Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: energyplay who wrote (56421)	11/25/2004 3:55:13 AM
From: elmatador	Read Replies (1) \| Respond to of 74559

Not lumped with Argentina with good reason: FT demands strong action from IMF against Argentina Britain’s Financial Times severely criticized Argentina for its current handling of defaulted debt and suggests the IMF “must be prepared to halt new lending”. “Too many exceptions have been made already. Argentina’s behaviour is setting dangerous precedents for future default situations”, writes FT. Argentina’s Finance Minister Roberto Lavagna is currently involved in restructuring the 103 billon US dollars defaulted debt (capital and interest) with private bond holders and has promised to present in the coming weeks the “final offer”. Originally Argentina proposed a 75% cut to bondholders which was rejected and since then has been devising new mechanisms which anyhow do not attract or convince private creditors. The scathing editorial follows: “Argentina would be well advised to enter constructive negotiations on how its offer might be improved. If it fails to do so, and consequently fails to win overwhelming backing for the restructuring deal, the IMF must be prepared to halt new lending. Too many exceptions have been made already. Argentina’s behaviour is setting dangerous precedents for future default situations”. Roberto Lavagna, Argentina’s Economy minister, has enjoyed playing tough thus far. He has certainly succeeded in showing the world that sovereign borrowers are far from powerless in their dealings with private creditors. Creditors will have to take a big haircut as part of a restructuring deal. Indeed the difference between the offer Argentina is willing to make, roughly 30 cents in the dollar, and what might be the maximum feasible amount, is probably not huge. Yet its handling of the process has violated norms of transparency and cooperation. Threatening indefinite default on debt owned by holdouts is unacceptable. The structure of the deal is too clever by half. Bank of New York was right to walk away from it. Argentina’s confrontational approach is all the more senseless considering growth is strong, exports and reserves high, and the fiscal surplus exceeds government forecasts. It is no longer acting in desperation. Whatever policymakers may think, default is not cost free. Confidence would be hit and next year’s growth undermined. Longer term, Argentina would pay the price in missed investment needed to support ongoing development. The IMF is on hold while the restructuring offer proceeds. Fair enough. But it must make clear to Argentina that it will require a high level of acceptance from creditors to continue lending, 80% might be reasonable. Every 10% holdout is 10 billion US dollars debt litigated in the courts. The IMF must also hold Argentina to its other pledges to pursue structural reform which have fallen behind schedule. If the IMF does stop lending, Argentina may default on its multilateral borrowing too. So be it. The IMF’s credibility is at stake and the US Treasury must this time stand behind it. Those emerging markets which play the rules, endorsed by the G-20 at the weekend, must see that their behaviour does not put them at a disadvantage compared with the likes of Argentina. If the US wants to do something for Latinamerica, neighbouring Brazil is a worthier candidate”.

To: energyplay who wrote (56421)	11/25/2004 4:40:14 AM
From: Raymond Duray	Read Replies (1) \| Respond to of 74559

Re: which trying very hard to screw their bondholders.... You really do need to look at this situation from the perspective of the borrower nation's citizenry as well as from that of the city bankers. democracynow.org It is growing increasingly impossible for a well-read individual to not find fault with the IMF/WB complex and with their propagandists and dissemblers such as the FT and the WSJ. Honor, decency and honesty seem to be in shockingly short supply among the Western world's elites today. It must now be recognized that they don't achieve their success by means of superior merit, but rather by means of more cunning chicanery. My sympathy for the poor, poor bondholders is pretty limited. I'd say to about 1/2 of 1% of what it is for their victims across the planet. I.e., the ordinary citizens of the world who've had their lives diminished in dozens of ways by the "masters of the universe" who promised progress, and provided penury.