Archive for the ‘business’ Category

Argentina: Cristina’s vultures

Friday, September 19th, 2014

Argentinian president Cristina Fernandez has taken time between Botox injections to indulge in more name-calling.

No longer satisfied to refer to Argentina’s creditors as vulture funds, she now has vulture airlines:

Cristina tilda de ‘buitres con turbinas’ a American Airlines Cristina dubs American Airlines ‘vultures with turbines’

Why?

American Airlines will not sell tickets in Argentina more than 90 days in advance. Cristina says this is an “attack against the country to cause uncertainty” about the currency.

Considering how Argentina joins the Venezuela School of Economics by passing laws

that cap consumer prices of goods, set profit margins for private businesses and levy fines on companies found to be making “artificial or unjustified” profits

AA is worrying about getting paid. Over in Venezuela, the government is withholding US$3.6 billion in airline ticket revenue.


Venezuela: The next default

Monday, September 15th, 2014

Mary O’Grady writes on more to come from the ALBA deadbeat zone:
Venezuela Heads to a Default Reckoning
Amid bills for imports and debt servicing, and shrinking dollar liquidity, something has to give.

Venezuelan bond prices swooned last week on renewed speculation that the government of President Nicolás Maduro might soon default on as much as $80 billion of foreign debt. The yield on the government bond due in 2022 hit a six-month high of 15.8% on Sept. 9. David Rees of London-based Capital Economics, who last year warned of the risks of falling oil prices to Venezuelan solvency, told Bloomberg News by telephone that “the bond market is finally beginning to wake up.”

That may be true. It’s clear that the foreign exchange that Venezuela earns from oil exports cannot pay its import bills along with debt service. There are dire shortages of industrial and consumer goods as well as services. Something has to give and odds are that allowing the required adjustment to the economy won’t be the government’s first choice.

Nearly 1 million [corrected] barrels per day (almost one third of the daily 2.3 million barrels of crude OPEC says Venezuela produces) don’t generate revenue: 300,000 bpd go to Cuba, some 100,000 bpd are smuggled into the Colombia by insiders, and 650,000 bpd are sent to China to pay debt. This is even more disastrous when considering how the Venezuelan economy has become more dependent on oil after foreign capital leaves the country and productivity plummets.

Puerto Rico: Trump golf course defaults

Tuesday, September 9th, 2014

Trump-Branded Golf Course in Puerto Rico Continues to Struggle
Golf Course Defaulted on Borrowing Agreement with Municipal Bondholders

The golf course opened in March 2004 as Coco Beach Golf & Country Club but renamed itself in 2008 after making a licensing deal to use the Trump name. The facility has two 18-hole courses that were designed by professional golfer Tom Kite and a 46,000-square foot clubhouse.

Over in Atlantic City, Trump Entertainment Resorts Files for Chapter 11 Bankruptcy
Bankruptcy Filing Includes Trump Taj Mahal, Trump Plaza Casinos
(emphasis added)

Units associated with Trump Plaza, which is already slated for closure, and with the Trump Taj Mahal sought Chapter 11 bankruptcy protection with Tuesday’s filing in the U.S. Bankruptcy Court in Wilmington, Del., along with Trump Entertainment Resorts Inc. and other affiliates. Among other things, the filings halt Mr. Trump’s efforts to get a New Jersey court to get his name off the casinos.

September is working out to be a tough month for The Donald.

Warren Buffett and his American dollars for Canadian doughnuts

Wednesday, August 27th, 2014

My latest at Da Tech Guy Blog, Warren Buffett and his American dollars for Canadian doughnuts, on the newest tax exile, is up.

Please read it and contribute to Da Tip Jar!

Argentina: Enter Soros

Wednesday, August 27th, 2014

A new player enters the litigation picture:

Argentina default: George Soros sues US bank in London over $500m payment
Hedge funds take legal action against Bank of New York Mellon for freezing payment by Argentina, which has also banned the lender from operating in the country

The billionaire investor, who famously “broke the Bank of England” after shorting the pound, is joined by Knighthead Master Fund, RGY International and Kyle Bass’ Hayman Capital Master Fund in the lawsuit against Bank of New York Mellon.

According to Bloomberg News, the group owns more than 1.3 billion of euro-denominated bonds.

Bank of New York Mellon said: “The suit is without merit. BNY Mellon has consistently followed the binding court orders that govern its actions as trustee in this matter.”
In a further twist, Argentina banned Bank of New Mellon from operating in the country, arguing that the lender “isn’t complying with its operational objectives”.
Bank of New York Mellon declined to comment on the ban.
Argentina is attempting to replace Bank of New York Mellon as trustee with state-run Banco Nacion

Soros has invested heavily in Argentina, particularly in YPF SA and Adecoagro SA.

