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Argentina: The Big Bicycle

In Argentina they have a slang verb; "bicicletear". It literally means "to bicycle" but on the it street means to put off paying someone for the longest amount of time possible, an art perfected by generations of Argentines that is now being put to good use by the Klishtina government. In fact, October 2008 could mark the start of the biggest bicycle in recorded history.

It's all about the defaulted debt, and even though I really don't like to say 'I told you so' on this can I put this? Hmmmmmm...yeah....


When the debt swap at a significant haircut was annoucned by Klishtina in New York (oh how convenient...all those tough questions that didn't need answering on her US jaunt) I was already pretty incredulous about it. Then suddenly on October 8th your vigilant Otto posted on a press conference in which the gov't said (via Interior Minister Randazzo):

"... the gov't was reconsidering the Paris Club payback, and the operation may be indefinitely delayed due to "unpredictable" nature of the financial crisis. In the words of Randazzo (translation Otto):

"At the moment it's something we are analyzing. We have made a commitment and commitment are to be fulfilled. In any case, we are negotiating with the Paris Club to determine exactly what is the debt and how it is to be paid."

If you're not aware, "negotiating" in LatAm politikspeak means "drag this sucker out as long as possible".

You thinkthe Paris  Club debt and the default swap are different stories? Think again. Cut to today, and the report in Critica headlined "The Opening of the Debt Swap Has No Date (Timing)".

At today's presser, Cabinet Chief Sergio Massa was the talking head. This is one of the classic delaying tactics already showing its head; keep changing the mouthpiece, then come time later they have the "I didn't say that! Who said that? That can't be true! Hmmm, I'll have to consult with my colleague on this, it seems..." stalling tactic to fall back on. But anyway, Massa today started by saying the same thing as Randazzo, namely that Argentina would meet with its obligations on all matters of debt (ah how nice). But then he said;
  • Argentina would "start the process working for when Argentina believes it to be convenient."
  • The operation would be complex because the debt "is being held by a lot more hands" than before (he said that twice, in fact).
  • But this one is my favourite; "We're not stupid. We'll look at the situation and we're going to choose the timing that most suits the country. We have to be alert, with sights set on production, employment and industrial activity."
This has all the makings of one very large bicycle, people. Massa said the payment process would start before Christmas. Otto says 'seeing is believing'. So for those holding the defaulted bonds and thinking they're in for a quick payout, here's my translation of all the things Massa said today in just four words: DON'T HOLD YOUR BREATH.