Argentina prepares for the Nixon zombie judge deadline

Hopefully the markets - meaning the actual individuals and institutions who buy and sell securities - have fully incorporated the information about real state of Argentine finances into their calculations when tomorrow's deadline passes with no new deal between Argentina and the vulture funds backed by Nixon-appointed zombie federal judge Thomas Griesa.

They still have today and Wednesday for something to change. But there's no public sign that a deal is imminent.

Wow! This is a surprise. He didn't say it directly yet. But Pope Francis is taking Argentina's side against the vulture funds and the Nixon-appointed zombie judge Thomas Griesa that is trying to push the country into bankruptcy at the end of the day tomorrow. The Pope met with Gabriel Mariotto, the vice-governor of Buenos Aires province who's from President Cristina Fernández's Peronist party. According to Mariotto, "Francisco dijo que Griesa está a la derecha de la derecha en Estados Unidos" ("Francis said Griesa is to the right of the rightwing in the United States.") The Spanish has a nice double meaning that could also mean "to the right of the law."

Mariotto also relates:

“El Papa lo ve como una reacción de un sector reaccionario, de una minoría del sistema financiero carroñero que atenta contra todo ese sistema financiero e incluso contra el Partido Demócrata de los Estados Unidos”,

["The Pope sees it as a reaction by a reactionary sector, of a scavenger minority of the financial system that is making an attack against all of the financial system and including against the Democratic Party of the United States."]

Shorter English report: Mariotto: ‘Francis said Griesa is further right than right-wing Republicans' Buenos Aires Herald 07/28/2014.

Yo! I figured that Cristina had made a tacit deal with the Argentine Pope when he took office along the lines of: "You don't be a jerk to Argentina, and I won't remind people of your shady record under the last military dictatorship." Or maybe Pope Francis thinks it's insane and sinful for a Nixon zombie judge to try to wreck the economy of his home country so that some vulture funds can collect big bucks on wild financial gambles.

So, Cristina has the Pope on her side. The vulture funds and the Nixon zombie judge are backed by the Wall Street Journal, who is running this slam article on Cristina today: Santiago Pérez y Taos Turner, El vínculo entre el dinero y la política, una sombra que persigue a los Kirchner 07/29/2014.

The Nixon zombie judge did correct one problem of his goofy order by releasing bank funds that had been paid by Argentina to the Spanish oil company Repsol that didn't even related to the Argentine bonds! Visión 7 - Griesa autorizó a pagar intereses a Repsol TV Pública argentina:

I mean, trying to bankrupt the nation of Argentina is one thing. But inconveniencing a respectable oil company? That was something the Nixon zombie judge didn't want to do!

Miguel Jorquera in "No existe posibilidad de default" Página/12 29.07.2014 interviews Juliana Di Tullio, head of Argentine President Cristina Fernández' legislative bloc, the Frente para la Victoria (FpV). Di Tullio points out one of the foreign policy implications of the Nixon zombie judge's attempt to force Argentina into bankruptcy, which is that increases the need for Argentina to build stronger alliances with the BRICS, notably China and Russia. She notes that Cristina recently concluded a deal with China for $19 billion in investments in Argentina.

Di Tullio also articulates the government's position that a failure to comply with the Nixon zombie judge's decision cannot be regarded as a "technical default." Argentina is paying the debts recognized as valid under Argentine law, i.e., the 92%-plus of the 2001 defaulted debt that has been renegotiated. The Nixon zombie judge is blocking the banks to which Argentina payed last month's payment from transmitted the funds to the actual creditors. "No existe posibilidad de default, que sería si no está el dinero para pagar. Tampoco default técnico, porque eso sería tener el dinero para pagar y no depositarlo," she says. ("The possibility of default doesn't exist; that would be not having the money to pay. Nor technical default, because that would be having the money to pay and no depositing it.")

If this seems like a bit of legal comma-dancing, there is a lot riding on it. It's a safe bet that some of the vulture funds and other big-time gamblers have bought credit default swaps (CDS) that pay off in the event of an Argentina default. The vulture funds may actually be hoping for Argentina non-compliance for just that reason. So whether what happens when and if Argentina doesn't comply with the Nixon zombie judge's order by end of day tomorrow is considered a default in a legal sense matter a lot.

Di Tullio also harshes on Mauricio Macri of the Propuesta Republicana (PRO), Governor of the City of Buenos Aires and the main opposition figure right now, and Julio Cobos, an opposition parliamentary leader of the Frente Amplio UNEN and former Governor of the Province of Mendoza. Both have criticized Cristina's handling of the confrontation with the vulture funds. Macri essentially demanded that Cristina capitulate to the Nixon zombie judge, consistent with his general commitment to the neoliberal worldview. He has been doing so with some political mealy-mouthing in the form of demanding that Cristina comply with the ruling but skirting the ruinous cost to Argentina for doing so. (Fernando Cibeira, Idas y vueltas alrededor de los buitres Página/12 29.07.2014)

As Di Tullio puts it:

Macri por lo menos es sincero y dice que “si yo fuera presidente, ya lo hubiera pagado”, por lo cual la deuda de los argentinos quedaría abierta y nos endeudaríamos en 500 mil millones de dólares más. Es una cosa de locos, pero es lo que cree Macri.

[Macri at least is sincere and say that "if I were President, I would have paid," by which the debt of the Argentines would remain outstanding and we would take on $500 billion more. It's a crazy thing, but that's what Macri believes.]

She's referring there to the estimated additional debt that Argentina would have to take on if the RUFO clause is triggered, which through the end of 2014 gives all creditors the right to claim the same terms the vulture funds would get under the Nixon zombie judge's bizarre ruling.

Julio Cobos, along with other opposition figures like Socialist Party leader Hermes Binner, have criticized Cristina in general terms over her handling of the issue without being as explicit as Macri in saying she should just capitulate.

Tags: argentina, cristina fernández, thomas griesa