Telam: “The new debt swap will be with foreign and national law, without banks and without commissions”

Lead Articles:

 

Telam: “The new debt swap will be with foreign and national law, without banks and without commissions”

 

Clarin: “In the end, the bonds of the new swap will be governed by U.S. law”

 

Perfil: “The Paris Club rejects the new swap: “it’s cunning””

 

La Nacion: “The market, altered by the holdouts”

 

Clarin: “With the view in New York”

 

Clarin: “The government’s pedal won’t go any further anymore”

 

Pagina/12: “Financial lobbies”

 

OTHER NEWS ITEMS:

·         La Nacion reports exclusively today that there are decisions being taken at the Casa Rosada for a “change in strategy” for the electoral campaign, starting with a “change in tone” from Cristina herself.  “It had to change, because the previous style didn’t work,” an unnamed official says.  It is due to the fact that “Cristina is obsessed with coming back from the hard defeat in the primaries” and improving the outcome in October “because she fears a scenario of difficulties governing.”  In terms of policy announcements, she is looking at a series of more tax relief measures like this week’s income tax exemption for the first 15,000 pesos earned per month for salaried workers, giving more relief to the self-employed, cutting VAT on food products, and other measures to win votes.  The measures are being analyzed by Hernan Lorenzino and AFP head Ricardo Echegaray, and “the most influential these days is Vice Minister Axel Kicillof.  The President took away big decisions from Commerce Secretary Guillermo Moreno, criticized by the rest of the cabinet.”  On the political side, there will be an effort to clamp down on La Campora’s visibility in the next 60 days, and to take firmer control of the campaign from their ranks, putting it in the hands of Cristina’s trusted deputies and loyal governors, to “de-Camporize” and “Peronize” the campaign, with Cristina “seeking to show herself as likeable, tolerant and the President of all the Argentine people.””

·         Perfil reports that “after October comes the tax man to pay for the party”, and that the government is examining measures for after the elections to recoup some of the huge spending costs that will be accrued in trying to win votes.  Among the measures under study are cutting energy subsidies, raising taxes on purchases made abroad and a new tax on sales of luxury cars.  In a separate Perfil piece, economists believe that the BCRA reserves could fall as low as US$20 billion by the end of 2015.

·         Mauricio Macri gave an interview to La Nacion, where he said he aspires to be “the president of change in 2015.”

·         In an op-ed in La Nacion, entitled “The President turns an Cristinism looks to the other side”, Jorge Fernandez Diaz writes of how “most progressives are never interested in reality” in a general attack on Kirchnerism’s governing style.  He opens the piece with the following passage (the debt issue is not again referenced in the piece):

“Say that a man wants to learn diving and he turns to an expert who recommends a didactic experience at a determined location along the coast. When he goes under water, two sharks attack the client and chew off his legs. After several operations, the client reflects in bed on his misfortune. His anger is directed at the aggressive nature of sharks or the ineptitude of the instructor who got him into that infested sea and left him defenseless against them.  Everyone knows the repugnant efficiency of the "vulture funds" that swim in the cold and relentless international financial ocean. What is surprising is the managerial negligence which is now playing us within range of their teeth, with the danger of judicial default and in a sequence of events that, if God doesn’t illuminate the American judiciary, may complicate the economy of two generations of Argentines.

 

It doesn't matter that we have gone through a decade at Chinese rates and we can boast of having growth close to Australia and Canada. And that with those exceptional conditions we have not resolved our external front with the holdouts and the Paris Club, something that was envisaged in the original schedule of Néstor Kirchner. What matters for Cristinist progressivism, to the guy who is arriving late, for the apostles of the changing narrative, is that dramatic circumstance allows for putting together an epic of patriots and sepoys again for national liberation and going against the sharks. That they are evil and they bite.”

