Ethical Markets agrees with Ellen Brown that Argentina is right to resist the US court decision which tried to force an involuntary default , by transferring the trustee for payment from Bank of New York Mellon to Argentina’s own central bank. The idea of an international bankruptcy court , under the current global financial order , would lead to disastrous loss of national sovereignty , even if under the less-harsh terms of Chapter 9 of the US Bankruptcy code , rather than the Chapter 11 proposed by the IMF . Again , lawyer Brown, President of the Public Banking Institute , proposes a better solution : public banks , which can issue their own local currency sovereign credit , as detailed in her magisterial new book, THE PUBLIC BANK SOLUTION (2013) to which I was honored to write a Foreword. Hazel Henderson, Editor
If Argentina were in a high-stakes chess match, the country’s actions this week would be the equivalent of flipping over all the pieces on the board.
– David Dayen, Fiscal Times, August 22, 2014
Argentina is playing hardball with the vulture funds, which have been trying to force it into an involuntary bankruptcy. The vultures are demanding what amounts to a 600% return on bonds bought for pennies on the dollar, defeating a 2005 settlement in which 92% of creditors agreed to accept a 70% haircut on their bonds. A US court has backed the vulture funds; but last week, Argentina sidestepped its jurisdiction by transferring the trustee for payment from Bank of New York Mellon to its own central bank. That play, if approved by the Argentine Congress, will allow the country to continue making payments under its 2005 settlement, avoiding default on the majority of its bonds.
Argentina is already foreclosed from international capital markets, so it doesn’t have much to lose by thwarting the US court system. Similar bold moves by Ecuador and Iceland have left those countries in substantially better shape than Greece, which went along with the agendas of the international financiers.