“We shouldn’t be blaming tourism for the drop in reserves rather government policies,” said Jose Luis Espert
, who runs research firm Espert & Asociados in Buenos Aires. “High public spending makes the government print more pesos which Argentines don’t want.”
Foreign-direct investment in Argentina fell 32 percent in the first half of 2013 from the same period a year earlier to $5.2 billion, while investment in neighboring Brazil and Chile was $39 billion and $10.4 billion, respectively, according to the Santiago-based United Nations Economic Commission for Latin America.
“What we have in Argentina is a dollar supply problem, not demand,” Ricardo Delgado, director of Buenos Aires-based Analytica Consultora, said in an interview. “The big problem is that we’re not receiving dollars because investors don’t have confidence in the country.”
Investors demand an extra yield of 8.23 percentage points over U.S. Treasuries to hold Argentine debt, as of 5:24 p.m. in Buenos Aires, according to JPMorgan Chase & Co.’s EMBI Global Diversified index.
Psychology of contempt
Post date : 07.10.2014 3:07 pm
July 10, 2014
By Jose Luis Espert
If the real reason, as suggested by the Government, of why it does not want to comply with the judgment of Judge Thomas Griesa (to pay the winners of the judgment each time you pay the bondholders who agreed to the swaps) is that the RUFO clause – Rights Upon Future Offers-(those who accepted the swaps will collect as much as the winners of the judgment, by which total claims against Argentina could reach the range of 150 to 400 billion) is activated … why not pay cash which was the most antiseptic and clean way to comply with the judgment of the trial that it had lost?
Somewhere, the background is psychological, beyond the intricate issues related to the country. On one side, after overcoming whatever domestic institutional limits and doing what it has wanted with the country for the last 10 years, Kirchnerism found a limit from abroad that came over from the hated Yankee imperialism: American justice told it that in order to continue paying bondholders had accepted the debt swaps, it had to also pay thoe who didn’t Kirchnerism discharged statistics on public debt (for a while there between 2005 and 2006), from the bond trading records and, as if it wasn’t enough, calls them “vultures” when in fact the vultures are not more than 1% of those who didn’t enter the swaps … and they know it. The limit was “hit”, and the answer is: 100% in cash for vultures.
Furthermore, it is easy to find the famous quote from Néstor Kirchner about his love for “the cash boxes” and the fables (or not) on the vault full of black money in his house in El Calafate. If a Kirchnerist gives money to someone, it expects to generate a client on the other side, addicted to the doctrine, or a front man … something in exchange for pesos or dollars. Remember that they are the kings of crony capitalism (Lázaro Baez, Ruy Ulloa Igor, Cristobal Lopez, etc.). Paying cash on this sentence is a cross to bear for them, as they are addicted to the most bizarre capitalist accumulation. What security would they have from Paul Singer bringing in those dollars to Argentina or doing some kind of spurious business with them? None. It could be money thrown in the trash. Once again, never.
By ruling out the option of paying cash on the judgment, the option immediately arose that at least some will be paid with public debt bonds. And there begins the negotiation. How much cash and how much debt? But by starting the negotiation, RUFO has 0% chance of occurrence versus if it were a single cash payment (one bondholder seeing the government “negotiating” an improvement, even from a lost lawsuit, could sue for this improvement from Argentine government). Then, appearing along with the RUFO, is the official terror that the problem of a lost sentence for nothing more than US$1.5 billion ends up being in the worst case scenario, nearly 100% of GDP and in an intermediate situation some US$150 billion.
So, now that the “grim reaper” of RUFO is now circling over the Kirchnerist sky, the government does not know how to kick it forward to the end of the year when it expires, that is, to get out of it without paying cash and, if possible, without defaulting on its debt that is being paid regularly.
To get an idea of how deeply things have gotten for the government from its mental breakdown around hitting the limits on its addiction to its base metal of cash, it now appears to be negotiating with those who won the judgment against its bondholders, and there are some who think, from legal point of view, that Cristina Kirchner, unless she wants to go into default, will have no choice but to include in the negotiating all other holdouts and all the bondholders who accepted the debt swaps of 2005-2010, so that the holdouts would ask Griesa to reinstate the stay, and once it is reinstalled, negotiate with them (the holdouts) on how to pay 100 % of their claims and achieve the consent (with signature by the Griesa court) of the bondholders from those negotiations to not also sue Argentina.
The refusal to comply with the judgment, much less pay cash, is so strong that some think that some Kirchnerists are feverishly thinking of defaulting, blaming the American courts that will not let them pay the bondholders (showing the excellent track record of paying debt in the won decade) and build a new and fatuous anti-imperialist epic (radicalizing the style of Laclau) with an eye towards the 2015 elections. After all, these Kirchnerist reason, the debt that would enter into default is less than 8% of GDP and no more than 15% of total liabilities of the State and, to top it off, most of it is paid outside of the country (something like throwing pearls before swine). It would be like the “Living on our own…financing” after the decadent “Living on our own” of the Kirchnerist period.
So in the same way that there are no vultures without debt, there is no debt without a deficit, no deficit without spend-crazy politicians, and no spend-crazy politicians without a society that deserves them. We would not be with the sword of Damocles of the RUFO without those addicted to absolute power and the patronage-riven and corrupt cash ruling the destinies of the country.
Psicología del desacato
American Taks Force Argentina (la pagina de lobby de los buitres)
Jose Luis Espert ¿Economista? No. Es un chanta, es un hijo de puta que defiende el interes de los buitres. No es una discusion entre dos ignorantes y un economista, si crees eso sos un pelotudo, es una discusion entre dos Argentinos y un criollo que juega para los intereses de afuera, y si, habria que cagarlo bien a trompadas como minimo, ese es de las personas que quiere cagar al pais, pero como tenes tanto rencor hacia el kirchnerismo no podes verlo.