Argentina intends to continue paying bondholders on the same terms as it has been doing until now, Economy Minister Hernan Lorenzino has said. Lorenzino was speaking in response to a U.S. appeals court decision to confirm a judge's order that Argentina repay $1.33B of debt in full to investors who refused to accept a haircut following the country's $100B default in 2001. Argentine law forbids such a payout. The appeals court has refrained from implementing its verdict while the Supreme Court decides whether to take on the case, thereby averting a possible default in the near future.ETF: ARGT Post your comment!
Wolf Richter www.testosteronepit.com www.amazon.com/author/wolfrichter The issue of inflation is complex everywhere. Official rates are disputed. People can’t reconcile them with what they see at the store. There are different formulas and data sets, resulting in different rates, and everyone picks and chooses what suits their needs. But nowhere is the issue as “complex,” infested with lies, and shrouded in obscurity as in Argentina. The debacle took on hilarious overtones when a Greek reporter, in her soft, harmless-looking manner, began to crucify Economy Minister Hernan Lorenzino during an interview at his office: “I have a very simple question for you, which seems very complicated these days: how much is Argentine inflation at this moment?” His response was an epic journey into obfuscation that got him entangled in such verbal spaghetti that the video, when it was released in April, went viral instantly. “We never speak about inflation, not even with the Argentine media,” an unseen aide explained after the minister had skedaddled. But his jab at official inflation was on target. The interview took place late last year. By April, inflation, as reported by the Instituto Nacional de Estadista, was 10.5%, down from 10.6% in March, and from 11.1% in January, its recent peak, nicely heading once again in the right direction, after having been below 10% for much of 2012. But it’s a joke – though not nearly as hilarious as Lorenzino’s verbal spaghetti. In early 2007, the staff at the statistical agency were booted out and replaced with political appointees who would toe the line on inflation and other inconvenient statistics. Since then, official inflation has been decided by edict. Private economists, brushing off these figures with a nervous smile, kick around 25% as the current annual inflation rate. Mid-May the government nodded. With elections coming up in October, President Cristina Fernández de Kirchner has to hand some goodies to her base to buy their votes. So during the impeccably timed wage negotiations, she personally met with leaders of six unions representing 2 million workers, and struck the same kind of deal she’d made with the Railway and Bus Drivers’ unions, a deal that might get close to preserving purchasing power: wages would be increased by 24%! The closest to an official and somewhat realistic CPI that Argentina has. To pour some oil on the fire, Torcuato Di Tella University (UTDT) – a non-profit private university in Buenos Aires – publishes the Inflation Expectation Survey. It measures what the public expects inflation to be over the next 12 months. For much of 2006, when the surveys began, median inflation expectation was 10%. The just-released index for April came in at 30%; and average inflation expectation rose from 34.2% to 34.9%. UTDT concedes that the public has a tendency to overestimate changes in consumer prices. Nevertheless, it’s another ray of light in an obscure environment where the government has done its darnedest to replace any visibility with lies. Yet ordinary people, managers, and investors alike need to make decisions daily based on their understanding of inflation. And they’re making those decisions – just not the way the government wants them to. The impact on the peso has been, let’s say, noticeable. In 1999, when I first traipsed around Argentina, the peso was interchangeable with the dollar one-to-one. ATMs would distribute both, depending on the button you pushed. Quite impressive. But Argentina seemed expensive, compared to other Latin American countries. And the economy was bogging down. Something was amiss. The peso mirage ended in 2001, when people cleared out their bank accounts, converted pesos to dollars, and sent them overseas. To stop this torrent, the government froze all bank accounts; only small amounts of cash could be withdrawn. The people didn’t accept this quietly, which led to the declaration of a state of emergency, and more riots. In January 2002, the government lifted the dollar-peso parity, and set an exchange rate of 1.4 pesos to the dollar. People with money still frozen at the bank had been robbed. And it never stopped. In early May on the black market, the peso fell through yet another floor: for the first time ever, it took over 10 pesos to buy a dollar. People have been scrambling to convert every peso they didn’t need at the moment into dollar bills. The official exchange rate is 5.25 pesos to the dollar. But it too is a lie, for most people. In one of those ironies that follow reckless deceitful governance, the government is running out of dollars and few people can buy them at the official rate – though the country is awash in dollar bills. Since I write so much about financial fiascos, debacles, and nightmares, I’ve been asked about ways to protect assets in this environment. Thankfully, I don’t give financial advice. Even if I did, I wouldn’t have all the answers. But I just finished reading an excellent book on precisely that topic, so I decided to review it. Read.... Diplomatic Immunity For Your Assets In Interesting Times!
