MercoPress. South Atlantic News Agency
Nobel Prize Stiglitz comes out strongly in support of Argentina in bonds litigation
“A recent decision by a United States appeals court threatens to upend global sovereign-debt markets. It may even lead to the US no longer being viewed as a good place to issue sovereign debt. At the very least, it renders non-viable all debt restructurings under the standard debt contracts. Read full article
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Disclaimer & comment rules”In the process, a basic principle of modern capitalism – that when debtors cannot pay back creditors, a fresh start is needed – has been overturned,“
Sep 05th, 2013 - 02:37 am - Link - Report abuse 0I thought the principle was to allow a country to start afresh and learn from previous mistakes. Argentina is a serial debtor and has learned that they can continue to make the same mistakes over and again, getting away with it one way or another. Argentina clearly needs a more potent lesson.
1 The problem is that the rgs are going to get away with it again. It doesn't matter what the court rules.
Sep 05th, 2013 - 03:03 am - Link - Report abuse 0Making a conservative defence of the mechanisms of capitalism but then using “vulture” to describe a capitalist is surely a contradiction. If you believe in the rich giving their money to “uniquely recalcitrant debtors” then why try to dress that up as capitalism?
Sep 05th, 2013 - 03:18 am - Link - Report abuse 02. Argentina is not “getting away” with anything. They are in the beginning of what will be their largest economic downturn in a century.
Sep 05th, 2013 - 07:17 am - Link - Report abuse 0Until and unless they come to terms with the holdouts and IMF it will take at least a generation to fix the destruction the Ks have caused to the economy.
This next crash will make 2001 looks delightful.
What a shame that Stiglitz has lost it. Still, he's 70 now. And that Nobel Memorial Prize was 12 years ago. He also received the John Bates Clark Medal. But that was in 1979. Still, he was appointed Chairman of the UN Commission on Reforms of the International Monetary and Financial System in 2009. Wonder if there was anything in his report about serial defaulters? Can't have changing circumstances making his report look daft. Argieland has had one or two sovereign defaults. In 1827, 1890, 1951, 1956, 1982, 1989 and 2002-2005. That's a lot of defaults! What's Mr Stiglitz's answer to crooks?
Sep 05th, 2013 - 07:52 am - Link - Report abuse 0I think Stiglitz needs to consult with a lawyer - his premise that the pari passu clause has been “incredibly” misinterpreted is wrong. What he fails to consider is that the original bonds did not include a ”collective action clause (CAC)” whereby a majority ( or supermajority) of bondholders could force a revision of the original terms ( including pari passu) on 100% of the bondholders.
Sep 05th, 2013 - 08:39 am - Link - Report abuse 0Most bonds contain such a CAC and future sovereign and non-sovereign defaults will not result in a situation similar to that where AR finds itself. Perhaps AR ought to sue the lawyers it hired to write the bonds for malpractice. I wonder how much such a suit would be worth...
4 But the rgs got out of the 2001 crash by defaulting. They're doing it again.
Sep 05th, 2013 - 09:18 am - Link - Report abuse 0The problem is that the rgs have had good results from defaulting. We need to teach them a lesson. America should have sanctions against rg like Iran.
I really question whether Stiglitz is not saying these things because he of the fees he has charged for the services he's offered the RG government.
Sep 05th, 2013 - 10:06 am - Link - Report abuse 0The irony of it all is that the Kirchners became filthy rich by being vultures: forcing out people who owed mortage loan payments and buying the houses for a song. Mrs. K has over twenty properties obtained tha way. She gets the Nobel Prize for Hypocracy.
Stiglitz mentioned, in loud voice, someting that is in most european economists and leaders' minds nowadays.
Sep 05th, 2013 - 11:01 am - Link - Report abuse 0There are plenty of countries that were forced to restructure thier international debts so a conclusion against the Argentine position in the NY court most probably will affect all of them and the European Community.
