Argentina (not so) Bravely Defaults

CM156

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As of May 22, 2020, the Republic of Argentina has defaulted on its loans, due to a failure to pay creditors on time. This is nothing new for Argentina, as this marks their third default in 20 years and their ninth default since independence. Faced with a major debt crisis even before Corona, it was highly likely that things would turn out this way. It's worth nothing that the time they defaulted in 2001 resulted in litigation in US courts (Argentina agreed to New York jurisdiction when issuing the bonds back in the 80s and 90s) by the so called "vulture funds" and that court case caused their default in 2014. It remains to be seen what the fallout from their ninth default will be.

From this, I expect them to try ramping up rhetoric on the Falkland islands (an issue I'm very interested in), something they did back in the early 2010s in order to serve as a domestic distraction (and unifying issue) from the country's constant economic woes.
 

meiam

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Why would they need to make a distraction, corona is the ideal distraction. Honestly, burn me once shame on you, burn me twice shame on me... burn me nine time, how the fuck do you keep falling for that?! Why would anyone ever lend money to Argentina with that history?

Argentina need a break from loan for like a decade or two, let all current litigation fall (honestly it's entirely the fault of people who lent the money in the first place, they deserve to lose every cents). Right now every crisis just plant the seed for the next crisis, Macri tried to sort the mess left by the Fernandez but couldn't politically do it because people had gotten accustomed to the sweet handout, which directly lead the Peronist to come back into power. Even without the corona they would have likelly defaulted (or at least would have needed quite a bit of help/debt forgivness from their nemesis, the IMF). Let everything sort itself out and
 

Trunkage

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Yeah, the problem is that Argentina has terrible credit rating. (still not a C though, so there must be worse countries out there.) That means you can charge a significantly higher rates for any money they take out, making them easy prey profitable for creditors. It also means that these low rated countries can be crippled by a small amount of debt. So, they're never going to dig themselves out of this hole
 

Agema

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It's worth nothing that the time they defaulted in 2001 resulted in litigation in US courts (Argentina agreed to New York jurisdiction when issuing the bonds back in the 80s and 90s) by the so called "vulture funds" and that court case caused their default in 2014. It remains to be seen what the fallout from their ninth default will be.
Their creditors should lose more money. It might teach them a lesson about responsible lending, and from that Argentina will be forced to learn about responsible borrowing.

The problem with letting creditors get too much of their money back is they repeat the same trick next time. If they're pricing in risk for their profits, they can jolly well suck that risk up if things turn bad.
 

meiam

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Some questions don't have answers


And what?
I had just "hope for the best" dunno why it cut it out. Like Agema said, everyone need to learn a lesson before they should be allowed to borrow more.
 

CM156

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Their creditors should lose more money. It might teach them a lesson about responsible lending, and from that Argentina will be forced to learn about responsible borrowing.
I would be inclined to agree with you, were it not for the fact that in the 80s and 90s, Argentina agreed to a forum selection as part of their bonds, which reduced both the risk and the interest rate for borrowing.

At this point, though, I agree. Lending money to Argentina is an extremely risky venture.
 

CM156

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Finance is full of egolords who think "I'm smarter than the rest of them; I'll be the one who gets this to work!".
Real "Lending money to Argentina" has never been tried.
 

CM156

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And what is the definition of this?
The definition of lending money to Argentina or the definition of the joke I was making that "real X has never been tried" in response to a failure of X?