Questões de Inglês

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Argentina defaults – Eighth time unlucky

Cristina Fernández argues that her country’s latest default is different. She is missing the point.

Aug 2nd 2014 ARGENTINA’S

    first bond, issued in 1824, was supposed to have had a lifespan of 46 years. Less than four years later, the government defaulted. Resolving the ensuing stand-off with creditors took 29 years. Since then seven more defaults have followed, the most recent this week, when Argentina failed to make a payment on bonds issued as partial compensation to victims of the previous default, in 2001.

    Most investors think they can see a pattern in all this, but Argentina’s president, Cristina Fernández de Kirchner, insists the latest default is not like the others. Her government, she points out, had transferred the full $539m it owed to the banks that administer the bonds. It is America’s courts (the bonds were issued under American law) that blocked the payment, at the behest of the tiny minority of owners of bonds from 2001 who did not accept the restructuring Argentina offered them in 2005 and again in 2010. These “hold-outs”, balking at the 65% haircut the restructuring entailed, not only persuaded a judge that they should be paid in full but also got him to freeze payments on the restructured bonds until Argentina coughs up.

    Argentina claims that paying the hold-outs was impossible. It is not just that they are “vultures” as Argentine officials often put it, who bought the bonds for cents on the dollar after the previous default and are now holding those who accepted the restructuring (accounting for 93% of the debt) to ransom. The main problem is that a clause in the restructured bonds prohibits Argentina from offering the hold-outs better terms without paying everyone else the same. Since it cannot afford to do that, it says it had no choice but to default.

    Yet it is not certain that the clause requiring equal treatment of all bondholders would have applied, given that Argentina would not have been paying the hold-outs voluntarily, but on the courts’ orders. Moreover, some owners of the restructured bonds had agreed to waive their rights; had Argentina made a concerted effort to persuade the remainder to do the same, it might have succeeded. Lawyers and bankers have suggested various ways around the clause in question, which expires at the end of the year. But Argentina’s government was slow to consider these options or negotiate with the hold-outs, hiding instead behind indignant nationalism.

    Ms Fernández is right that the consequences of America’s court rulings have been perverse, unleashing a big financial dispute in an attempt to solve a relatively small one. But hers is not the first government to be hit with an awkward verdict. Instead of railing against it, she should have tried to minimise the harm it did. Defaulting has helped no one: none of the bondholders will now be paid, Argentina looks like a pariah again, and its economy will remain starved of loans and investment.

    Happily, much of the damage can still be undone. It is not too late to strike a deal with the hold-outs or back an ostensibly private effort to buy out their claims. A quick fix would make it easier for Argentina to borrow again internationally. That, in turn, would speed development of big oil and gas deposits, the income from which could help ease its money troubles.

    More important, it would help to change perceptions of Argentina as a financial rogue state. Over the past year or so Ms Fernández seems to have been trying to rehabilitate Argentina’s image and resuscitate its faltering economy. She settled financial disputes with government creditors and with Repsol, a Spanish oil firm whose Argentine assets she had expropriated in 2012. This week’s events have overshadowed all that. For its own sake, and everyone else’s, Argentina should hold its nose and do a deal with the hold-outs.

(http://www.economist.com/news/leaders/21610263. Adapted)

SALVADOR ALLENDE AND THE CIA

_{By Jack Devine (ex-member of the CIA)}

[1]   The CIA’s covert efforts to reduce support for President Salvador Allende played an important role in the extreme political confusion that characterized his time in power. But the fierce opposition Allende faced was primarily a response to his own flawed economic policies, which hurt not only the wealthy but the middle and working classes as well. Perhaps fearing that his narrow margin of victory gave him little time to pursue his vision of a socialist Chile, Allende rushed into a program of land reform, nationalization of industry, and government spending to stimulate the economy. Initially, it seemed to work. In the government’s first year, real GDP grew by nearly eight percent, production increased by more than 12 percent, and consumption levels grew at a rate of 13 percent. But by early 1971, Allende’s economic populism began to backfire. Landlords became reluctant to maintain properties that might be seized at any moment. Business owners began leaving the country, taking their capital and entrepreneurial knowledge with them. And the public in general suffered shortages of basic goods.

