If you dont like capitalism you can always emigrate to Cuba, North Korea or Venezuela.
Thanks for the fallacious thinking (specifically, false dilemma)
I did not say "capitalism is evil." I said "capitalism should not be about bankrupting sovereign nations." There are plenty of other ways for a hedge fund to profit without deliberately forcing a nation to default.
Argentina has no choice because nobody else wants to help them them (and for good reason).
You didn't read my question. Here it is again.
How many times has IMF intervention actually made a situation better? What's their track record?
Wrong. They barely enacted those reforms you mentioned and pretty much stopped them altogether and then went back to meddling with the economy, just like all Keynesians and socialists do, so when the IMF saw that they stopped supporting the country.
Uh, no. Argentina deliberately refused further IMF assistance. IMF and bond holders were pushing it towards austerity, which would have crippled growth (as we've seen with many European nations recently). As it was, IMF requirements pushed them towards devaluing the peso, which caused an economic disaster.
There's no question that many of Argentina's problems were created by various Argentine governments, with varying degrees of legitimacy. But it doesn't look like the IMF did much to help, because they're focused on repaying foreign creditors rather than fixing economies.
Argentina never made any lasting reforms and continued their corruption and manipulation of the economy until it blew up on them, then they all of a sudden decided to thumb their nose at the world and defaulted because they didnt want to pay what they owed and then expected everybody else to accept their terms- sorry, but only the sycophants ever agreed to it and Im glad that the two hedge funds fought them back.
Why? What have those hedge funds done to improve the economy of Argentina?
They aren't helping any of the other creditors, because their intransigency holds up payments to all the creditors. They aren't helping the economy of Argentina, which will tank if it undergoes the "reforms" you want. They certainly aren't helping the citizens of Argentina, by stripping the nation of its reserves and keeping it in economic turmoil.
I must admit, I was wrong. Argentina doesn't owe $15 billion. They're on the hook for about
$100 billion if they do what the hedge funds demand.
Long story short: Their current agreements require them to treat all bondholders equally. While RUFO is active, if they pay the NLM group in full (as NLM demands), they will be required to make all of the bondholders whole, to the tune of $100 million (or 3 times their reserves). They were trying to pay some of the bonds, but the US court blocked them because, again, the agreement requires them to treat all creditors equally.
So even if they want to pay off the $1.5 billion to the holdouts, doing so would trigger a debt obligation they can't possibly afford. Hence they've been trying to wait out RUFO, which expires at the end of 2014.
Obviously it's much more complex than this capsule explanation. And I'm not saying that Argentina are the "good guys" or can do no wrong. I've already explicitly stated that Kirschner's attempts to blame the US government and scare her constituents is wrong, and not helping. They also apparently made some very poor and/or short-sighted arrangements with the original default.
By the same token, the hedge funds are certainly not the White Knights of Capitalism. They're screwing over an entire nation
and all the other creditors, because they won't take a haircut like all the other bondholders, on loans they purchased long after the initial default, for around 10¢ on the dollar. They could take the same deal as everyone else, and still profit, especially if they bought a bunch of CDSs on their investment (which is almost certainly the case).
So in this particular case: Screw the hedge funds. They can still make a profit without keeping Argentina in turmoil. And it's not their job to teach Argentina a lesson, or to force Argentina to change its fiscal policies.
