Bloomberg Editorial Board: Argentina Needs to Settle with Holdouts to Regain Access to Capital Markets
Post date : 10.06.2014 12:31 pm
Yesterday’s editorial in Bloomberg View, “Argentina’s Contempt for Its Citizens,” provides an excellent overview of how the President Kirchner’s nonsensical economic policies combined with her decision to default on bonds has severely harmed the Argentina’s citizens. Experts have also warned of the consequences the Argentine people will experience as a result of the Argentine government’s refusal to settle its obligations with creditors.
Here are some key points Bloomberg’s editorial board makes:
“Since the country was largely cut off from international capital markets following its default in July, the government of President Cristina Fernandez de Kirchner — never a paragon of orthodox policy making — has resorted to even more self-destructive coping measures. As the foreign currency reserves that Argentina needs to pay for imports have diminished, the government has issued new rules meant to keep dollars from leaving the country.
“Yet such perverse interventions have not been helpful: Export levies on Argentinian beef, for instance, have failed to protect consumers from higher prices, but they have displaced it from global markets.”
“There’s one easy way for Argentina to avert such a scenario: Settle with its holdout creditors and regain access to global capital markets. Instead, Argentina has continued to defy U.S. District Judge Thomas Griesa’s ruling that it can’t make payments on its restructured debt as long as it continues to refuse to pay holders of its defaulted debt. Fernandez has barnstormed the United Nations, attacking her antagonists — the minority of bondholders who have refused a restructuring of terms — as vulture-fund terrorists. (For good measure, when American Airlines cut some service to Argentina, she denounced the company as “jet-propelled vultures.”) She has also accused Argentinian businessmen, farmers and bankers of conspiring with “foreign help” to overthrow her government.”
Count Bloomberg’s editorial board as being part of the consensus that Argentina should settle with its creditors. Unfortunately, Cristina Kirchner has instead decided to default, and to blame creditors, a judge, private companies and the U.S. and German governments for her country’s worsening economic situation. (For a quick compilation of just a few of the many assaults Cristina Kirchner has waged, check out our infographic).
It isn’t too late for Argentina to settle with holdout creditors. We can only hope Axel Kicillof will use his upcoming trip to Washington, D.C. this week to sit down and discuss a settlement with the holdouts.