The Argentines did not get out of the crash by defaulting in 2001. They defaulted and then crashed. Talk to Argentines that lived through that time as adults. They were horribly affected by the actions of their government at that time.
Sep 05th, 2013 - 11:36 am - Link - Report abuse 0This action will not necessarily set a precedent. If CFK had kept her mouth shut - as advised by her lawyers - she may not be in such a mess. If she had actually qualified as a lawyer she would have know this.
So, to summarise:
Sep 05th, 2013 - 01:09 pm - Link - Report abuse 0Its “wrong” that people who default on paying loans can no longer get away with just paying back considerably less than they should've done in the first place.
Regardless whether Argentina obeys the courts or not (it wont nor should it), the damage is already done.
Sep 05th, 2013 - 01:19 pm - Link - Report abuse 0The USA has proven to be a huge ponzi scheme: you can't invest in real estate there because it is a fraud, you can't invest in stocks because it is a sham, and soon you won't want to issue bonds there (sovereign or private), because the “creditor” by such rulings has been rendered in fact a 100% riskless position, while the one seeking credit has to pay in full and with interest regardless as to whether the business flourishes or founders... add to that the bailout of big business from their business errors, but nothing similar done to small American business, and you have the recipe for the end of the USA as any good harbor of business and investment.
@12 TTT
Sep 05th, 2013 - 01:32 pm - Link - Report abuse 0Fair enough. So for all future sovereign debt requirements Argentina should issue its bonds in BA, repayable in pesos and according to Argentine laws. Good luck with that.
Sarcasm isn't your forté.
Sep 05th, 2013 - 01:37 pm - Link - Report abuse 0I never stated “Argentina” was or would be the place to do such transactions, did I?
You Anglos are so insecure any criticism you take as a personal and cultural attack, hence the visceral urge to retaliate. It redounds on your already browbeating reputation.
It's good to hear that a nobel like joseph stiglitz supports argentina's posture, i don't think he makes it because he's a fun of the country, in fact, surelly he makes it because he knows that the rulling of the court of appeals can take a serious precedent for future debts crisis.
Sep 05th, 2013 - 02:05 pm - Link - Report abuse 0As i usually say, it's not necesary to be a kirchnerist activist in order to realise that if argentina were a recalcitrant debtor, as the court of appeals and some our sepoys say, it would never make the two debts restructurings it made, which were accepted by the 92% of holders. Anyway, it's expectable that some people who just hate c. f. k., take the side of the vultures, in fact sepoys have always existed, this is evident that for some people, the worst that happened to them, is to be born in argentina. Maybe they learn to be serious detractors of any political project someday. I have friends who are detractors of kirchnerism, however the would never take the side of the people who want to prejudice our country.
13 The problem is that the rgs have not borrowed since 2001. They have been paying cash. If america does not have sanctions against rg then they will not be punished and they will get away with defaulting again.
Sep 05th, 2013 - 02:33 pm - Link - Report abuse 0@9 who wrote:
Sep 05th, 2013 - 03:37 pm - Link - Report abuse 0”There are plenty of countries that were forced to restructure their (sic) international debts so a conclusion against the Argentine position in the NY court most probably will affect all of them and the European Community.”
Wrong. See my #6 above. The language of the original bonds was poorly drafted and did not include a fairly standard collective action clause. Other sovereigns should not have the same result if there is a majority of bondholders who choose to accept a haircut.
The problem with these people who are always gossiping about us, is that they can see how impotent they are when trying to impose their authoritarian measures and their will upon us like they did in the past. Néstor and Cristina are not perfect, but 10 years have passed since they took office after the default, and they have changed Argentina for good, that is their legacy, their teachings... and come to think of it, how fortunate we are in Argentina, we don't invade countries to take control of their oil, gas, land, water, etc., we have all those things in our land, others not so lucky invade countries, and to hell with the right of self-determination of those populations.
