Don't cry for Argentina's Marxists.

Early in the 20th century, Argentina was the 5th richest nation on earth in terms of per capita GDP. Then several generations of Argentine politicians and the military with a “mixture of statism and inflationism managed to squander so much capital with such unwavering regularity that Argentina eventually became the basket case it remains to this day.” Despite spectacular resources and some of the most fertile farmland on earth, Argentina is currently ranked 60th in per capita GDP.

 

Under the Socialism of Argentina's Marxists, Argentina has become a deadbeat nation. Argentina is organized as follows: a small elite at the Universities, in the Media and in politics (based in the urban centers) gets elected by an urban population of dumbed down laborites. The freight of their bungling comes from the productive rural sector. But, that money is never enough, so Argentina is constantly in debt like its West European Socialist cousins. The Argentine govt prints money so its inflation rate is in excess of 25%. The Govt reports it as 10%.

 

As the “fiery red Marxist” of the ruling Peronist Party, Kicillof sought to wash away broad swaths of capitalism in Argentina. His biggest accomplishment was expropriating the 98% of YPF domestic oil company shares held by the Spanish energy giant Repsol in April of 2012.After a favorable arbitration in front of the International Center for Settlement of Investment Disputes, Kicillof agreed that Argentina would pay Repsol just $5 billion for the YPF shares that were valued by “Repsol at $7.5 billion.” Kicillof then leveraged the settlement in a deal with the Paris Club, an informal group of government creditors, in May that would have allowed the Argentina to refinance its $100 billion debt and once again raise money selling more money by selling “junk rated” bonds. 

 

But on June 16th, the Supreme Court of the United States allowed NML Capital, a “vulture” fund that bought defaulted bonds for pennies on the dollar after a 2001 default, to start seizing any financial or physical assets in the U.S. owned by Argentina. In an added burden, the U.S. Supreme Court also ruled that creditors can seek information about  Argentina’s hidden non-U.S. assets through subpoenas against Bank of America and Banco de la Nacion Argentina.

 

The day after the U.S. Supreme Court ruling and a 10% crash in the Argentine stock market, Economics Minister Axel Kicillof dismissed the options of full payment or outright default as “unthinkable.”

According to the Economist Magazine, Kicillof’s attitude is not unusual. “The city of Buenos Aires is big and sophisticated and like New York or San Francisco, it has socialist tendencies: the urban intelligentsia provides the ideas; the urban proletariat provides the votes; and farm exports provide the money.”

 

With Argentina’s next interest payment on its exchanged bonds due on June 30th and not enough cash to satisfy a U.S. court order to pay, Argentina will have only a 30-day grace period before it enters into default and creditors can seize any of the nation’s assets they can find as collateral for repayment.

Despite spectacular resources and some of the most fertile farmland on earth, Argentina is currently ranked 60th in per capita GDP.