Gamesmith94134: Argentina’s Sovereign Bondage

“Given the uncertainty involved, and that sovereign debtors can repay domestic-currency debt simply by printing money, creditors have typically demanded significantly higher interest rates if bonds are not issued under the law and in the currency of an advanced country – often the United States or the United Kingdom.”



As an institutional investor, I would protest on the issue of standardizing value on the bonds that are pegged to dollar or pound; in which, IMF has neglected the significance of the local pricing system which has made BRICS to fall after the invasion of the local equity market that created a stagflation and depreciation on the local currencies. Of course, it was the Quantitative Easing that triggered “beggar thy neighbor” and the concurrent environment that pushing the equity market to double its value in both developed nations and EM nations which have acclaimed disinflationary measures works. Hereby, I would warn both US and United Kingdom that their equity market are now being invaded as well, that inflation and inequality would depreciate their currencies and societal disorder is startling to rumble. Perhaps, EU is questioning the Conglomerates on the Taxes and privileges to restore its strength; and its double digits returns are undermined. After the 17000 in DJ, I would doubt the undeterred perpetual growth in price and how the market react on value of these stocks—diasporas or depreciated after widened trade deficits.

It is the market system that IMF must contemplate how the prudent macro-economic in the coming round of throw weight accountability of the currencies exchanges. How does IMF treat currencies in Developed nations and EM nations like protein in meat or fish alike that make it impossible to account 0.75% and 7% as in market rates by lumping together in such so-called market system? It is discriminating from one market system to another if the exchange rate is standardized with the globalized economy; and there is no one market system going to fit for all.



“Under the court order, Argentina may not pay the holders of the new bonds unless it also pays the holdouts, and no US financial institution can serve as an intermediary to make payments for Argentina. As a result, Argentina must either pay the holdouts in full or default on the new bonds.”



It is why I would agree that zone development to trade should be applied in the 1% in the transcontinental investment and another 1% for Diasporas for profits to levitate the exchange differentials; so, it would ease the tension of the strategy of “beggar thy neighbor” in fund transfers and devaluation of local currencies. Such issue cannot resolve with bankruptcy court since the sovereign is not marketable and vulture fund to manhandling the discounted bonds be not be rewarded with its full fund. Eventually, each trade group of the Zone can utilize these 1% funds to balance the exchange trade off, and the contingency that the bonds can buy back or subsidized to renew its bond issues through the zone authority through the WTO commissioned and World Bank guaranteed through the sovereign bonds, instead of kicking the can down the road or snowballing the debts to unsustainable. In the process, we, the institutional investors can purchase these bonds with local currencies and demand the debtor sovereign to participate the 3% loan with another 1% payment on the insurance premium to World Bank and IFC to work on the coupon issues to repayment and supervision to how the bond is pegged to it tax program or utility fee. Perhaps, we can eliminate the casino type investment from the stronger currencies and holdouts. Then CAC would not be needed or challenged in litigation; instead of using austerity to starve of the local economy.

At present, I would encourage the institutional investors to participate in the WTO commissioned sovereign bond programs that my 3% return is ascertained with its 1% funding to ensure its payoff. I suppose such 3+1% is still cheap as comparing to the local loan rate; and it fitted for reviving the local in a breathable manner rather than a chokehold in depreciate its currencies to qualify to newer issue of sovereign bond and our investment are the real capital that are earned or accumulated through the process of valuation; they are matured cash value. By comparison, restructuring bonds are using the deferential interest rates and exchange rate to manipulate the local market system that is just assets by its shell only. I bet my finger is better than the bet off the broker; and it is not market system. It was Casino like Las Vegas.

I think I have out-spoken on the issues; but why should I second guess what the bankruptcy court could have offer for the investment on the debts which is sovereign or not; and my pension fund are real capital when it compare to those loans of the cheaper cost from the FED.

We do need reform even for Developed nations too, and the secondary central Bank from World Bank and Zone insurance should be considered……..and now before the diasporas. It may not happen because Ms. Yellen believe US can do hold with DJ; but trade deficit, inequality and over-valued stock price could be another factors in being depressed.

May the Buddha bless you?