Sep 05th, 2013 - 03:39 pm - Link - Report abuse 0@owl61
Sep 05th, 2013 - 04:01 pm - Link - Report abuse 0Quite interesting your comments. I'm not a lawyer so I don't know about the clauses mentioned.
But it's quite evident that most of the European countries, USA and even the IMF have been quite lenient with Argentina. In some way they seem to be doing “balance” between supporting the creditors and supporting Argentina. They don't want to go directly against the creditors and they cannot support Argentina.
Plenty of economists and article published in the media speculate that they have this doubtful attitude for the fear to another “chain” crisis.
Otherwise..What could be the reason for such attitude?
@axel arg
One of the most basic behaviour of populism and authoritarism is to blame those who think differently of betrayal.
The first step to doing this is to define a “border” and those who are on the other side are “the enemy” or “the cipayos”. Quite evident.....to be taken seriously
18 Maybe we ought to change that impotence. Remember that we have a base near by. Maybe a strike will get you deadbeats to pay up.
Sep 05th, 2013 - 04:38 pm - Link - Report abuse 018, Toby, 10 years of fake K “prosperity” will be followed by at least 1 and maybe 2 generations of abject poverty.
Sep 05th, 2013 - 04:38 pm - Link - Report abuse 0Let me know in 20-30yrs if it was worth it.
hahaha
@12&14 TTT
Sep 05th, 2013 - 04:59 pm - Link - Report abuse 0You rage against the Americans and yet get upset that I pointed out that Argentina can't deal with its debt problem on its own - it will most likely need international assistance at some point. Therefore what you can't do is borrow, spend, default and then get angry with the people who loaned to you. As for your “insecurity” generalisation, in 1976 the UK had rampant inflation and had to go to the IMF for a bailout. I'm perfectly happy to bring that up because it is history and everyone knows it. We accepted the conditions that came with it, repaired our economy and paid the loan back - but it was hard work and not without casualties. Why should Argentina expect an easy way out?
Why is that only corrupt and economically unsuccessful countries think they should not pay their debts?
Sep 05th, 2013 - 07:40 pm - Link - Report abuse 0The government we will vote out tomorrow clocked up AUD$270 billion in debt.
Perhaps we should default and then ask to be treated no differently.
Because if we payed our debts we would still be treated by the world like crap and inferior, so we might as well not pay and be treated like crap and inferior.
Sep 05th, 2013 - 11:40 pm - Link - Report abuse 0Then stop being so crap and inferior and we won't.
Sep 06th, 2013 - 12:35 am - Link - Report abuse 0Loser!
Alas, but we don't care what you people have to say. I was just answering your question but believe me, in Argentina what outsiders think of us is irrelevant.
Sep 06th, 2013 - 12:38 am - Link - Report abuse 0They need to create new law to allow bankruptcies for nations finally. That said, it is not the business of judges to make new law, is it, That is for legislators.
Sep 06th, 2013 - 01:53 am - Link - Report abuse 0May Argentina succeed in TTT's dream of putting all the government's savings in ,U.S. banks back into Arg pesos.
Wait, but I really like Simon68 too.
A principle of capitalism is that you do pay your debts, or forfeit your assets.
Sep 06th, 2013 - 02:19 am - Link - Report abuse 0There is no Nobel Prize for Economics, Alfred Nobel's will established prizes for Peace, Literature, Chemistry, Physics and Medicine or Physiology, that is all.
Nostrils
Sep 06th, 2013 - 04:04 am - Link - Report abuse 0You care too much!
That's why you are always on this forum (and I'm guessing others) giving us your opinion and rebuttal.
If you honestly didn't care you wouldn't say a thing. You'd just forget this site existed and get on with living umcumbered.
“in Argentina, we don't invade countries to take control of their oil, gas, land, water, etc., ”
Sep 06th, 2013 - 06:38 am - Link - Report abuse 0Yes, you do invade countries. You would invade again if you had the armed forces to do it.
