Mish's Global Economic Trend Analysis |
- Argentina to Circumvent US Supreme Court Bond Ruling Via French Banks; Comments on "Vulture" Funds
- Ceasefire or Not? Putin's 7-Point Peace Proposal; Sanction Mad-Hatters; History Lesson
- Gallup Survey: 38% Think Economy Getting Better, 56% Say Worse
| Argentina to Circumvent US Supreme Court Bond Ruling Via French Banks; Comments on "Vulture" Funds Posted: 03 Sep 2014 08:32 PM PDT It's increasingly likely that Argentina will come up with a way to get around a US supreme court ruling on bond payouts. Here is the background ... Argentina defaulted on bonds following a debt crisis in 2001-2002. 92% of the investors agreed to haircuts, but an alleged "vulture fund" picked up an 8% share at rock bottom prices and refused to negotiate. In June, the US Supreme Court ruled that Argentina Cannot Selectively Default on the small group of hold-outs. Today El Pais reports Argentina Offers to Pay Creditors in France. Comments Regarding "Vultures" I have nothing against "vultures" and do not even like the term. In general, vultures serve a purpose, as do those who short stocks. That said, I find the US Court ruling that Argentina Debt Swap Proposal is Illegal rather odious. Fortunately the judge stopped short of making a "contempt of court ruling". Here's the deal in a nutshell. Those investing in Argentinean debt should have known the possible outcome. Argentina has defaulted before. It did so again, and alleged "vulture funds" made a bet they would be paid in full even if no one else would be. But if holdouts were guaranteed to be paid in full, everyone would be a holdout. Holdouts Give Vultures a Bad name I seldom agree with Financial Times writer Martin Wolf, but his September 2, piece Holdouts Give Vultures a Bad Name is spot on. His conclusion "Argentina's creditors should make every effort to protect themselves from the vagaries of American judges. Fleeing US jurisdiction would seem an extremely sensible move." And so they did. On July 19 I wrote Argentina "Determined to Default" Second Time (and it indeed did just that). I noted, "the problem with the US court ruling is that if Argentina pays the vulture fund full value, it will have to pay all the bondholders full value, and that would wreck the country again." Wolf made similar comments. I also stated, that "In the future, bond agreements will force everyone to go along with a majority decision." Again, Wolf made a similar statement. Wolf is likely not aware of my article, so I presume he came to the same conclusions independently. The problem in this case is US judges think they can tell sovereign nations whether they can or cannot default. I find that both arrogant and ridiculous. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Ceasefire or Not? Putin's 7-Point Peace Proposal; Sanction Mad-Hatters; History Lesson Posted: 03 Sep 2014 01:35 PM PDT Ceasefire or Not? Earlier today Putin outlined a 7-Point Peace Proposal. The primary conditions on Mr. Putin's list are that the separatists halt all offensive operations and that Ukrainian troops move their artillery back out of range of cities and large towns in the rebel-held area.What's Not to Like? Notice that Putin did not demand any territory. Instead, he has proposed a federation in which Eastern Ukraine would remain part of Ukraine. He also insists, and rightly so, that he cannot force the rebels to do anything. However, Putin's plan was immediately slammed by Ukraine's prime minister Arseny Yatsenyuk who stated "Putin's real plan is the destruction of Ukraine and the resumption of the U.S.S.R. The best plan to stop Russia's war against Ukraine would be if Russia withdraws their regular troops, mercenaries and terrorists from Ukrainian territory — then peace will be reinstated in Ukraine." Clearly Yatsenyuk is living in fantasyland. Russia is not going to bow down to Ukraine under any circumstances. Dmitri S. Peskov, the Kremlin's press secretary, said separately that Russia could not negotiate a cease-fire because it was not a party to the conflict, but that the opinions of the two presidents overlapped.Rebel Response Vladislav Brig, the head of the political department for the rebels' Ministry of Defense in Donetsk, said in a telephone conversation that combat operations were continuing as usual on Wednesday.Has Anything Changed? So... Ukraine wants the rebels to lay down arms and the rebels want Ukraine to do the same. Has anything really changed? The answer is yes. Talk between Putin and Ukraine is good. The answer is not more war. What's needed now is talk with the rebels and ousting Ukraine's prime minister. Mariupol Surrounded If the plan is not accepted, rebels are likely to take Mariupol. The city is now surrounded as the the following map shows. Military Operations August 25 - September 1  For excellent images and commentary, please see Colonel Cassad English Live Journal. Another Ridiculous Lie Amid the