So Much For The Sanctity Of Institutions

[sesamosinsal]

From La Nación:

"Sturzenegger said that he was just an agent, not a representative from a government body. He said that everybody speculates with dollar futures and that we were going to make an absurd profit. He said that he would not recognize the difference of exchange rates, and that we would have to accept the losses," a banker told LA NACION. "We're going to lose billions of dollars, and we also risk having all of our clients, to whom we sold futures contracts, sue us," the banker continued. Additionally, another source who was at the meeting opined: "It's a disaster. They just got in, and they are going to default."

From Ámbito.com:

According to sources contacted by ámbito.com, the Central Bank has backtracked on the idea of creating a payment scheme. With the payment scheme, Sturzenegger wanted to establish new prices for the futures contracts using the traded values in New York.

If the Central Bank doesn't pay the contracts, even if Vanoli's operations were transacted at a low price, the Central Bank will default on obligations that it has with ROFEX, the Rosario-based exchange and the MAE, the market where banks operate.

In one of the negotiations, Sturzenegger informed the banks that he wasn't going to comply with the contracts. The executives responded that the banks were intermediates and that they, in turn, sold to companies. Among the companies holding the contracts are the 100 most important companies in Argentina. There aren't any vulture funds. Sturzenegger's response: "Persuade those companies that the transactions are null and void." Guillermo Moreno's ghost has reappeared.

¿Cambiamos?

(bolding mine)

 

[Rich One]

Two options Default, or put Vanoli in jail for life for spilling the beans, and then default.

Examine EACH Dollar futures trading Contract from October 25 onwards for possible Insider Trading...!

 

[sesamosinsal]

Two options Default, or put Vanoli in jail for life for spilling the beans, and then default.

Examine EACH Dollar futures trading Contract from October 25 onwards for possible Insider Trading...!

The third option is to not devalue, which the reason why Vanoli and Co. sold the contracts in the first place.

But it looks like we're back to "persuading" (i.e. threatening) companies and banks to accept losses, not paying debt obligations, and not upholding the be-all-and-end-all importance of "seguridad jurídica."

Oh, the irony.

 

[RodalfoWalsh]

The third option is to not devalue, which the reason why Vanoli and Co. sold the contracts in the first place.

But it looks like we're back to "persuading" (i.e. threatening) companies and banks to accept losses, not paying debt obligations, and not upholding the be-all-and-end-all importance of "seguridad jurídica."

Oh, the irony.

If what Vanoli did wasn't criminal, it was at the very least completely immoral antidemocratic and reprehensible.

 

[sesamosinsal]

If what Vanoli did wasn't criminal, it was at the very least completely immoral antidemocratic and reprehensible.

I don't think it is criminal. It was a dirty play, but not criminal.

Vanoli would have a great defense. One could argue that the contracts were sold in an effort to provide stability and show the BCRA's intent to maintain that stability up to a certain date, regardless of who won the elections.

That said, let's not ignore the fact that Macri and his team are now asking companies to accept billions of dollars in losses, not respecting legal contracts, and seem all but intent on defaulting on debt obligations. They accused the Kirchners of doing the same, and ran a campaign that promised to "change" this. What gives?

(Again, I am looking at this from an institutional perspective.)

At least the Kirchners negotiated with and paid 93 percent of bondholders from the previous default (nontechnical), which ironically Sturzenegger has some blame for.

 

[dennisr]

"Breaking a trade", happens all the time. The trade is corrupted. Welcome to the real world. End of story.

 

[sesamosinsal]

"Breaking a trade", happens all the time. The trade is corrupted. Welcome to the real world. End of story.

But Macri promised to restore the credibility of Argentina's institutions and bring back legal security.

I thought we were leaving this behind with Presidente Macri... I had such high hopes.

 

[dennisr]

And there is nothing wrong or corrupt with Vanoli selling $12.75 billion worth of dollar futures contracts at 10.20 pesos per dollar on the local exchange (ROFEX) yet the same contract sold off-shore (New York) was going for 14.44 pesos per dollar? No red flags?

 

[ElQueso]

Untangling the mess that Cristina left is not easy and will require the help of everyone. As you said, it didn't really matter who won, this problem was still there. What did I see reported something like 15 billion dollars that the government has obligations to cover due to Vanoli et al trying to make things look stable instead of trying to actually fix things? No matter who was coming into the presidency, Argentina could not have upheld the futures that Vanoli sold, as far as i can tell.

And how does one continue to maintain a fictitious price without enough money in the reserves anyway? How long could they keep wearing no clothes until there are even more serious problems?

At the very least, what I see is Macri talking to everyone and trying to negotiate a way out of this mess instead of a few people in an inner, closed circle telling everyone how it's going to be. They were trades made in bad faith with an unsupportable price - which, BTE, just about everyone had to know who was involved in trading at those prices. He doesn't seem to be dictating this to anyone, but rather is trying to figure out the best way to get out of a bad situation left over from unspeakably horrible fiscal management at best and sheer arrogance and corruption of the truth more likely.

 

[sesamosinsal]

And there is nothing wrong or corrupt with Vanoli selling $12.75 billion worth of dollar futures contracts at 10.20 pesos per dollar on the local exchange (ROFEX) yet the same contract sold off-shore (New York) was going for 14.44 pesos per dollar? No red flags?

Legally, no.