Posted on 08/01/2014 7:51:42 AM PDT by SeekAndFind
Ok, you economists, this is a quick exercise in free association: When I say “South America” what do you think? If you said “default,” go to the head of the class. Really, it’s the whole bloody continent (think “Mexico,” amigo), but let’s just look at Argentina, an economic basket case if there ever was one. The only question I have is why, given its recent history of fiscal incontinence [1] (not to mention political barbarousness [1]), anyone would lend them a nickel.
The latest episode, which has been much in the news lately, involves more than $1 billion that Argentina owes to Elliott Management, a New York-based hedge fund. Things came to a head yesterday (well, I am writing from New Zealand, and somehow lost Thursday: it happened on Wednesday in New York) when Argentina failed to make a $500 million bond payment and slid, officially, into default. As the New York Times reported [1], Argentina had the money on to make the bond payment, but a right-thinking New York federal court judge had ruled that the spendthrift country had to pay its other creditors first. Clever work!
Of course, the New York Times is all pursed-lips about this. It describes the head of Elliott Management, Paul Singer, as “a billionaire,” i.e. a bad guy, and goes on to note with distaste that the hedge fund’s pursuit of Argentina “is motivated by a desire to make money.” You don’t say? Is that a bad thing?
The Times enlists left-wing economist Joseph “Inequality” Stiglitz to castigate Elliott. “We’ve had a lot of bombs being thrown,” Mr. Stiglitz warns, “and this is America throwing a bomb into the global economic system.” Really? Why isn’t it more accurately described as an American firm attempting to collect a legitimate debt?
(Excerpt) Read more at pjmedia.com ...
When you go back and look at how Greece fell apart economically....gifting government funds back to the taxpayer at a faster rate than they’d ever collect....and companies vacated Greece, it’s almost the same deal that should have occurred in Argentina a decade ago....except they used loans to keep themselves afloat.
No one is going to come and help Argentina at this point, and I think the public will demand answers from the government when they can’t get their banking system to work.
Argentina should have been a major economic power as a major exporter of grain, beef, pork and chicken meat had they got the right economic system in place. Instead, they got the same economic system as Spain and Italy and no wonder why the country is in default a second time in this century.
That country has not learned a danged thing about economics since 1946.
Just a point of geography - Mexico, along with the United States and Canada, is part of North America.
“When the money keeps rolling out you don’t keep books...”
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