Fact Check: Argentina

958 days, 18 hours, 30 minutes ago

SINCE RUFO EXPIRED

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Argentina’s leaders are living in an alternate reality

Argentina appears to be stuck in some sort of alternate reality, where if they say something enough times, or hope for it enough, it becomes fact.

Argentina insists that it welcomes a “dialogue” on this issue, when in reality it refuses to even sit down in the same room as its creditors to hold a discussion.

Argentina insists that it has and continues to “negotiate,” when all it has offered for over 12 years are unilateral, coercive, take-it-or-leave-it offers.

Argentina insists that it “can’t default” because it “paid its debt” by depositing $539 million in the Bank of New York Mellon, despite this being a clear violation of Judge Griesa’s orders (who deemed the payment “illegal” and ordered the bank to return the money to Argentina).

And Argentina insists that, if it is held to be in default when its exchange bondholders don’t receive their money, that this will merely put it in some kind of “technical,” “managed” or “transitory” default, failing to recognize that in reality, it is already in default on bonds held by more than 61,000 bondholders, many of whom paid 100 cents on the dollar for their debt and haven’t seen a penny in more than 12 years. On July 30, should Argentina continue to refuse to negotiate, it will simply be in default on the exchange bonds as well, to the tune of billions of additional dollars.

President Kirchner and her government fail to realize that merely having a strong desire or intention to do something does not solve real-world problems. Argentina owes it to its citizens and to its creditors to start taking its potential default seriously. Judge Griesa stated yesterday that a default would be about the worst thing” he can envision. “People will be hurt by that,” Griesa said. “Real hurt. Not ‘vultures,’ but real people.”

That is why he ordered the parties to meet continuously to resolve the dispute. Will Argentina finally agree to meet with creditors? If President Kirchner’s speech today is any indication, we shouldn’t get our hopes up. President Kirchner deployed all of the excuses above, plus the RUFO smokescreen, in what sounded very much like an attempt to lay the groundwork for a post-default blame game.

Many commentators in the market continue to discount the likelihood of this potentially disastrous outcome given the widespread assumption that Argentina will act rationally and finally come to the table to work out a settlement with its creditors. Maybe they are the ones living in an alternate reality.

Argentina has less than 6 days to decide. The clock is ticking.