Usuario :     The Bottom Line Question La verdadera pregunta 04042013 . . .

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ATFA, la Asociación de Bonistas de EEUU publicó en Inglés la nota de ADAPD la verdadera pregunta

The Bottom Line Question: At What Price?

By Horacio Vázquez, holdout bondholder, Buenos Aires

April 4, 2013

In early February, I was interviewed by CNN, Dinero to discuss a briefing I had conducted with members of the international news media along with several dozen Argentine holdout bondholders, who had travelled to New York to tell our story. In my remarks to reporters, I made it clear that the bottom line question for us was simple:  How come our government does not want Argentina to purchase debt at lower interest rates, comparable to our neighbours from Paraguay or Bolivia? What price must we pay for their obstinate refusal to satisfy holdout creditors like myself?

After all, the government is receiving significant amounts of foreign currency by selling commodities from the agriculture sector. So why would they not allow ordinary citizens to buy US dollars? These restrictions have led to the sharpest drop in sales, purchases and construction jobs in twenty years. How do they explain that the private investment that creates real jobs, which once came to Argentina, is now going to our Latin American neighbors? How come foreign businesses that once settled Argentina can’t wait to leave?  Certainly, it’s the same policy that triggered an increase in unemployment.

Now with the high-profile US court case brought by bondholders holding investments governed by New York law, the ghost of legal uncertainty has appeared again.  At issue, are several billion dollars in neglected contracts still owed to holdout bondholders like myself. These obligations date back to the default of 2001 and the messy exit from the convertibility between US dollars and the Argentine Peso. Even then, this mostly affected the middle class who "dared" to have savings in our country.

After the default, a high tax rate was imposed on the agriculture sector. Later on, driven by the need to boost Central Bank reserves, the government expropriated billions from the pension funds. This sparked more inflation. Since 2006 the administration decided to fake its official inflation statistics, allowing them to steal from those bondholders who received Argentine Legislation Bonds during the “swap.”

What many don’t know is that at the end of 2011, there was a second swap custom-created for “friends” of the government that made them whole. At that time, it had already been a decade since Argentina was able to sell debt on the global markets at lower tax rates – all because Argentina had never exited from default. The government started restricting the purchase of US dollars, culminating in the current situation where it is almost a crime to purchase foreign currency for investment savings. In the past year, the price of the dollar on the “black market” (which is where you are actually able to purchase foreign currency outside government controls) exploded, making it impossible for us to save -- given the peso’s devaluation.

This has generated a significant tax pressure that is suffocating what’s left of the middle class: sectors of legal employment, retirees and pensioners, lower income classes battered by inflation and a high VAT (value added tax).

If we analyse these recent events, we understand that this has happened to a great extent because of the government’s unwillingness to negotiate their sovereign debt. Today, we are still in default because of a mere USD 6 billion of capital debt (less than 1.8% ofthe national GDP). We still can’t access credit, which is currently available at the lowest interest rates in 50 years. This predicament (of their own making) has forced the administration to create what’s popularly known as “Cristina’s dollar yard.” As a result, we live with the highest levels of inflation in 20 years and with the consequences that come with it.

Now the US Court of Appeals in New York has ordered that Argentina pay USD1.3 billion to holdout bondholders. If the government decides to ignore this order, it will mean that our country will be  creating more poor people every day, reducing more and more the ability of our citizens to be able to provide a decent life for their families.

We hope that the U.S. justice system might help us convince our government to honor our basic rights that they have violated with impunity. This decision by the US courts will make it impossible for our government to continue evading the responsibilities that would allow us to live in a normal world; similar to our neighbors. We want to have basic civil and economic rights restored. We trust in New York law to uphold the contracts and promises so violated in Argentina.