·         In an op-ed in Clarin, a relative of one of the victims of the AMIA bombing writes of the “bitter fruit of the pact with Teheran,” calling for the memorandum of understanding with Iran to be overturned by Congress.  In one passage, he writes:

“The request from U.S. members of Congress for their country to stop honoring trade commitments with Fabricaciones Militares, the sudden change of position of the International Monetary Fund linked to support for our country in the lawsuit with the vulture funds and above all the rulings from district and appellate courts in that lawsuit should not be analuzed without tying them to the signing of the Memorandum.”

 

 

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Telam

The new debt swap will be with foreign and national law, without banks and without commissions

 

Sunday, September 1, 2013

 

By Mara Laudonia

 

The new debt swap (Swap III) which the government is preparing to hold will be under the same conditions as in 2010, with foreign and national law, but with a novelty: the economic team will advance in an operation without international placement banks and without commissions.

 

Government sources confirmed it to Telam, detailing that Swap III, which is under consideration in Congress, wll offer “the same three families of bonds that were issued in the operations of 2005 and 2010, both in foreign as well as national legislation, which will include New York law.”

 

The economic team does not rule out then immediately activating the offer, which they told Telam will be without banks and commissions, even in issuances with international jurisdiction, which will be a novelty in the use and customs of global finance.

 

"Can bonds be placed abroad without banks?", asked Telam.

 

"Yes they can, as we do it here through Caja de Valores, we do not need banks, it can be evaluated, for example with the Consob, among others," said the source.

 

In this way, the government is taking a step forward in its policy of lowering the payment of commissions and the lobby of the banks: in 2010, commissions to the banks came out to 0.4% but it was achieved through the creditors paying them; and in the swap of of Guaranteed Loans which took place (2009), the operation was done through Caja de Valores, without others.

 

It should be recalled that in 2005, even with all the headwind against launching the exchange, lower commissions were achieved with respect to levels prior to the default, to 0.4 percent in the biggest mega-operation in history (until Greece came in 2012) of more than US$80 billion. In turn, during the 2001 Megaswap (an operation of US$ 27 million), commissions of 0.56% (150 million dollars) were awarded to banks.

 

In this way, it is expected that there will be bonds issued in dollars and euros, with US and New York legislation, and the offer will be presented in New York, Rome, London, and Brussels. The novelty is that there will be no issue in yen, since 99% acceptance was achieved in that jurisdiction after the culmination of the swap in 2010.

 

The source explained that "there is no such restriction in United States for Argentina to present an exchange offer to the 7% of holders of debt in default".

 

What does exist is a suspended sentence that, to pay the 93% of creditors who reached a debt agreement with the country in previous swaps, the vultures must be first paid 100%.

 

Here the solution offered by the government is the guarantee of payment with bonds with national legislation; however, this voluntary option for the holder is not expected to be instrumented in the very short term, since the official betting is on first trying to exhaust all legal recourses and reverse the judicial setback before the Supreme Court of the United States.

 

Precisely, as a gesture to the Supreme Court of the United States, the bill for the reopening of the swap contemplates the suspension of the lock law, which could end up being repealed after the debate in the Senate, according to the bills filed by the opposition.

 

It is also unknown still whether the opening of swap will be indefinite, in a way of perpetuating the "equality of treatment" to creditors.

 

The possibility remains of it ending up as a proposal open "ad eternum", with the same option of haircut, and therefore performance, for "all" the creditors of the universe of US$81.8 billion that fell into default in 2001: that means, for 93% of the swap - which, despite the redundancy, they already accepted – for holdouts (which are still reluctant to enter) and also the vulture funds.

 

According to parliamentary timing, the swap will be taken up on the floor of the Senate Wednesday, and there are moves to take it up in House Committee quickly, so that on September 11 or 12, it could become law.

 

After approval, the economic team that will work on the operation at the secretariats of Finance is virtually the same that did Swap II, when Lorenzino was occupying the post of his right hand man, Adrián Cosentino.

 

When the source mentioned to Telam that there will not be any banks, he said by knowledge of the case: when Swap II was held, piloted by Amado Boudou, the same team met up with the fact that the big placement banks had failures in finding the small bondholders, especially in Italy.

