Don't Cry For Me, Argentina

Argentina, if you can believe it, is managing to dig itself into an even deeper hole in regards to its economic isolation. Following on from the technical default on bonds and then the failed attempt to reconvert those bonds to domestically issued bonds; it has now fallen out with the WTO over a trade dispute involving Japan, the United States and the EU from 2012.  It addition to this aggressive stance to foreign investment, it blames the catalyst for the debt default at the door of ‘vulture’ US hedge funds. 

The truth is slightly different: large proportions of bond holders are usually pensions funds, with the majority of holders looking for a return on their money in the form of fixed interest and low risk, some of which were based in Argentina itself.  Argentina then tried to differentiate on who it paid out to: something that is not possible in bonds and governed by a term called Pari Passu: meaning equal treatment. Argentina was the success story that never was; an amazingly abundant amount of natural resources have not been utilised properly which comes amidst political mismanagement and outright corruption – for an idea of basis; in 1914 Argentina was the 8th richest country in the world. 

The next step for Argentina is extremely murky, with an increasingly belligerent attitude, it isolates itself, when in reality they should be looking for foreign investment to add impetus to their economy. I’ll leave you with one of my favourites quotes: There are 3 times of country in the world: developed, undeveloped and Argentina.

 

Jordan Hiscott,

Senior Trader

 

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