PGERMAN: I respect your opinion, but i think that there are some questions which go beyond ideological postures.
Sep 06th, 2013 - 10:46 am - Link - Report abuse 0In my opinion, it's not necesary to be kirchnerist in order to realise that if argentina were a recalcitrant debtor, it would never make the two debts restructurings, which were accepted by the 92% of holders, beside even after griesas's rulling, the country offered to pay the vultures but in the same conditions of those who accepted the previous debts restructurings, so, what kind of recalcitrant debtor is it?.
If there are some people who decide to take the side of those who want to prejudice the country, it's respectable, but we don't have to be hypocrite, and we have to call them for what they really are, and the right word for them is sepoys.
How would you call somebody who takes the side of the people who want to prejudice your own country?.
I have some relatives and friends who have always been detractors of kirchnerism, but they would never take the side of those who want to prejudice the country, i can agree or not on what they think about c. f. k's government, in fact, i dont agre on some their thoughts, but they are serious people, because beyond our ideological and political differences, they would never take the side of those who want to prejudice the country.
@31 Your position is highly subjective.
Sep 06th, 2013 - 02:32 pm - Link - Report abuse 0What is to be “against your country”?
The restructuration of the international debt, which was definitely a kind of extortion (”take what I’m offering now, only 30% of the initial capital, or leave it forever), was successful in terms that an important part of it was cancel by paying just a very low percentage of nominal debt.
The consequences are financial isolation of Argentina, capital flight and the reputation of the county ruined for many decades.
Is that a patriotic think?
Is that to love your country?
I think differently.
President Nicolas Avellaneda gave a famous first speech as president when he said that “the Argentines go hungry and thirsty but will honour the Argentina debt”. The country paid its debt and its reputation was safe. There were other times but most important, they were other leading class.
For my point of view being a patriot is to cancel every last dollar that the country took as debt.
The country issued bonds in democracy, accepted the money and use it so. its now time to pay the money received.
Where is the betrayal? Is that to be an enemy of the country?
The current situation of Argentina, my country and my people, indicates just the opposite.
People of good faith can argue about there ought to be a right for a sovereign nation to erase unpayable, truly burdensome debt - to get a clean slate as individuals do through bankruptcy laws. They should have to show dire consequences and or a true inability to repay the original debt plus pay what they can when they can as determined by a neutral arbiter / judge/ court taking into account all considerations.
Sep 06th, 2013 - 07:31 pm - Link - Report abuse 0What is not acceptable is for a country to refinance its debt outside a bankruptcy court venue on terms it dictates and then pass a law stating that it will never pay a cent to those who refuse to take a haircut by agreeing to the newly dictated terms. That is what AR did and when it was litigated it was held by law (chosen by Argentina) that the original bondholders had greater rights. Now AR wants to avoid that result , not because it can't pay (although with some discomfort), but because it is offended by the result. It is arrogant as those who say above “Argentines don't give a damn what outsiders think of it.” That is exactly why Argentina is the defendant in a vast array of complaints in the WTO and other world orgs...it is arrogant . It adopts protectionist trade policies and then tries to defend itself with sanctimonious rhetoric speaking of high minded ideals and patriotism when, in fact, its all self serving bullshit. CFK is a corrupt incompetent boob who has surrounded herself with yesman incapable of contradicting her to point out the negative consequences of her myopic policy decisions. Collectively, Ar deserves the pain it is experiencing and the citizenry would do well to rethink its “ I don't care what other think ” attitudes which seem to be all too prevalent.
Nostrils said:
Sep 06th, 2013 - 09:55 pm - Link - Report abuse 0“You Anglos are so insecure any criticism you take as a personal and cultural attack, hence the visceral urge to retaliate. It rebounds on your already browbeating reputation.”
Is it just me or does that paragraph sum up Nostrils perfectly?
PGERMAN.