 

They were several times that President Cristina Fernández de Kirchner pondered the feat of changing strategy in mid-operation to go out hunting for bondholders, that took place while the South Africa World Cup was being played and the Bicentennial celebrations were bring held in the Argentina.

 

They will use this 'expertise' now to act without the banks, and count on the advantage that there are funds that were recruiting debt and who expressed an interest in joining the swap; in fact, the old bonds in default rose 26% in value after the announcements.

 

Among these large funds, many are already creditors who accepted the swap, and bought more bonds in default. They belong to the Exchange Bondholder Group (EBG), who joined to complain to the Court of New York, whose ruling, they believe, affects private property, and cannot be ruled out that this group will file a complaint before the Supreme Court.

 

Overall, this operation is not pursuing the objective of achieving maximum acceptance, but rather to ensure that all creditors have equal treatment.

 

It will also serve to lower the amount of lawsuits from small investors and bondholders who went knocking on the door of the ICSID tribunals, although it is not expected that vulture funds will enter, due to their peculiarity in resisting collecting the same as the rest.

 

 

Clarin

In the end, the bonds of the new swap will be governed by U.S. law

Cristina had announce that she would propose to the bondholders to convert their bonds to Argentine law to avoid attachments.

 

Sunday, September 1, 2013

 

The threat to change the bonds issued under New York or London law to Argentine jurisdiction – to then be able to continue paying the bondholders that entered swaps I and II – as become, for now, only that, a threat.

 

There are no firm signals for now that a resolution will be issued  to open that "exchange within the exchange". Moreover: the reopening of the swap (now version III) that President Cristina Kirchner announced on Monday will be done through an offer that will include bonds with Argentine and foreign legislation.

 

So assured the official news agency Télam yesterday based on information provided by officials from the economic area.

 

The new debt swap that the government is preparing to hold will then be in the same conditions as 2010, with foreign and national law. Thus confirmed that agency through government sources, who pointed out that  Swap III, which is being considered n Congress, will offer "the same three families of bonds that were issued in the 2005 and 2010 operations both in foreign national legislation, which will include New York law."

 

This means that Par, Discount and a Global 17 bonds will be issued for accrued interest. GDP coupons will also be issued.

 

The announcement of the change of jurisdiction - voluntary - generated some excitement. It was read as a signal that with the imminence or the inevitability of a final ruling against the Argentina, the government was trying to "escape" the decision of Judge Thomas Griesa (upheld by the Court of appeal) by repatriating the payments to the bondholders, forcing them to come to Argentina if they wanted to get their dollars.

 

For the sentence to be firm, however, there is still the word of the Supreme Court of the United States. The Government has to appeal and then the Court must decide if it accepted the case.

 

But these days, it is feared that, because of the threat of change of jurisdiction, the U.S. judiciary could remove the stay that is allowing Argentina to delay enforcement of the judgment.

 

That caused a sharp decline in public bonds, both those issued by foreign law as well local.

 

The format that Swap III will have suggests that the government decided to keep the change of jurisdiction in the deck and play it just when the ruling that benefited the vulture funds is firm and immovable.

 

The new feature of Swap III is that economic team studying launching the offer without the services of private banks, even in issuances with international jurisdiction, which will be a novelty in the use and customs of global finance.

 

In this way, the government is taking a step forward in its policy of lowering the payment of commissions and the lobby of banks: commissions to banks were 0.4% in 2010 but they got the creditors to pay for it; and in the exchange of Guaranteed Loans that was held (2009), the operation was done through Caja de Valores, without others.

 

The Argentine government will try to capture part of 7% of the bonds that have not entered the exchange. Some are in the hands of vulture funds and surely they will not enter. What is planned is to show willingness to pay before U.S. judges.

 

 

 

Perfil

The Paris Club rejects the new swap: “it’s cunning”

 

Sunday, September 1, 2013

 

by Cristian Riavale

 

From Paris- After the adverse ruling in the case with the vulture funds, the Paris Club harbors no hope of being able to restart negotiations in the short term with Argentina over the US$9 billion in debt.  “There are more difficulties than reasons to be optimistic,” acknowledged an official in the leadership of the Treasury in the French Finance Ministry, the agency that coordinates the activities of that informal club.

