Argentine debt crisis continues

Argentina continues to hold out against the US judicial rulings, remaining in technical default and under the threat of being found in contempt of court in the US. In a further twist of policy, President Kirchner submitted a bill to the Argentine Congress on 20 August that would make the Banco de la Nacion in Buenos Aires the fiduciary agent for paying restructured bondholders rather than the Mellon Bank in New York - essentially a manoeuvre to get round the US Court ruling that such payments should be held back until there is an agreement with bondholders that did not accept the debt restructuring offer in 2010.
 
The Argentine Government describes these bondholders as 'vulture funds' and has sought to stoke up populist resentment in Argentina against the US (and the US court system). Playing hardball, President Kirchner has essentially blocked all attempts via court-approved independent mediation and private initiatives to negotiate an agreement with the 'hold-outs'. Yet the fact is that, once again, Argentina is defaulting on its debts which will affect its already low reputation in international financial markets.
 
All this has dominated the Argentine media with little regard to the more worrying problems affecting Argentina's economy (increasing unemployment, rising inflation, seriously diminishing reserves). This will, at some stage, come home to roost as Argentine citizens increasingly feel the pinch. But it also impacts negatively on Argentina's international reputation - and for us, the aggressive, rabble-rousing language used by the Argentine Government in seeking to justify its debt position gives absolutely no confidence in any prospect of a more rational policy towards the Falkland Islands.