Argentina’s shell game

Thursday, August 21st, 2014

Argentina tries to sidestep US ruling with debt swap
“Nervous” Argentina president Cristina Fernandez de Kirchner announces plan to replace Bank of New York Mellon as trustee with state-run Banco Nacion
, because, of course, that would mean Cristina gets what she’s been after all along.

As for that lawsuit Cristina’s government brought to the International Court of Justice in The Hague, claiming the US had “committed violations of Argentine sovereignty”?

The US government must consent to the ICJ’s jurisdiction before the UN can proceed with the case.

She ought to hire this guy; he’d do a better job,

Brazil: Opposition now has Arminio Fraga

Tuesday, August 12th, 2014

Arminio Fraga, president of Brazil’s central bank from 1999 to 2002 under the Fernando Henrique Cardoso administration, is now back in the game:
Brazil Ex-Insider Returns to Help Oust President
With slow growth and high inflation hurting Brazilian President Dilma Rousseff’s chances of winning a second term, former central banker Arminio Fraga joins the opposition to persuade voters that Brazil needs a new economic steward.

Mr. Fraga appears to be positioning himself as something of an inflation whisperer. As president of Brazil’s central bank from 1999 to 2002 under the administration of President Fernando Henrique Cardoso, he helped stabilize the currency and rein in consumer prices. Mr. Fraga supports restrained public spending, tough inflation targeting and a floating exchange rate, policies that became known in Brazil as the “economic tripod.”

He is highly critical of the Rousseff administration’s decision slow inflation by capping gasoline prices and electricity rates, moves he dismissed as “gimmicks.” He’s also alarmed that Brazil’s central bank has been intervening regularly in the currency markets to prop up Brazil’s real against the dollar, a strategy he ridicules a “populist move.”

Mr. Fraga said these are stopgap measures that already are proving unworkable and that Brazil needs to focus on long-term fundamentals like increasing private investment and balancing its books.

The fact that earlier this year Standard & Poor downgraded Brazil´s long term bonds credit rating to one notch above junk doesn’t help Dilma – but you have to remember that, even when Dilma’s the candidate, Lula is the man to beat.

Ecuador: Like bitcoin, but not as solid

Wednesday, August 6th, 2014

Anyone investing in Ecuador?

Bitcoin-Like Money Is Ecuador’s Latest Dollar-Saving Plan (emphasis added):

After mortgaging most of Ecuador’s oil and gold to finance spending, President Rafael Correa is planning to create virtual money to pay the nation’s bills.

Congress last month approved legislation to start a digital currency for use alongside the U.S. dollar, the official tender in Ecuador. Once signed into law, the country will begin using the as-yet-unnamed currency as soon as October. A monetary authority will be established to regulate the money, which will be backed by “liquid assets.”

What do they mean by “liquid assets”, if it can’t be swapped for government bonds?

How reliable is Ecuador?

Less than six years after repudiating $3.2 billion of its dollar-denominated debt

And don’t forget the 1999 default.

UPDATE:
Since the “currency” is yet unnamed, I suggest we name it bullcoin.


Argentina: Cristina gives bondholders the raspberry

Friday, August 1st, 2014

As I predicted,
Argentine Leader Defies Wall Street for Main Street
Argentines awoke Thursday to find their country was once again a financial pariah after the populist President Cristina Kirchner stared down Wall Street hedge funds and pushed her country into its second default in 13 years.
Very little downside for her, since

Her refusal to settle with bondholders owed $1.6 billion could prove politically expedient in the short term: It distracts from Argentina’s slowly crumbling economy and shores up her support among many working-class Argentines who form the base of her Peronist movement, economists and analysts say.

Higher inflation, deeper recession?

Here in this sprawling capital, Argentines reacted with a mix of pride and disinterest. Pride because Mrs. Kirchner stood up to foreigners, mostly Americans and Wall Street, and disinterest because unlike the country’s record $100 billion default in 2001, this one doesn’t mean Argentina is suddenly broke and on the verge of financial collapse.

It’s all about power, folks.

UPDATE:
Stop spouting ‘half truths’ over default, US judge tells Argentina
South American country’s reaction to second default in 12 years does not alter the fact it has to pay what it owes, judge says


Argentina defaults

Thursday, July 31st, 2014

As predicted,
Argentina Declared in Default by S&P as Talks Fail

Standard & Poor’s declared Argentina in default after the government missed a deadline for paying interest on $13 billion of restructured bonds.

A US judge had set a deadline of 04:00 GMT on Thursday for a deal.

This is the eighth time the country has defaulted:

ARGENTINA’S first bond, issued in 1824, was supposed to have a lifespan of 46 years. Less than four years later, the government defaulted. Resolving the ensuing stand-off with creditors took 29 years. Since then seven more defaults have followed, the most recent this week, when Argentina failed to make a payment on bonds issued as partial compensation to victims of the previous default, in 2001.

En la fuacata!