 

In particular, the proposal to reopen the exchange that the Argentine government made last week didn’t go down well. Instead of opening expectations, that initiative created more confusion and mistrust, they say, because it reveals the "inexperience", the "lack of knowledge of the international reality", "lack of timing" and a "cunning that is difficult to accept" in the world of international high finance. But, above all, it is "extremely dangerous" because it raises many troubling prospects.

 

The first problem is that, as interpreted by the economic daily Les Echos, a new swap of warrants would "represent the third default in Argentina since 2001". "The problem [for the country] is that this is how the international financial circules are going to interpret it," said the expert, accustomed to the behavior of creditors and investors.

 

Secondly, the change of jurisdiction - to propose that future issuance adopts Argentine law – generated suspicions. "It is not certain that Argentine law and courts are completely reliable in the context of the Kirchner government", said a confidential report by the French bank Crédit Agricole. On the other hand, the United States Supreme Court, to which the government appealed, could interpret it as a maneuver and a hostile gesture toward the American judiciary.

 

In addition, France is concerned about the systemic risk of a final ruling in favor of the vulture funds.

 

 

La Nacion

The market, altered by the holdouts

The reopening of the swap and the decision of the American Court are generating doubts  

 

Sunday, September 1, 2013

 

By Sabrina Corujo  | For LA NACION

 

The action by the government against the holdouts, does it speed up the timing of a default? Intense weeks are expected ahead for investors. The last rounds in August confirmed it and even ratified the recommendation of maintaining an active position within the financial portfolio, if what is sought is to come out successfully from the ups and downs that the market may be present in the short term. The trading will be key; while that means keeping in mind that it is not a market for just any type of investor. Volatility will remain high, and possibly there will be overreactions observed at different times, which go beyond the fundamentals or the technical analyses.

 

The evolution of the lawsuit with the holdouts will be one of the local issues with potential impact on the prices of financial assets; including, logically, the behavior of the dollar. The move by the government a week ago changed short term plans. On the one hand, announced the reopening of the swap, which, in general, brought almost unanimous opinions: it is not bad news, but it might have come late. The reason for the reopening was to show a sign of good will to the Supreme Court.  Concretely, this is because that at the moment the likelihood that the Supreme Court will accept the appeal from Argentina remains very low if the U.S. Government does not support the country (beyond analyzing if the decision will be known in one, three or six months).  For that, expecations are growing in recent hours about a meeting between the President and Barack Obama at the G-20 meeting.

 

On the other hand, the government proposed a "voluntary" change of jurisdiction for holders of exchange bonds with foreign law for another of equal status but with local law. Why? To minimize the cost of a rejection from the Court, if that happens.

 

Opinions on that subject are more divided, not only for technical reasons - among them, the complexity of the exchange itself-, but also because of potential legal complications. The greatest fear today, to which the market reacted in principle in a negative manner,  is happening because this proposal of a swap is taken as an "insult" to the US judiciary. That could lead to a lifting of the stay. In other words, there is a risk – an important probability - if the government’s action is taken as "contempt" it only speeds up the timing, and puts the country closer to the default. The reaction of the holdouts was swift, and surely it will deepen in the coming weeks. Quite possibly, equally, they hope that the change of legislation proposal is coming together to move forward.

 

At this juncture there is plenty of analysis to go around about possible scenarios and their chances. What will be the reaction of the holdouts? What chance of success could they have?  Will the Supreme Court accept the case or not? Could an acceptance or rejection be known by September 30, or only in 2014? What is the most suitable strategy for Argentina? Will the support of the United States be gotten? When will the announced swaps be operating? Are there any legal obstacles for DTCC or BONY, or other possible agents and/or investors involved, to participate in the swap? What will be the degree of acceptance, considering that national law always carries the risk of a possible pesification?

 

These are just some of the questions that opened up and they only will find responses over time, which ensures a high floor of nervousness in the market.

