Posted on 06/04/2008 7:29:33 AM PDT by TigerLikesRooster
Argentine alert as inflation spectre stalks half the world
Ambrose Evans-Pritchard
Last Updated: 1:12am BST 03/06/2008
Argentina is defaulting on its sovereign debt yet again, this time by stealth. Wealthier Portensos with a nose for trouble are pulling their savings out of Buenos Aires banks. Most are buying dollars, or slipping across the Rio de la Plata to deposit their stash in Uruguay.
European and US pension funds that snapped up Argentina's peso bonds at the height of the credit bubble are discovering that it pays to probe the politics of Latin America - and indeed, Eastern Europe, and emerging Asia - before taking the plunge.
It seems like only yesterday that Argentina halted payments on $95bn of external debt. The "Great Haircut" of 2001 was the biggest default in history. Investors are so forgiving.
Argentina's trick this time, under the presidential double act of Nestor and Cristina Kirchner, has been to purge the National Statistics Office and appoint a friend to manage inflation data.
The official Consumer Price Index (CPI) is 8.9pc. This is the benchmark used to set payments on inflation-linked bonds, now 40pc of the country's debt.
The true inflation rate is more than 25pc, according to union staff of the statistics office. They allege manipulation. St Luis province is issuing its own data, three times higher.
(Excerpt) Read more at telegraph.co.uk ...
Ping!
Thanks for the ping.
“Hey, wanna buy some derivatives, you know, CDO’s CDS’s, CDA’s??? Got a lot at a really good prices. No, I’m not sure of the collateral they have or exactly whose debt it is dollar for dollar, but, they can make you a lot of money....trust me!!... They’re really cool looking pieces of paper and their values only been leveraged 9 times!!”
The true inflation rate is more than 25pc, according to union staff of the statistics office. They allege manipulation. St Luis province is issuing its own data, three times higher.
hmmmm - reminds me of the FED!
What's the big deal? They do the same thing in the U.S.
You wish.
In Argentina, Russia and similar states this has been the historical economic policy and source of wealth for the ruling class. Borrow abroad, refuse to pay, with the added bonus of confiscation from the middle class at home by ruining the currency. The beat goes on.
By not investigating the Clinton mob’s numerous crimes against America, and by not rooting out the mobsters in State, FBI, and other government agencies, the Republicans have failed us enormously. They are complicit in Bill Clinton’s crimes by not exposing them plainly for America to see, and calling out journalists and their employers for complicity in these crimes. I’m disgusted.
Considering Argentina’s history of defaulting on tis sovereign debt for the past 100 years only a fool would invest there even with what appears to be juicy interest rates.
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