Should Argentina not pay its bondholders by Friday, it will default for the second time in 13 years. Argentina is paying investors who swapped their previously-defaulted bonds for new, less valuable bonds, but isn’t paying investors who refused the swap. A US judge is now prohibiting Argentina from paying anyone until the holdouts are satisfied. There’ll be no contagion, but Argentina’s economy may shrink due to reduced spending by bondholders.
Tag Archives: Argentina
‘Mazing Messi
The Friday File: Lionel Messi recently set a record by scoring his 86th goal in a calendar year for Barcelona and the Argentine national team combined. This broke the record of 85 set by West Germany’s Gerd Muller in 1972, who broke the previous record of 75 goals set by Pele in 1958. Messi scored 75 goals with his left foot, eight with his right, and three with his head.
Big Mac Attack
The Friday File: The Economist, using only the price of a Big Mac, created “the Big Mac Index” to measure the costs of living in each country. Knowing this, Argentina’s Prime Minister pushed McDonalds to keep the price of Big Macs artificially low to make it look like prices are stable when there is serious inflation. The unintended consequence; McDonalds loses money selling Big Macs and thus promotes everything but.
Luck for the Lady President
This past Sunday Argentines reelected president Cristina Kirchner. Like all good politicians lady luck has been with her. Argentina pulled out of its ’01 financial meltdown by; not paying its bills, devaluing its currency and defaulting on its debts. Miraculously, this worked (8% annual real GDP growth) because commodity prices began rising in late ’01 and have remained high ever since due to strong emerging market demand.
Return to Drachma
Greece must leave the Euro! Argentina (Arg) shows why. From ’98 through ’01 Arg was in a bad recession; the Peso was pegged to the USD. Arg borrowed from the IMF cut spending and the economy tanked. Then Arg defaulted on its foreign debt. The economy shank a bit but has been great since. In 3 years Arg was back to its pre–recession level of GDP. If Greece remains in Euroland it will take it 10 yrs.