That doesn't change the fact that Aurelius is unquestionably acting in a hostile and predatory manner.
This is not the first time in history that a sovereign nation has defaulted on its debts. As far as I know, it is the first time that an entire nation was bent over a barrel by a private entity who bought up the nation's debts.
Not so much. No one seems to be screwing over Greece in order to trigger credit default swap payouts.The Argentines have been intervening in every single aspect of their economy and have not curtailed their spending habits thereby continually destroying their economy- its pretty much what happened to Greece and a lot of the other EU countries.
In addition, while government spending has been slowly growing, the debt-to-GDP ratio has dropped significantly since 2003.
Yes, there is. It's called a "credit default swap."If there was any insurance they would have used it. There is no such insurance against government default.
CDS's are part insurance, part bet, part hedge. They are triggered when a particular debt instrument or arrangement defaults. Neither the issuer nor purchaser of a CDS needs any financial involvement whatsoever to buy one.
It's been around for over 10 years, and it's what got AIG into such big trouble. AIG issued CDSs on CDOs and MBSs for years, and as long as they were solvent, AIG was collecting huge fees. When people started defaulting on loans, AIG was forced to pay out more and more, until it drove them bankrupt. The US government stepped in and made the purchasers of the CDSs whole, which helped prevent the global financial system from melting down. It turns out that Goldman Sachs was a big holder of CDSs at AIG, so they were basically betting against derivatives that they were selling to their customers.
And yes, it is fairly likely that Aurelius et al have purchased CDSs on Argentine debt. Even if they don't have a plan to intentionally push Argentina to a second default, that would be a prudent move.
Erm... Actually, that's what a default actually is. You owe money, you can't pay, you offer to pay back a portion of your debts.Wrong. If Argentina wants to return access to the world financial markets then they have to pay their debts just like all the other nations of the world. Who gives Argentina the right to default and not have to pay off debts? Nobody.
In turn, once a nation defaults, no one is obligated (legally or morally) to make any loans. Any such lenders do so at their own risk.
That's how it works. Are you genuinely not aware of this process?