Five months later, Argentina has not paid any money to the hedge funds. The judge has succeeded in blocking it from paying any money to holders of other bonds, but that just increases the number of losers.Norris explains some of why the Nixon zombie judge's decision in this case was such a radical one:
In a way, the current fight is reminiscent of the battles more than 300 years ago in the American colonies over debtor’s prisons, which were widespread. Such punishment might have made sense for deadbeats, and it presumably had a deterrent effect, but prisoners were unable to earn the money needed to pay their creditors even if they wished to do so. [my emphasis]
For international bonds issued under New York law, as many are, it used to be that a country that defaulted could be sued and the courts would order it to pay. But sovereign immunity meant that decision could not be enforced. So most bondholders would eventually agree to some sort of debt restructuring, often involving the International Monetary Fund.This is a report from TV Pública argentina, Visión 7 - Fondos buitre: El New York Times habla de excesos de la Justicia de EEUU 11/21/2014:
The Argentine ruling has clearly given bondholders an incentive to hold out in future international restructurings. Under Judge Griesa’s ruling, holdouts could do much better than those who agreed to the restructuring, and could not do worse.
If, that is, the decision can be enforced.
The judge, aware of that problem, has barred banks and other financial firms from doing anything to help Argentina evade the ruling. That has meant extending the ruling to cover not only bonds issued under New York law but also those issued under English and Argentine laws.
The political maneuvering for the 2015 Presidential elections in Argentine is intensifying, not surprisingly. Aside from Peronism being an exceptionally challenging political movement to understand, Argentina's political system has confusing fluidities within continuities in other ways. Argentine President Cristina Fernández' Peronist Partida Justicialista (PJ) governs with a legislative coalition called the Frente para la Victoria (FpV). The main opposition party is the Unión Cívica Radical (UCR). But the leading opposition figure right now is the governor of the City of Buenos Aires, Mauricio Macri. He has a separate political party called the PRO (Propuesta Republicana). But in a two-way match-up in a national campaign against a PJ candidate in 2015, he would very likely be supported by the national umbrella coalition called Frente Amplio UNEN, aka, FAUNEN. FAUNEN includes the UCR and the Argentine Socialist Party, both of which are formal members of the Socialist International. Both UCR and the Socialist Party are married to neoliberal economic ideology. UCR is the main political vehicle of the "oligarchy," the political villain that is perhaps the most significant constant in the political trend called Peronism. The Socialist Party is effectively their ally, promoting the same interests and policies with more left-sounding rhetoric. FAUNEN also includes several smaller parties.
In a national meeting this past week, the UCR decided that they would seek to put forward their own UCR candidate rather than seek a unified FAUNEN candidate. (A nivel nacional, en el FAUNEN Página/12 17.11.2014). This rules out an early formal alliance between Macri's PRO and the neoliberal-Peronist Sergio Massa, whose current political vehicle is called the Frente Renovador (FR). Massa's ideology is known as "federal" Peronism.
Also this past week, Jorge Capitanich, head of Cristina Fernanez' cabinet, attacked the opposition for "golpismo activo" (active coup activity [!]) in connection with allegations of corruption in connection with the Hotesur company. TV Pública argentina reports in Visión 7 - Capitanich denunció "golpismo activo" 11/21/2014:
The Buenos Aires Herald reports (Gov’t says Bonadío uses Hotesur raids to 'extort and play politics' 11/23/2014):
Justice Secretary Julián Álvarez has joined the group of government officials who have questioned recent judicial raids at the Hotesur company partly owned by President Cristina Fernández de Kirchner. Álvarez accused federal judge Claudio Bonadío – who ordered the raids - of “extortion” and a “clear institutional coup-mongering.”
“When we speak of Bonadío, we are not talking about a paladin of justice, we are talking of someone who uses cases to extort and to play politics,” Álvarez stated during an interview with Página/12 newspaper.
The official described the judge’s raids as “clear institutional coup-mongering” and said that they are the result of the magistrate’s reaction against the “nine motions for his impeachment he faces in the Magistrates Council.” [my emphasis]
Santiago Rodríguez interviews Álvarez for Página/12 in “Usa causas para extorsionar y hacer política” 17.11.2014. Rodriguez reports that Hotesur administers a hotel owned by Cristina, a somewhat different description than the Buenos Aires Herald piece just cited provides. Álvarez claims that Judge Bonadío is an "activist" (militante) of the FN and is in active discussions with Massa about posts he might get under a Massa Presidency. Citing Bonadío's history as a loyal supporter of neoliberal causes as a judge and a long history of association with the neoliberal strand of Peronism says, "Cuando hablamos de Bonadio no hablamos de un paladín de la justicia, sino de alguien que utiliza las causas para extorsionar y hacer política." ("When we're talking about Bonadio, we're not talking about a paladin of justice, but rather about someone who uses court cases to extort and to make policy.")