Two days ago we first posted a Youtube clip in which a Greek reporter asked Argentina's Economy Minister Hernan Lorenzino a simple question: "what is inflation in Argentina" - a sensitive topic to a country with price and capital controls, and where inflation ranges between 0 and 20% depending on whether one uses official, or unofficial but based on reality, data. The result was a why we dubbed the clip "Thursday humor" as after several minutes of meandering gibberish, Lorenzino concluded by telling his aided that "he wants to leave", which in turn promptly became a twitter hashtag meme #mequieroir, in which the minister's response to a simple request for the truth was promptly lampooned around the world. However, that may have been just the beginning of Hernan's problems. As Bloomberg reports, citing Clarin, Argentina's president CFK, was also quite taken aback by the bumbling economist that she met with him subsequent to the interview going viral, and told him he has lost credibility and the most likely next step is his resignation. To wit: Argentine Economy Minister Hernan Lorenzino’s appearance on Greek television in which he abruptly ended an interview and refused to speak about inflation in Argentina has spurred speculation he may quit, Clarin newspaper reported, without citing its sources. President Fernandez met with Lorenzino to express her concern that he lost credibility among voters after he told an aide at the interview that he wanted “to go” after the reporter asked what he planned to do if the IMF sanctioned the country for not improving its inflation index, Clarin said. Deputy Eco. Minister Kicillof would replace Lorenzino, Clarin said, without citing anyone Kathimerini has some more information on the events that had taken place in late 2012, but were only broadcast this week, leading to the hilarious fallout. Bothered by a Greek reporter’s repeated requests to release Argentinas true inflation rate, Economy Minister Hernan Lorenzino interrupted an interview, saying the issue is too "complex" to explore and telling an aide "I want to leave." A video of the interview surfaced Tuesday and quickly became the talk of Argentine social networks. On Twitter, the hashtag #mequieroir (#iwanttoleave) was constantly retweeted, and the video of the visibly uncomfortable minister played repeatedly on Argentine television news stations that aren’t aligned with the government. Someone even put his voice to a cumbia beat, mashed it up with the Peronist March and posted the music video on YouTube. Lorenzino didn’t respond to the display of dark Argentine humor at his expense. His press office told AP that the ministry had no reaction, and his Twitter account was quiet. Lorenzino granted the interview in his ministry headquarters to Eleni Varvitsiotis late last year, but the Greek channel Skai TV didn’t broadcast it until Tuesday, as part of a documentary comparing Argentinas 2001 economic crisis to the situation in Greece. Private economic analysts have said Argentinas consumer prices rose about 26 percent in 2012, more than twice the 10.8 percent published by the government’s inflation index, whose accuracy has been publicly rejected by the International Monetary Foundation. "I have a very simple question for you, which seems very complicated these days: How much is Argentine inflation at this moment?" she asked. "Official statistics show month after month the inflation and this is the only inflation possible," the minister responded in Spanish. "But, how much is it?" she insisted. Increasingly uncomfortable, Lorenzino said "I think the cumulative inflation over the last 12 months is 10.2 percent; I might be off by a decimal." The journalist then noted that the IMF has warned that it will impose sanctions against Argentina for putting out false statistics. "What will you do about that?" "I don’t know, I don’t know. Can we turn off the camera a moment? I want to leave," Lorenzino said. The rest of the encounter was captured on audio. Lorenzino can be heard telling the reporter, "Talking about inflation statistics in Argentina is complex. ... Id rather leave it with the last thing I said and not go on about it." Lorenzino then leaves, and an aide can be heard telling the reporter: "We never speak about inflation, not even with the Argentine media." But "price increases are the main topic of the economy now," she protests. "Everyone in the street is saying theres high inflation. It’s not possible that I not ask about it. If not, Im not doing my job." And for those who missed it, here is the video again: Ahhh - economics. The biggest, most profound, and most deadly joke of a non-science imaginable. One can only hope more and more charlatans are unmasked, just like Hernan, and proceed to take their rightful place: at the unemployment office line, which is now the longest it has ever been in the modern era across all developed nations, precisely due the flawed and failed "policies" of such "academics" as Hernan. Of course that would (eventually) result in an economist finally doing an honest day's work for once, which as all know, is next to impossible. What we don't understand is why an openly embarrassing interview in Argentina will lead to the termination of their economics minister, yet in the US Paul Krugman grants numerous interviews daily, and has countless blog posts, all of which transcend the merely laughable and tweet mime-inducing, and cross into the grossly surreal, and yet his "reputation" is still intact. Alas, some things that make sense even in Argentina appear far too complicated to be grasped in the US of A.