 

Throughout this process an analysis of the exchange rate must be added in. The government maintains - and is expected, it will continue to maintain - a strategy of acceleration in the devaluation of the official dollar. The annualized monthly rate roe to 31% in July, and 38% in August. It will also continue intervening in the marginal dollar and the "contado con liquidacion", after due to the higher risk, the blue shoots to levels around 9.80 pesos.  

 

And as if it weren’t enough, the external situation has to be added to this combination. September will be a more intense month; something that also should lead us to expect some short term caution from Wall Street, although the underlying trend will be positive. Syria and a possible military attack from the United States generated noise on the market. On the other hand, there is no doubt that the Federal Reserve is another focus of analysis. Eyes remains focused on the exit strategy from the QE3, since the market has already digested that there will be a change in policy, but it is now seeking definitions about when and at what pace. Some unexpected negative data published on the agenda of the country of the North in recent weeks, like doubts about the global economic recovery, have at times raised concerns very high about the actions of the entity.  For that, attention should be paid to the meeting of  the 17th and 18th. And, in the same way, to the political level, the succession of Ben Bernanke and the discussion over the 2014 budget and thedebt ceiling in the U.S. Congress.

 

Data to take into account

 

The coupons were one of the hardest hit in the last week – they were equally the asset accumulating more gains in dollars over the year; however, they will be among the most benefited if the stay is not modified, but as long as it not decided the scenario could keep falling if the climate of uncertainty remains.

 

 

Clarin

With the view in New York

An article in the NY Times lays out the financial risks of a definitive ruling against Argentina  

 

Sunday, September 1, 2013

 

by Eduardo Cardenal

 

The reaction of the Argentine government to the ruling from the Court of Appeals added new spice to the proceedings, which impacted on the Argentine bonds. The initial reaction was quite negative, but towards the end of the week the fall was attenuated. Country risk closed the week at 1,160 points.

 

The Government intends to repeal the “lock” law, and reopen the debt swap with identical conditions to the offer of 2012. And, of course, offering only bonds of national legislation. The sole purpose is to demonstrate that there is a willingness to pay to the holdouts (investors who decided not to enter the above-mentioned exchanges).

 

In addition, it was offered to bondholders who had entered in previous swaps the possibility of a voluntary bond swap that would allow those bondholders who today have domicile of payment in New York to change it to Buenos Aires, to ensure payment in the hypothetical case that the final defiinitve ruling of the case will affect the path of payments to foreign places.

 

Halfway through the week, an article by Floyd Norris in the New York Times again highlighted the impact that a condemnatory ruling for Argentina would have on the international financial system in the future, since delivering a lethal blow to debt restructurings could be in check the whole system of sovereign debt placement to the point of be possiby damaging the status of New York as a global financial center, and even affecting the value of the U.S. dollar to stimulate countries to issue their debt in other currencies and outside the jurisdiction of U.S. courts. If this idea prevails, the odds of the US government interceding for the Argentina will gain strength. Ultimately, systemic risk returns to regain the prominence which it had lost.

 

Given these questions, and amid the current uncertainty, the strategy of diversifying between short-term bonds in dollars (RO 15-AA17) and bonds adjusting to CER (PR13 and NF18) continues to be a sound investment strategy. The adjustable bonds in dollars (dollar-linked) have been very effective so far, while they are now sufficiently valued, but they have not stopped being a good cover for those who wish to cover themselves from a strong devaluation. Yields offered by some provincial warrants also seem reasonable based on the risk that is, in our view, excessively assigned.

 

 

Clarin

The government’s pedal won’t go any further anymore

 

Sunday, September 1, 2013

 

by Alcadio Oña

 

Kirchnerism has proven to be, indeed, a good payer, but it sounds excessive call it a serial payer. Argentina remains in default with the Paris Club, is still in a legal battle with Repsol over the expropriation of YPF that is arriving at the point of having to be faced,  and has several lawsuits with adverse sentences in the ICSID of the World Bank, plus the one that exists with the vulture funds NML Elliott with a very predictable ending. Still indefinite, and also partial, in that lot, there is US$21 billion in play.

