Cry for Argentina: Fiscal Mismanagement, Odious Debt or Pillage?

[marmar]

Cry for Argentina: Fiscal Mismanagement, Odious Debt or Pillage?
Posted on August 12, 2014 by Ellen Brown


Argentina has now taken the US to The Hague for blocking the country’s 2005 settlement with the bulk of its creditors. The issue underscores the need for an international mechanism for nations to go bankrupt. Better yet would be a sustainable global monetary scheme that avoids the need for sovereign bankruptcy.

Argentina was the richest country in Latin America before decades of neoliberal and IMF-imposed economic policies drowned it in debt. A severe crisis in 2001 plunged it into the largest sovereign debt default in history. In 2005, it renegotiated its debt with most of its creditors at a 70% “haircut.” But the opportunist “vulture funds,” which had bought Argentine debt at distressed prices, held out for 100 cents on the dollar.

Paul Singer’s Elliott Management has spent over a decade aggressively trying to force Argentina to pay down nearly $1.3 billion in sovereign debt. Elliott would get about $300 million for bonds that Argentina claims it picked up for $48 million. Where most creditors have accepted payment at a 70% loss, Elliott Management would thus get a 600% return.

In June 2014, the US Supreme Court declined to hear an appeal of a New York court’s order blocking payment to the other creditors until the vulture funds had been paid. That action propelled Argentina into default for the second time in this century – and the eighth time since 1827. On August 7, 2014, Argentina asked the International Court of Justice in the Hague to take action against the United States over the dispute. ...............(more)

The complete piece is at: http://www.truthdig.com/report/item/cry_for_argentina_fiscal_mismanagement_or_pillage_20140814

[xchrom]

1. du rec.

[WillyT]

2. Did You Catch This:

DULink: http://www.democraticunderground.com/10025379519

[badtoworse]

3. So what happens if the courts thumb their nose at Obama...

... and point out that paying your debts is not a foreign policy issue? The issue here is whether Argentina can pay the restructured bond holders without paying Singer. The judge ruled that they cannot and you are saying that Obama can order the judge to change his ruling. How does that not violate separation of powers?

ETA: In any case, I expect that Obama would have to substantiate a claim that Singer's suit was interfering with foreign policy and cite specifics. I'm not aware of any pending foreign policy issues with Argentina that are being impacted by Singer. How about citing some.