* Latin America: A new Lancet Oncology report concluded that cancer death rates in Latin America are disproportionately high compared to other regions.* Argentina: Economy Minister Hernan Lorenzino has come under fire after he cut short a TV interview when he was asked about Argentina’s inflation data.* Cuba: According to Cuban officials the biotechnology industry is expected to double over the next five years and bring in more than $5 billion in export revenues.* Guatemala: A group of Nobel Laureates including Archbishop Desmond Tutu and Rigoberta Menchu urged Guatemalan judges to continue the halted genocide trial of former dictator Efrain Rios Montt.Video Source – YouTube via user telesurenglishOnline Sources- BBC News; Reuters; Bloomberg; New York Daily News
Аргентина собирается обжаловать постановление американского суда, обязавшего Буэнос-Айрес погасить долги перед инвесторами, которые потеряли деньги во время дефолта 2002 года. В 2005-2010 гг власти Аргентины договорились с большинством кредиторов о реструктуризации долгов. Тем же, кто не согласились на условия реструктуризации, по решению суда должно быть выплачено 1,3 миллиарда долларов. По словам корреспондентов, этот случай может создать прецедент и в будущем осложнить процесс реструктуризации долгов странами, испытывающими экономические трудности. Аргентинский министр финансов Эрнан Лоренцино назвал решение американского суда проявлением "правового колониализма" и поклялся с этим бороться. А президент Аргентины Кристина Киршнер заявила, что ее правительство не намерено выплачивать "ни единого доллара".
Суд в Нью-Йорке постановил, что аргентинские власти должны выплатить 1,3 млрд долларов старых долгов фондам Elliott Capital Management и Aurelius Capital Management. Об этом сообщает Associated Press. Требование может привести к техническому дефолту страны, так как денег на все выплаты не хватит. В 2001 году Буэнос-Айрес объявил дефолт по гособлигациям на 100 млрд долларов. После длительных переговоров кредиторы, за исключением упомянутых фондов, согласились списать задолженность. Реструктуризация, в ходе которой бонды обменивались на бумаги с более длительным сроком погашения, осуществлялась дважды. Кредиторам удалось вернуть около 30% своих вложений. Elliott Capital Management и Aurelius Capital Management решили взыскать старые долги в судебном порядке. В Аргентине их называют «фондами-стервятниками»; такой же точки зрения придерживается Ник Дерден - глава британской Jubilee Debt Campaign, которая выступает за списание долгов развивающихся стран. «Возмутительно, что из-за несговорчивости пары спекулянтов суверенная нация оказалась на грани банкротства. Эти «фонды-стервятники» никогда не кредитовали Аргентину - они просто делали ставки на кризис, который привел к бедности и страданиям в этой стране», - заявил Дерден газете The Guardian. Суд не только постановил выплатить всю сумму, но и запретил Аргентине перечислять платежи другим держателям гособлигаций до тех пор, пока Elliott Capital и Aurelius Capital не получат свои деньги. Министр экономики Аргентины Эрнан Лоренцино заявил 23 ноября, что правительство страны отказывается принимать решение суда и намерено его обжаловать. Об этом сообщает BBC. Еще до решения суда президент Аргентины Кристина Фернандес де Киршнер заявляла, что правительство не заплатит «ни единого доллара». Elliott Capital и Aurelius Capital обращались не только в американские суды. Фонды пытались вернуть свои инвестиции, преследуя активы аргентинского государства по всему миру. В частности, в начале октября этого года в Гане по иску NML - «дочки» Elliott Capital - был арестован корабль аргентинских военно-морских сил «Либертад». Судно до сих пор не возвращено на родину.