by centralizing control in the White House and imposing their own policy concepts. They do so because they mistrust the bureaucracy, resist Congress, and resent the media…Dwight Eisenhower and Richard Nixon managed national security the same way. They, too, inherited policies they saw as overextended; they, too, centralized decision-making. And–this is the worrisome part for Mr. Obama–they, too, faced increasing resistance to the new approaches they put in place.

— Stephen Sestanovich   WSJ Blogs  9/18/14