above peace proposal comes the latest ridiculous lie, this one spread by the Guardian: Thousands of Russian soldiers sent to Ukraine, say rights groups. According to Valentina Melnikova, head of the Committee of Soldiers' Mothers, the main organization representing the troops' families, between 10,000-15,000 troops have been deployed to Ukraine in recent weeks. "I am convinced I am right," she said, adding that her calculations were based on information from families whose husbands and sons were sent on drills close to the border, but had subsequently gone incommunicado. Got that. Russia puts troops on the border. They are instructed to keep silent (standard military procedure), and voilà, 15,000 are presumed to be in Ukraine. Deal or No Deal? Please consider France Halts Delivery of Warship to Russia. President François Hollande halted the delivery of the first of two warships to the Russian navy on Wednesday, the clearest sign yet that the west was preparing to take further punitive action against the Kremlin despite claims by Vladimir Putin he was pursuing a ceasefire in Ukraine.Apparently they did not cancel the deal, they just won't fulfill it. This one could be headed to court. Given that Russia does not need more warships, Putin would be wise to take the fine (if he can get it) and cancel the deal himself. Sanction Mad-Hatters There is 0% evidence that sanctions ever do any good, and crystal clear evidence that sanctions harm both sides, but that does not stop the mad-hatter sanction proponents. The Brussels Blog has details from a Leaked Russian Sanction Paper. Sanctions include boycotting the 2018 World Cup to be held in Moscow, and another round of economic sanctions and export bans. NATO Will Defend Estonia, Latvia, Lithuania Earlier today President Obama gave a speech in Estonia: NATO Will Defend Estonia, Latvia, Lithuania. Here are a few snips. And just as we never accepted the occupation and illegal annexation of the Baltic nations, we will not accept Russia's occupation and illegal annexation of Crimea or any part of Ukraine. As free peoples, as an alliance, we will stand firm and united to meet the test of this moment, and here's how.History Questions
The answer to question number two is 25,000,000. For details, inquiring minds may wish to consider the BBC report Hitler's Invasion of Russia in World War Two. Inquiring minds may also wish to consider Napoleon's Disastrous Invasion of Russia, 200 Years Ago. NATO Hostility to Test Russia's Resolve Earlier today Pater Tenebrarum at the Acting Man blog pinged me with a report "NATO planning 'rapid-deployment force' of 10,000 troops to counter Russia". He commented ... "NATO keeps provoking the Russians, but we are being told it is the other way around. If you look at the entire history of this, it soon becomes clear that the Russians only react. Your post Cold War About to Turn Hot? summarizes things quite nicely actually. Treating Russia like some third rate nation and making an enemy of it has to be one of the most moronic Western policy decisions ever." A headline on the Financial Times caught my eye today: NATO Hostility to Test Russia's Resolve. To be more precise the headline actually said "Russia Hostility to Test NATO's Resolve". Realistically, which is more accurate? Yet, here we are, possibly on the verge of a major war in Europe, with massive economic and geopolitical implications, and people would rather sit back and be spoon fed lies while wondering if the next 50 points in the S&P is up or down. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Gallup Survey: 38% Think Economy Getting Better, 56% Say Worse Posted: 03 Sep 2014 10:58 AM PDT In spite of a manufacturing ISM in positive territory for 15 consecutive months, a Gallup Survey shows Economic Confidence at -16, Economic Outlook at -18. Gallup's Economic Confidence Index is the average of two components: how Americans view current economic conditions and their perception of whether the economy is getting better or worse. In August, 20% said the economy is "excellent" or "good," while 34% said it is poor. This resulted in a current conditions index score of -14, the same current conditions score found for five consecutive months.Gallup Economic Confidence and Current Conditions  click oin chart for sharper image The Current Conditions Index is derived by taking Excellent plus Good ratings and subtracting Poor. The Economic Outlook Index is derived by taking those who say the economy is getting better and subtracting those who say it is getting worse. Both indices have been stable between -13 and -19 for the entire year. The big dip last October is related to Congressional budget bickering. The economy is getting better for some, but more say it's getting worse. In aggregate, people do not buy this recovery talk. Should they? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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