Kicillof Pays To 92% Of Bondholders, Griesa's Move Now?

[Don Alberto]

Economist with a PhD are like good lawyers: both créate rules that allow them to win. While lawyers win cases, economist develope rules to win money: to make his economy stronger. It is not a science, it is doctrine.

If we follow those rules, we fall into poverty and they get richer. It is not neutral.

Perhaps this would make more sense in Lunfardo.

Sure, Bajo philosophy: When proved wrong, blabber. Perhaps one or two of the readers are misled to believe you know what you are talking about.

The people with Ph.D.s in economy I quoted did not create rules, they simply listed facts.

 

[Bajo_cero2]

Simply claiming that I make a misconception is doubleplusungood, especially as you on previous occasions have misinterpreted my stance.

Point the specific misconception out.

Of course not, and the same goes for e.g. corporate bonds. Sovereign bonds, on the other hand, are guaranteed by a state which, in particular in the case of Argentina, has huge assets compared to e.g. corporations (except the largest multinationals). A retail (non-professional) investor has - should be able to have - confidence in a state's willingness and ability to comply with its obligations.

Another important parameter in the default: What percentage of GDP did the Argentine sovereign bonds represent in e.g. 1994 and 2001?
(I do of course know the exact numbers, so check them carefully)

Previously, developing countries, in more numerous cases than I care to list, used e.g. the income from guano, from the customs house, from the railroads, oil wells, etc. as a guarantee for repayment. (Argentina, Chile, Uruguay, Peru, ..., have done excatly that in the past).

When it comes to the Argentine sovereign bonds, the more than half million retail investors had no idea of risk assessment, their guidelines came from Argentine propaganda propagated in Western newsmedia, same as one previosly could read in e.g. New York Times how marvellously cheap, etc., Buenos Aires was (you may remember the debate on baexpats then).

You may kiss my big toe

The high profit of the bonds is water clear about the risk of a bond.

However, now you are clear: Argentina has Vaca Muerta and the vulpures want it for peanuts.

I hope you really get a check for so much propaganda.

 

[Bajo_cero2]

Sure, Bajo philosophy: When proved wrong, blabber. Perhaps one or two of the readers are misled to believe you know what you are talking about.

The people with Ph.D.s in economy I quoted did not create rules, they simply listed facts.

Right, and you also believe in St. Claus.

By the way, seems you are receiving a lot of mails Today,

 

[ajoknoblauch]

Right, and you also believe in St. Claus.

By the way, seems you are receiving a lot of mails Today,

As opposed to San Néstor or http://en.wikipedia.org/wiki/Santa_Evita

 

[EdRooney]

I am not aware of where I misinterpreted your stance. Please show me.

As for QUESTION 1: I (and others) already stated your misconception above several times: you have not shown any understanding of the concept of risk and investment.

You have then, repeatedly, argued that maybe some of the investors didn't understand all of the risks involved. But there's a difference between bonds and a casino. When I buy a bond, it says explicitly in the bond agreement that there is no guaranteed return on the investment. When I enter a casino, there is no such fine print. So you if you were to be consistent, you should first be arguing that casinos and the lottery should return all of their gains to their investors. Sovereign bondholders would be way down on that list.

If you want to talk about how we can ensure that all investors are informed about what they are buying, I would be totally into creating stricter laws and better enforcement. If you want someone to campaign against sleazy brokers who get widows to invest in more risk than they should, I'll be first on board. But that's an issue with the broker, not the issuer. Furthermore, it would be kind of silly to have to sacrifice spending on schools and hospitals just because 98 year old Norma didn't have things properly explained to her. (Or maybe she did. Who knows beyond your speculation?)

So at least show some kind of understanding of risk and investment and I'll quit riding your keester about insisting with the same misconception.


QUESTION 2. As far as 'is' or 'were' in the sentence you quoted, it makes no difference; the bonds were sold at a higher interest rate because of the risk of default, just as are the bonds being sold today. Either way, you avoided answering the question: what would be the effects to the global financial system of the major policy change you are proposing. In fact, you might be right: maybe it's a good idea to completely overhaul the sovereign bond market. I'd be all ears for a thorough proposal, but please spell it out, and let's look at all of the consequences.

Lastly, I would just add one other thing. I have no truck with the silly allegations about you being some paid shill, and I agree with you that those who most aggravated the Argentine debt did so under Menem and De La Rúa, not the dictatorship. That said, you still have a long ways to go to justify your position that defaults should never be allowed.

 

[Don Alberto]

QUESTION 2. As far as 'is' or 'were' in the sentence you quoted, it makes no difference; the bonds were sold at a higher interest rate

How many percent?

I have a very precise knowledge of risk management, but the point is, that the great majority of bond buyers had no idea of it, they were cut short.

The difference in perception is most likely because you are from the US where almost anything goes, while in my home country you end up in jail if you cheat or mislead investors and are caught (several CEOs and members of boards of directors are still in jail as a result of the financial crisis and a couple are on their way).

BTW: have you any idea of the size of the prospects? expecting a lil' ol' lady to read and understand 536 pages of legal language?

 

[Somewhereinba]

 

[EdRooney]

- I am not from the US. My native country defaulted recently as well (I think you've been calling that "viveza criolla")

- I am not going to play Guess What with percentages. If you have information, put it on the table. Meanwhile you only seem to be using this as a tactic to avoid the two very basic questions I asked.

- If you have a very precise knowledge of risk management, you have yet to show it on this thread. I'm ready to believe you though. I'm ready to go along with your new concept for sovereign bonds. Please spell it out.

-About cheating or misleading investors, that would be the broker, not the issuer. Again, you seem confused on this very basic point.

 

[Don Alberto]

- I am not from the US. My native country defaulted recently as well (I think you've been calling that "viveza criolla")

- I am not going to play Guess What with percentages. If you have information, put it on the table. Meanwhile you only seem to be using this as a tactic to avoid the two very basic questions I asked.

- If you have a very precise knowledge of risk management, you have yet to show it on this thread. I'm ready to believe you though. I'm ready to go along with your new concept for sovereign bonds. Please spell it out.

-About cheating or misleading investors, that would be the broker, not the issuer. Again, you seem confused on this very basic point.

You keep claiming that the yield on Argentine bonds was high. If you don't know the numbers, how can you know the yield?

Besides, around here it's long past midnight, so I'll get to bed.

PS I find it difficult to make you understand, that although I as an licensed engineer have a good understanding of risk assessment and management, I quite understand how and why the more than half million 'little people' investors did not, and that they were mislead by the Argentine propaganda, as previously mentioned.

 

[EdRooney]

I understand that millions of investors do not understand risk. I have said I would join you on a campaign to help. Yet you insist on blaming the bond issuer for that instead of the broker who sold them the investment. This shows that you may understand engineering risk but do not understand finance risk. I assume you continue to make this basic mistake because you are tired.

Have a good sleep. Hopefully you can answer my 2 basic questions tomorrow.