The election of Mauricio Macri to the Argentine presidency promised a new approach to global economics, and he has wasted no time in trying to settle with angry bondholders and creditors throughout the world. For the most part, they are getting what they demanded and Argentina is getting what it needs: access to the financial markets and loans from the likes of the IMF and others.
This is a battle that has been going on since 2001, when the government of Argentina elected to default on debts it incurred to keep a shaky budget intact. The government was in chaos with leaders holding office for no more than a few months. The emergence then of President Nestor Kirchner allowed for some stability, but he pushed the default further and adamantly refused to honor the bond obligations, setting off years of acrimonious relations with the investment community. The country has been all but cut off from the world, and the demand that bondholders settle for pennies on the dollar triggered a decade of legal attacks from those that had lost millions.
Macri has angered those in the country that still resent the demands of the bond holders, but he ran on a mandate of returning the country to some semblance of normalcy. Kirchner’s widow Cristina Fernandez has been ruling in her own right since 2007, and a nation that has been teetering on the edge of financial collapse ever since simply grew tired of it.
- Chris Kuehl, Ph.D., NACM economist and co-founder of Armada Corporate Intelligence