 

According to the standard that the President used on Monday, it also could be argued that the world is full of serial payers, because with very rare exceptions all countries are up to date with their debts. Simply because they know the costs that a default entails.

 

And if the issue is fulfilled commitments, the one that has in reality been revealed as a good payer is the Central Bank, although at the expense of the reserves. Since 2010, and only because of the Debt Reduction Fund, the government already has withdrawn about US$28 billion to comply with private creditors. But that is just a part of the bar that is set..

 

The mountain of public bonds in dollars accumulated in the Central Bank comes to about US$38 billion. Coupled with transient advances, which finance state expenditures, have been transformed into being permanent, and so have national Treasury obligations, and the account goes up to at least US$65 billion.

 

Thus, in withdrawal after withdrawal, entity is loaded with 35% of the public debt, a percentage that will be tiny by year’s end. And smaller still if, with the current legislative majorities, Cristina Kirchner pushed for another Debt Reduction Fund. In 2005, the number was 6%.

 

Difficult if not impossible to deal with, the bill is on track to become a gigantic IOUs. It is the face that the government hides when it wave the flag of debt reduction

 

The international market, increasingly more expensive and far away, was crossed out of the agenda of alternatives some time ago: the President believes that this would mean submitting to the "casino of capitalism".

 

Although it smells old, another fact operates in the imagination of Cristinism.

 

In key corners of the Casa Rosada they still wag the history of the loan from the Baring Brothers, agreed to when Bernardino Rivadavia was in power.  The cash never arrived or only half arrived, according to which historian is talking, and evaporated in the hands of speculators and mortgaged the country. Since then, 189 years have passed.

 

In any case, to squeeze the Central Bank also is part of the game of dodging problems and kicking the ball forward. It can be useful when the time gained is used in search for different avenues, which has obviously not occurred nor perhaps will occur.

 

What is already in sight is the patrimonial deterioration of the entity. And if there are not shocks that alter the course direction until the end of 2015, the ball will fall heavily in the field of people who will succeed Cristinism. To leave the BCRA so exposed gives light to a serious problem, so everything is bring done on behalf of a debt reduction that the official figures themselves belie.

 

The technique of the bicycle was already painted as ineffective by them in litigation with the NML Elliot fund, in New York, since the first adverse ruling from Judge Thomas Griesa, if not before. Except for one difference. This time it was not necessary to wait too long: the ball is already bouncing in the end zone of the government, and the government must take charge of a problem that it created on its own.  

 

Everyone knew that the last sentence of the Court of Appeals would be unfavorable. The question had been reduced to finding out how bad it would be, and it came out in the worst manner.

 

"The vulture funds are still alive and kicking", Clarin headlined a commentary on January 12 of this year.

 

"Something smells bad in the Court of New York," said another, on March 1.

 

"The only thing missing from this movie (the one about us going all the way) is that the New York Court rules against the Argentina", ended an article from 23 June.

 

No chain of predictions of misfortune; the signals were sustained in reliable and independent sources, following the process step by step. And what did it occur to the Kirchnerist home team to say? That it was all a campaign against their government, that we were accomplices of the vulture funds, anti-Argentine, or still worse things.

 

The thing from always: if there are responsibilities, they are never theirs.

 

Now the President asks God to illuminate to the Supreme Court of the United States for everything to turn around, in a late tactical change.  Properly tactical, because it is hard to find a planned strategy planned and truthfully one in a complete sequence.

 

The NML Elliot case seems lost and the only thing missing is to know the aftermath. Although one has already poked through: the rebound of the parallel dollar, which forced a frantic move by Guillermo Moreno. The Secretary of Commerce largely knows from experience how things fall to Cristina from the flights of the blue.

 

There are no big surprises in these manners of maneuvering, because during the K era it has been customary to sort out constraints with short-term ways out. But this methodology is skidding more and more.

 

The list of consequences can be as vast as anyone wants it to be. From the energy crisis, the loss of reserves and the monumental and suspicious account of subsidies up to the inflationary process, the dismantling of the INDEC and red ink in public finances.

