House of Paine

how it works......

argentina ....

not my type 
               of latin loopee 

never liked Gouchos 
or 
cry baby torch singers
or 
non italian 
flowing main
           white footballers 
or 
that silly tango shit 
(except between 
non-consenting
          cartoon critters)
   or
  yellow faced 
high crown capped
               generals
with 
dark caterpillar mouse-tacheoos
cavorting about
like 
manhattan
 elevator operators

especially 
after 
ordering up
the latest
  pile of dead 
        raw  reds  

or
for that matter
 even their wagery's
           boom and bust 
                     brand 
               of
          Muscle -eeny
           union  street  struggle 

or..or ...or 

but lately
they have a tale
           worth retelling 

==========================================


from the beltway post

---------------------------------------------

"In late 2001,
 during bloody riots, 
the Argentine government 
defaulted on about 
$100 billion in sovereign debt

 The default was the biggest
 by any nation in history

 and it plunged the economy 
into chaos, 
with millions falling into 
poverty 
and unemployment reaching
 nearly one-quarter 
of the workforce. 



The government is completing 
a restructuring 
of its debt 
in which it offered 
new securities to hundreds
 of thousands of bondholders
 ranging from Italian widows
 to New York hedge funds

 Officials announced yesterday 
that bondholders owning
 76 percent of the defaulted debt
 had accepted the deal
 worth about 32 cents 
on each dollar 
of claims that they held

------why 32cents per dollar ?
simple 
cause with a peso worth i/3 what it was worth 
in dollars when the dollar debt was incurred 
this puts 
 the same real burden 
on the argentine's 
as the old bonds did back when...-------------

That assertion is subject to challenge 
by international financiers and investors
 Many of them are angry
 with the take-it-or-leave-it
 terms of this week's deal

 which leaves bondholders 
with losses about twice as deep 
as the average settlement 
reached in previous 
sovereign defaults 
such as Russia's and Ecuador's. 

Thrown into question 
in the process 
are some hoary financial principles

 Countries that treat foreign creditors
 so shabbily 
are supposed to be doomed 
to stagnation for years
 because investors and lenders 
presumably will shun nations 
that show little respect
 for property rights

 But the boom 
that Argentina is enjoying
 stands in mocking counterpoint
 to that tenet. 

It is not just 
that Argentina recorded 
annual growth of 8.8 percent
 for the past two years
 More significant,
 companies are investing.
 According to government figures,
 business spending 
on structures, plant and equipment
 is close to all-time highs 
as a percentage 
of national output. 

---------------- rule one:

access to capital

 what defines access?
     super  profit opportunity
 
 that makes 
 access to capital  easy ----------------------------. 

During the 1990s, 
Argentina had no worries 
about obtaining international capital 
 With its free-market policies,
 a fixed exchange rate of $1 per peso 
and a near-zero inflation rate, 
the country was 
the darling of the International Monetary Fund 
and a magnet for foreign funds

. It depended on international bond markets 
to cover its budget deficits,
 and Wall Street was happy to oblige. 

Once foreign financiers 
realized the country 
had piled up unsustainable debts,
 however, 
they began to pull their money out.

 The ensuing default 
also led to a crash of the peso. 

Today the Argentine currency 
 trades
 at about three to the dollar
 instead of the one-for-one exchange rate 
that prevailed before
                   the '01 crisis
 

 many    goods 
     tied to the dollar 
 real estate
 cars electrical appliances 
are out of reach 
  for many Argentines 

On the plus side
 
the cheap peso 
is one of the major factors 
attracting foreign manufacturers

 Volkswagen, 
which pays its workers 
n average of less than $6 an hour,
 including all fringe benefits
just about the lowest wage 
in Volkswagen's operations worldwide
 

But the diminution 
in living standards 
is all too perceptible 

------------------------------

All this could have significant ramifications
 for the international system,
 by making future crises
 more likely
, some policymakers and economists fear.
 Because the Argentine restructuring
 is likely to set a new benchmark 
for investor losses 
on loans to governments 
in Latin America, Asia 
and other "emerging markets,"
 the deal may make markets 
more prone to bolt 
from those areas
 when the global financial environment
 turns sour. 

Some on Wall Street 
see an even more dangerous precedent:
 Won't countries with large debt loads
 such as Brazil, 
Turkey or the Philippines 
look at the Argentine case 
and wonder whether they should default too?

the nitemare:

finance ministers across 
the emerging markets 
            having second thoughts 
about making fiscal sacrifices 
in order to continue 
servicing their external obligations
-------------------------------------


Today argentina's
   government 
has no need to borrow 
from abroad 

because it has been running 
budget surpluses

the test has not come yet really 
until the gub tries some up lift type social finacing 
there'll be no big wooop
not when 
the place and its people
are  now
on sale dollar 
at 65% off ---------------



 the surplus  is  attributable
     in part 
 to the government's discipline 
in keeping a lid on the wages 
of public-sector employees.

 With the government treasury full
 economic policymakers here
 can shrug off the threats 
by foreign money managers 
to boycott Argentine government  bonds. 

-----------------------------------------------
-----above anmd beyond the 65% off dollar sale
            inside the peso world 
  wagery has a further 20 off 
                             mark down 
                          on its head...
so if yer a yank
its take 65% and then another 20% off ----------


" The rebound 
  of the past couple of years 
has failed to improve
 the lot of ordinary Argentines 
 Even for salaried workers
 who kept their jobs
 real earnings
 adjusted for inflation 
are still well below the 2001 level
  and 
 Compared with the peak level of 1998
 real wages are down 20 percent
 according to data compiled by IDESA
 a private think tank. 


By reducing 
the outstanding number 
of bonds in default
 the government has cleared the way
 for a new loan agreement 
with the IMF
 an important consideration
 because a serious confrontation 
with the IMF 
would cost the country 
billions of dollars 
in international aid 
and throw it back i
nto the pariah camp. 


-------------- keep tuned for
                 new look argentina 
                              act II:
OKAY CAPS YOU GOT YOURS
  SO                                
  NOW 
  WHAT ABOUT BORROWING 
 FOR THE PUBLIC GOOD?  ---------------