Sep 07th, 2013 - 05:21 pm - Link - Report abuse 0Sorry, but i don't agree on the too partial way that you see nationalism.
In relation to the debts restructurings, it's very easy to say that debts must be paid, in fact i agree on it, but you don't have to forget the context when they happened, after the crisis of 2001, the half of our population was under the poverty's line and we had a 22% of unemployed people, so, during the negotiations for the debts restructurings, the country proposed to pay what it could, and it has never stopped paying since it started those negotiations. If it were a recalcitrant debtor, it would never make absolutly any proposal.
Youcan't ignore that foreign debthas always ben a sword of damocles which didn't let argentina to carry on a development project.
On the other hand, debts restructurings are usuall, they aren't a kirchnerist invention. Beside, we all know that what financial world doesn't forgive argentina aren't the two debts restructurings, but the fact that it hasn't taken more debt for making roll over, after cancelling it's debts with the i. m. f.
Beside, you have no more than the tipicall too partial view about argentina's situation, while it is true that argentina is isolated from the financial world, it's also true that it could diminish it's debt a lot, which let it have much more autonomy in order to carry on an autonomous development project, which is not based mostly on international prices of commmodities, like some orthodox neoliberal economists love repeating all the time.
Despite all the serious problems that we still have, like poverty, delincuence etc etc, i prefer one million times the actual context, with the actual policies, which let millions of argentines improve their social situations, from neoliberal ideas which provoked poverty, hight levels of social unequality, and submission to the caprices of the i. m. f., just have a look to what's going on in europe, with those so called austerity plans, which celebrate financial sistem's projects.
Firstly you extended the debt problem to other issues that take us out of the main discussion.
Sep 09th, 2013 - 08:11 am - Link - Report abuse 0Secondly I do not forget when Argentina went financially bankrupt after a decade of a Peronist government where CFK, as Senator, voted in favour of the privatizations and the increase of the debt.
The problem is that Argentina has not “re-structure” its debt, the country simply made a partial removal (a “quita” of almost 70%) of the nominal value of the bonds.
If a removal of it was not possible, such as with the Paris Club, the Government simply stopped paying and they even did not approached to negotiate the value of the debt.
Argentina received, by the increase of commodities, between 9k/7k additional million dollars that would allow it to partial honouring the debt and to demonstrate willingness to pay.
Your concepts towards the IMF do not have any basis and are part of the “mystical epic” of Peronism. According to this epic Peronism has always been persecuted and fought, they like to be the “eternal” victim.
The IMF, or any other international organization or country, has not any grudge against Argentina simply because we are a country absolutely inconsequential.
Under similar agreements and surveillance of the IMF countries like Uruguay, Chile and Brazil (to name a few of the region), have made plenty of progress and are part of the international financial community.
In fact the cancellation of IMF debt by the Argentina and the taking of it of the same amount agreed with Venezuela is costing the country millions of dollars in terms of interest because Venezuela charges us with much higher interest.
Regarding your comments about the growth of Argentina in the last decade it is really hard to discuss about it due to the lack of reliable statistics. No one knows what the actual inflation, unemployment rate, the real reserves or GDP growth. Statistics have all been intentionally distorted by the government.
PGERMAN.
Sep 09th, 2013 - 12:03 pm - Link - Report abuse 0What you call removal, let a restructuring of the 92% of the defaulted debt, restructuring debts is as legal as getting more debts. I don't think holders were idiots who were forced to accept the offer made by the government, if they accepted it, was because they saw that the country had the politic will of paying it's debts, despite the deplorable state of the country after the crisis of 2001.
I respect what you think about i. m. f., but i dont agree on it in absolut, in fact the consecuences of accepting i. m. f's recepies are being suffered by europe right now, and were suffered by us in the decade of the 90's, just turn the t. v. on and have a look.