 

The World Bank has closed off credit to Argentina, with technical arguments, but ultimately by what it deems a lack of transparency in tenders and the privileges of the new oligarchy of concessionaries of the State.

 

Also shut is the window of the International Finance Corporation, the entity that banks private projects. And increased obstacles are being put on an entity, the MIGA, which gives guarantees for joint ventures.

 

One still must add a not insignificant fact in the times that are running now: inside the World Bank the United States has carved out a strong position and for that it is presided over by someone that Barack Obama appointed in mid-2012. For domestic consumption it counts little, therefore, that Jim Yong Kim was born 54 years ago in South Korea or is a physician and anthropologist who made is career in renowned universities in the U.S.

 

In the IADB the problems do not reach similar heights, but the voting in favor of the country is becoming increasingly tight.

 

"Today we are 51% against 49%", they admitted in official offices.

 

Pedaling difficulties, not assuming errors and must less correct them, going to the wall in every part of the field and enlarging it, if necessary, or passing everything through the filter of conspiracy theories, are common mechanisms in the airtight mini-universe of Cristinist power.

 

Surely, after 2015, some of them will disappear. But others are part of a thick coil which will inevitably have to be undone.

 

And, in addition, to pay the political costs of restoration.

 

 

 

Pagina/12

Financial lobbies

 

Sunday, September 1, 2013

 

by Alfredo Zaiat

 

American Task Force Argentina is the lobbying entity of the vulture funds NML, of Paul Singer, and EM Ltd., of Kenneth Dart.  They invest millions of dollars in disinformation campaigns in the U.S. press, with ramifications in the Argentine media, to influence public opinion, in the U.S. Congress, in the State Legislature of New York, in international courts, like in Ghana, and also in the city where Wall Street operates.  One of the biggest impacts by the vultures was the undue retention of the warship ARA Frigate  Libertad in the port of Tema, in Ghana, and to get a group of Argentine deputies to propose a collection to pay the complaint to lift the attachment on the insignia ship of the Argentine Navy with sovereign immunity, protection upheld by the International Tribunal of the Sea.  The other achievement was the ruling of the Court of the Second District of Manhattan which reproduces, like it did before with lower court judge Thomas Griesa, every one of the points demanded by the vulture funds, up to the use of the unmeasured language in derogatory adjectives toward Argentina, similar to the ones incorporated in press releases and ads from ATFA published in the main newspapers of the United States.

 

ATFA has been stalking Argentina after the success of the first exchange of debt in default, in 2005, which achieve an acceptance of 76 percent of creditors, a percentage that rose to 92.4 percent with the second swap of paper, in 2010. That organization is led by three former Clinton administration officials. The president Robert Raben was assistant attorney general of the Department of Justice, followed by Robert Shapiro, Assistant Secretary of Commerce for Economic Affairs, and Nancy Soderberg, Ambassador of United States in the United Nations during the Clinton administration. Paul Singer, creator and principal financier of American Task Force Argentina, summoned for this effort Democrats, over time has gained influence in the Republican Party through million-dollar donations to election campaigns. The last presidential election he was one of the major contributors to candidate Mitt Romney’s political action committee.

 

Those who minimize the ability of the financial lobby to influence governments and judges do so due to ignorance or because they are part of the same lobby. The default and restructuring of Argentina's debt is a case that is sufficiently visible for this type of intervention. In general, the circuit of money would be categorized as a type of corruption in peripheral countries; but in the United States it is legalized under the figure of the lobby.

