Why Argentina Consistently, and Unapologetically, Refuses to Pay Its Debts

[marmar]

(Bloomberg) Argentina’s fight with foreign banks and bondholders is more than just business. It’s part of the national psyche, enshrined in a special museum at the business school at the University of Buenos Aires. The Museum of Foreign Debt is nothing fancy. There are a few flimsy panels plastered with grainy photos, dates, text, and graphs.

Oh, but the saga portrayed on those panels! Banks, bond investors, and the International Monetary Fund flood crooked regimes with overpriced credit. The Argentine economy collapses, and the people suffer. International markets are roiled. It happens time and time again. The story has all the emotions of a good tango.

Argentina has reneged on foreign debt obligations at least seven times, starting in 1827. The latest was in July 2014, when Argentina defaulted rather than give in to pressure from Paul Singer of Elliott Management. The fight with Singer has been going on for a dozen years, and the term vulture investor—rather esoteric in much of the world—is now pretty much universally known in Argentina. It’s so much on people’s minds that Buenos Aires toy stores carry a homegrown board game called Vultures, packaged in a box depicting a pair of the birds picking at a pile of dollars. “We planted the anti-vulture flag in the world,” President Cristina Fernández de Kirchner said in a speech in mid-May. “We gave a name to international usury and despotism.”

One May morning at the debt museum, guide Antonella Fagnano, a 21-year-old business major, describes Argentines’ attitude toward default. She pauses by a black-and-white photo of the late General Jorge Videla, who led a 1976 coup that ushered in a seven-year dictatorship. Successive presidents in that period loaded up on foreign debt to finance, among other things, the 1982 Falklands War with the U.K.

Today’s Argentina, Fagnano says, has no moral obligation to make good on debts like those. In fact, it would be wrong to pay. “Foreigners financed a lot of leaders, like these dictators. They didn’t do what they were supposed to do with the money, and left future generations the debt,” she says, shaking her head. “So, of course, you cannot allow that.” ...............(more)

http://www.bloomberg.com/news/features/2015-07-17/-no-why-argentina-refuses-to-pay-its-debts

[WDIM]

1. All countries should reject the bad debts ran up by war profiteers

Debts ran up by governments just to make the mega wealthy more money and exploit the people of the country should all be negated.

[truebluegreen]

4. Agree. The IMF and similar neoliberal institutions should be disbanded. nt

[malaise]

10. Not only that - democratically elected governments should reject the debts

of foreign backed dictators (military or otherwise) who were imposed by coups.
Let their backers and those foreign governments who put them in power pay.

[geek tragedy]

2. What's amazing is that anyone lends to them.

"What, Argentina isn't paying us back? I never saw that coming."

[truebluegreen]

3. How predictable.

[geek tragedy]

5. You disagree that its creditors deserve to lose money?

Paul Singer is a vulture and every penny he makes is ill-gotten.

[Adrahil]

13. I think the creditors should lose money...

But if I were a lender, I would not lend to a borrower who unilaterally decides to not repay debt.

[Adrahil]

11. At the end of the day, if you don't pay back debts...

You can't expect to get more loans. I don't disagree that some of those loans were of questionable validity, though I won't lend money to anyome who can just decide not to pay it back on a whim.

[stevenleser]

12. And why was that ad-hominem necessary in response to that post? nt

[truebluegreen]

15. What ad-hominem would that be? nt

[stevenleser]

16. Intimating that the response was bad and its not surprising because the poster who made it

is also bad from your past experiences with them.

And to top it off, to cover up the ad hominem you made, now you are trying to play games.

There was nothing in that post that deserved any of this.

[truebluegreen]

17. History exists.

[stevenleser]

18. So now you admit the ad hominem and are trying to explain it. Well, that post doesnt deserve that

there was nothing malicious in that person's post.

[truebluegreen]

19. iyo

[stevenleser]

20. This is a discussion forum. Explain in your opinion, why it was malicious. Don't go ad hominem nt

[geek tragedy]

21. So you are now agreeing with me that only

a fool (greedy or otherwise) would lend to Argentina.

After all, "history exists."

[whatthehey]

6. which explains why they had to raid their pension funds to keep deficits going.

Since nobody sane will take their notes any more.

Going to be a lot of angry older Argentines in the none too distant future.

[Nuclear Unicorn]

7. "Going to be a lot of angry older Argentines in the none too distant future."

It will be the young Argentines that see their savings stolen to ameliorate any pension deficits.

[whatthehey]

8. Quite probably both sure

and in fact anybody in between who has to take the wheelbarrow out to go shopping once they start printing worthless money to cover the deficits they've already stolen from the only funds they have left.

[meow2u3]

9. Two words: Odious. Debt.

Argentina's debt was run up by a corrupt military dictatorship, so it should have been written off as odious debt years, if not decades, ago.

[stevenleser]

14. What the vultures are doing should not be allowed. If you default, it's over. The penalty is the

hit to your credit rating and ability to borrow in the future. Folks buying bonds take a risk and they know they are taking that risk if the amount you borrow is large relative to your GDP.

Vulture firms should not be allowed to buy up defaulted debt at pennies on the dollar and then demand full payment. That is the entire point of default.

[KamaAina]

22. They need to issue a Greek version of that Vultures game.