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Win us with honest trifles

CFK addresses the nation re. bonds

As Abel notes in his thoughtful analysis of the situation, last night’s appearance of CFK (after all the football matches had finished, obviously) had three parts to it. She explained (this link has the youtube, so go watch it yourself) to her citizens in the type of terminology that non-financial experts can absorb easily and with the obvious government position bias:

1) How Argentina had got to the position it finds itself in today regarding external debt, with a lot of emphasis on the 1976-2001 period when the dictatorship and subsequent governments took out the “cheap looking” debt, then later restructured it to put the country into hock even further.
2) Gave an overview of what the “vulture funds” are, differentiating their position from those foreign holders who were severely affected by the 2001/2002 default. It’s at this point she said that Argentina would not default on its honoured positions (as predicted) and talked of the vulture funds position of extorsion (also right on playbook).
3) Explained in general terms the position of her government to the court decision and decisions the country will need to make in the near future after the US Supreme Court ruling yesterday.

The last point is obviously the most interesting one for us today, and it was notable how she kept things very vague and did not go into any sort of specifics. One impression I did get, that was reinforced by a couple of repeat viewings, is that CFK is preparing Argentina for a period where the country is locked out of the external debt market. But overall what she did say fits right in with your author’s call yesterday morning; she’s not going to pay. No way.
The most interesting views and opinions won’t be those of CFK, however. This is going to be one of the central topics of the 2015 Presidential election, so the positions of the main candidates on the Bonds question will be key. We know Macri will say “pay” and Scioli will say “no pay”, but what of Massa?

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