Basically the capital markets don't think they will be put into default...Argentina has until August 4th to work things out...they are solvent and this is a bit of a weird default this time around...lot of hedge fund guys are pretty bullish on Argentina actually once this gets sorted out.
I love Zerohedge but be aware they are the biggest worryworts on the planet and see the downside in almost every story.
From Reuters:
"But it is a far cry from the mayhem following the crash in 2001-2001 when the economy collapsed around a bankrupt government and millions of Argentines lost their jobs.
This time the government is solvent. How much pain the default inflicts on Argentina, which is already in recession, will depend on how swiftly the government can extricate itself from its obligations.
"This is a very particular default, there is no solvency problem, so everything depends on how quickly it is solved," said analyst Mauro Roca of Goldman Sachs.
Buenos Aires had argued that agreeing to the hedge funds' demands to pay them in full would break a clause barring it from offering better terms than those who accepted steep writedowns in the 2005 and 2010 swaps.
That clause expires on Dec. 31, however, after which the government would be able reach a deal with the funds. Many investors and economists hope for some solution after then.
"Our base case is that a default would be cleared by January 2015," said Alberto Bernal, a partner at Miami-based Bulltick Capital Markets. He projected that a default would cause the economy to shrink 2 percent this year compared with a previous market consensus for a 1 percent contraction."
I love Zerohedge but be aware they are the biggest worryworts on the planet and see the downside in almost every story.
From Reuters:
"But it is a far cry from the mayhem following the crash in 2001-2001 when the economy collapsed around a bankrupt government and millions of Argentines lost their jobs.
This time the government is solvent. How much pain the default inflicts on Argentina, which is already in recession, will depend on how swiftly the government can extricate itself from its obligations.
"This is a very particular default, there is no solvency problem, so everything depends on how quickly it is solved," said analyst Mauro Roca of Goldman Sachs.
Buenos Aires had argued that agreeing to the hedge funds' demands to pay them in full would break a clause barring it from offering better terms than those who accepted steep writedowns in the 2005 and 2010 swaps.
That clause expires on Dec. 31, however, after which the government would be able reach a deal with the funds. Many investors and economists hope for some solution after then.
"Our base case is that a default would be cleared by January 2015," said Alberto Bernal, a partner at Miami-based Bulltick Capital Markets. He projected that a default would cause the economy to shrink 2 percent this year compared with a previous market consensus for a 1 percent contraction."
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