 

A recent book, “The Financial Lobbies: Tentacles of Power”, Juan Hernández Vigueras (Le Monde Diplomatique, Intellectual Capital), develops the immense power of influence by those groups on governments and most powerful international institutions. If they are successful, as shown in the course of the international crisis, the Argentine default mission is not a challenge that can tranquilize them. Vigueras, a member of the Scientific Council of Attac-Spain and the Tax Justice Network, exposes a shocking case. Two powerful lobbies, such as the Institute of international finance (IFF) and the International Derivatives and Swaps Association (ISDA), based in Washington and New York, intervened before the European Council over the agreement on the haircut on capital of Greece’s debt, with significant benefits for the big banks. "After negotiations behind the scenes with the IFF as a banking lobby, our (European) leaders were forced to rectify the initial approach of the compulsory imposition of a haircut on the German and French banks, because the ISDA (Goldman Sachs is the most influential member of that organization) had rules for derivatives markets that had to be applied;" and the bond swap was (finally) voluntary for holders of Greek bonds".

 

You don't have to be very insightful to discover lobby action displayed in the mainstream media by financier-economists in favor of the vulture funds. The bolder say that they have to be paid; the more subtle claim that everything the Argentine government has done was wrong. They are the same who postulate the option to restart the cycle of borrowing on the international financial market, with high commissions for the placement banks of bonds. Vigueras explains that "the lobbies of big banks and financial firms are a  'revolving door', back ebb and flow of experts between the private sector and the public technocracy, and the private financing of campaigns of the political parties to win influence or power in the political arena". In national terms, historical participants in the "revolving door" in relation to the debt are Daniel Marx, Miguel Kiguel and Alfonso Prat-Gay, among the best known. At the international level, as mentioned, Paul Singer finances the payment of salaries of Democrats and election campaigns of Republicans.

 

Lobbying is one of the tools of banks and financial funds (vultures) to apply constant political pressure on governments, defending an unstable system and a concentration of income, benefiting them. Vigueras details which "are constituted with the end of exerting influence on the legitimate representatives of the policy, mainly from the legislative branch and the Executive, although from the analysis of reality analysis we can deduce that they also exert it over the judiciary." The latter has become clear with the ruling of Griesa and the upholding of it by the Court of Appeals of New York, the Mecca of financial capitalism.

 

The G-20 will meet in St. Petersburg, Russia, on Thursday and Friday of this week. It will be the eighth presidential summit of the countries since the outbreak of the global crisis in 2008. That year the first was held in Washington, with the powers desperate over the crisis that had broken out over the risk of a global financial meltdown. Since then, they were convened in London and Pittsburgh in 2009, Toronto and Seoul in 2010 in Cannes in 2011 and in Los Cabos, Baja California Sur, Mexico, in 2012. The G-20 is made up of 19 countries plus the European Union. It officially presented as the most important forum for cooperation in the most relevant areas of the international economic and financial agenda. In addition to the European Union, it consists of the United States, Germany, Canada, Japan, Italy, United Kingdom, France and Russia, South Korea, Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Saudi Arabia, Turkey and South Africa. This forum has emerged as a response to the financial crises that were emerging at the end of the decade of the 90s and as a recognition that these economies were not sufficiently represented in traditional multilateral bodies. It acquired more dimension recently in November 2008, when it was re-launched to recover the founding agenda of the Group over the need to prevent new crises. The diagnosis of the first two presidential summits was that there was a systemic problem and the way to solve it was through the creation of mechanisms for coordination and regulation to rein in the chaos of the global financial markets.

 

The description of the G-20 allows one to specify the scope of the political power of the members of that group in global economy. The promise of reform of the financial markets by the powerful countries, new powers and emerging economies was aborted by the banking lobbies. Despite the thunderous international crisis that is going into its sixth year, precipitated precisely by the existence of a globalized and deregulated financial market, any attempt at change in line with improving and enhancing the supervision and regulation of the system, was neutralized. Before the crisis they lobbied for deregulation, and then with the outbreak, intervened to obtain the bailout of banks and bankers first and then slow down measures to modify the functioning of the international financial system. How did they do it? Vigueras explains it: the lobbies have managed to place their agents in the highest spheres of power, both in the United States and Europe. He indicates that "the big banks and Wall Street financial firms spent US$3.4 million dollars on these activities from 1998 to 2008, preventing legal reforms that would have prevented the financial crisis."  It is the same thing that the vulture funds are doing with litigation over debt in default with Argentina.