So the Argentina’s second default this century is finally done. Referring to Bloomberg, by defaulting today, Argentina may trigger bondholders claims of as much as $29 billion — equal to all its foreign-currency reserves. Just remember that the last 2 days have seen ‘smart money’ buy Argentine bonds and stocks to all-time record highs.
Some more information from Bloomberg :
If the overdue interest on Argentina’s dollar-denominated securities due 2033 isn’t paid by July 30, provisions in bond indentures known as cross-default clauses would allow the nation’s other debt holders to also demand their money back immediately. The amount corresponds to Argentina’s debt issued in foreign currencies and governed by international laws.
In a default, even a temporary one, Argentina’s economy will contract and the odds of a crisis are high, according to Marcos Buscaglia, an economist at Bank of America Corp. Money demand will become unstable as Argentines scramble for dollars, causing the peso to slump, he wrote in a report today.
“Argentina’s current weak fiscal, monetary and external conditions make the probability of the situation spinning out of control quite high,” he wrote. “Argentina’s payment capacity should not be taken for granted if it defaults.”
I think most people are misunderstanding the “risk” here!
Of course the funny money printing presses will fire up to cover a one time event like this, but Argentina has to be punished for this, there has to be an example made of them, because if a default with massive western banking loses occurs and then the Argentinean economy explodes with GDP of 6-8% the next quarter without the anvil of debt payments to the West on its head, you can quickly see how that could cascade in a hurry!!
The elites that authorized this right down to the average citizen, must be made to feel massive pain and instability from this, or this whole shit show of debt and fiat bullshit will be in jeopardy!