Beside, i don't care in asbolut about statistics, i don't vote kirchnerism for what statal or private statistics say, i vote it for objetive facts that i can see in reality, that's why i told you that despite all the serious problems that we still have, nobody can deny that the demands of the actual argentine society are not the same than those of the 90's, where people's main demand was work, however now the main demands are inflation and insecurity, just read any poll, and you'll see that what i'm saying is true.
I know that you hate hearing this, but the worst thing that detractors like you can do, is to understimate c. f. k., as many of them did after the result of the legislative election of 2009, and started to call about the so called end of cycle. However, since that moment, c. f. k could interpret the result of the election, and took measures which benefited millions of people, which let her be re elected with the historical 54,11% of votes.
Don't commit the same stupid mistake again, it's still too soon to talk about that theory, especially when i see that f. p. v. is still the most voted party along the country, which is a privilege that not many political parties around the world can have, after having ruled the nation for 10 years.
You keep on mixing things.
Sep 09th, 2013 - 01:26 pm - Link - Report abuse 0The bond holders are not stupid but they were force to accept the conditions of the Argentine Government.
The debt was (as you call it) “restructured” by deducting 70% of the nominal value. Do you think this is fair?
In addition, was imposed in a “take it or leave it” offer. This was not hidden by the Argentine Government at all, just to the contrary, in a typical “viveza criolla” attitude they showed this extortion as something to be proud of.
So, least we can do is to discuss honesty a one sided deduction is not a restructuring.
Europe is Europe and they are much better than Argentina in any field you would like to compare. Even countries such as Spain, Portugal, etc. Don't bring this here.....don't preach about this.
Yes, the best thing you can do is not to care about stats. This another typical Peronist attitude.
It's always much better to talk about not measurable and generic values such as “freedom”, “social justice”, “equality” or “recognition”. Have you ever read Ernesto Laclau? He is an Argentine sociologist that live and work in London but supports and advices CFK (quite a clever guy!!!).
Following his advice you are trying to convince all of us with populist terms....
CKF is not stupid but she seems to be emotionally unbalanced and to take inconsistent decisions (such as the attempted removal of the statue of Columbus in the Casa Rosada).
Its’ quite evident that the Peronism is the strongest party in Argentina..the consequences can be seen all around the country. The provinces were peronism is stronger are the poorer. The most peronist the poorer !!!...
In provinces such as Chaco, Jujuy or Formosa and despite the fact peronism has ruled for ever (now almost 30 years in a row) the social statistics of these provinces could perfectly well belong to an African country.
Anyway, the least we can do is to recognize that the country has defrauded creditors. To have something to start !!
PGERMAN.
Sep 14th, 2013 - 04:53 pm - Link - Report abuse 0It's not my intention to compare argentina with any european nation, because it's obvious that even with the actual crisis, in some issues it keeps a high level of life in some aspects, especially in transportation and infrustructure, however i don't think european workers are happy with i. m. f's recepies.
I respect your opinion but i don't agree on it, as far as i'm concerned, i think that the best thing that we could do, was to get rid off the i. m. f., and not to continue getting more debts in order to pay financial debts, which is the great bussiness of financial sistem.
Those decisions let argentina carry on a development programme which gave millions of compatriots the chance of improving their economic situations, despite all the serious problems that we still have, like poverty, delincuence, insecurity, corruption, institutional violence etc etc.
Beside, beyond the deductions of the debt, they holders could have rejected the government's proposal, and litigate for their money before justice, however the 92% of the defaulted debt could be reestructurate, maybe they saw that the proposal was reasonable.
On the other hand, i know ernesto laclau, he's a great sociologist, and he's as coherent as you and as anybody else, he has right to support what he thinks what's the best for the country.
Despite i don't agree in absolut on what you think, i praise the fact that unless we can debate seriously without insulting eachother, unfortunatelly, in just a few opportunities i could have mature debates in this forum, because many of the people here, not all but a lot of them are very reactionary, and not always give arguments, but insult only, making misserable comparisons, based on too partial reports, or on distorted information published in the press.
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