[2]   Allende faced political problems, too. The moderate Christian Democrats were alarmed by his nationalization of industry and opposed his agenda in parliament. Meanwhile, leftists in Allende’s ruling coalition thought he should move even faster. Their impatience encouraged the Revolutionary Left Movement, which sponsored confiscations of privately held land in the countryside, often by violent means, creating a climate of fear and worsening food shortages.

[3]   Among my group of secret helpers at the time was an elderly middle-class woman, a grandmotherly type. She suggested putting together a demonstration in which women would carry pots and pans along with banners protesting the scarcity of food and basic household items. It sounded like a good idea, at least worth a small CIA investment. I gave her several hundred dollars but had low expectations. So I was stunned a few weeks later when I was walking near a park not far from the U.S. embassy and heard the thunder of thousands of women parading down the street, pounding on pots and pans. There, among those directing the marchers toward the presidential palace, was my helper. Later that night, as the demonstrators gathered outside the palace, leftist students arrived on the scene and physically attacked the women. Images of Chilean housewives getting harassed by leftist youths flashed around the world, creating a publicity nightmare for the Allende government and a rallying point for the opposition.

[4]   The demonstration came to be known as “the March of the Empty Pots and Pans,” and soon, similar protests were organized by other women’s groups, sometimes aimed at the military, which the women challenged to act against Allende.

Adapted from Foreign Affairs, July/August 2014.

SALVADOR ALLENDE AND THE CIA

_{By Jack Devine (ex-member of the CIA)}

[1]   The CIA’s covert efforts to reduce support for President Salvador Allende played an important role in the extreme political confusion that characterized his time in power. But the fierce opposition Allende faced was primarily a response to his own flawed economic policies, which hurt not only the wealthy but the middle and working classes as well. Perhaps fearing that his narrow margin of victory gave him little time to pursue his vision of a socialist Chile, Allende rushed into a program of land reform, nationalization of industry, and government spending to stimulate the economy. Initially, it seemed to work. In the government’s first year, real GDP grew by nearly eight percent, production increased by more than 12 percent, and consumption levels grew at a rate of 13 percent. But by early 1971, Allende’s economic populism began to backfire. Landlords became reluctant to maintain properties that might be seized at any moment. Business owners began leaving the country, taking their capital and entrepreneurial knowledge with them. And the public in general suffered shortages of basic goods.

[2]   Allende faced political problems, too. The moderate Christian Democrats were alarmed by his nationalization of industry and opposed his agenda in parliament. Meanwhile, leftists in Allende’s ruling coalition thought he should move even faster. Their impatience encouraged the Revolutionary Left Movement, which sponsored confiscations of privately held land in the countryside, often by violent means, creating a climate of fear and worsening food shortages.

[3]   Among my group of secret helpers at the time was an elderly middle-class woman, a grandmotherly type. She suggested putting together a demonstration in which women would carry pots and pans along with banners protesting the scarcity of food and basic household items. It sounded like a good idea, at least worth a small CIA investment. I gave her several hundred dollars but had low expectations. So I was stunned a few weeks later when I was walking near a park not far from the U.S. embassy and heard the thunder of thousands of women parading down the street, pounding on pots and pans. There, among those directing the marchers toward the presidential palace, was my helper. Later that night, as the demonstrators gathered outside the palace, leftist students arrived on the scene and physically attacked the women. Images of Chilean housewives getting harassed by leftist youths flashed around the world, creating a publicity nightmare for the Allende government and a rallying point for the opposition.

[4]   The demonstration came to be known as “the March of the Empty Pots and Pans,” and soon, similar protests were organized by other women’s groups, sometimes aimed at the military, which the women challenged to act against Allende.

Adapted from Foreign Affairs, July/August 2014.

SALVADOR ALLENDE AND THE CIA

_{By Jack Devine (ex-member of the CIA)}

[1]   The CIA’s covert efforts to reduce support for President Salvador Allende played an important role in the extreme political confusion that characterized his time in power. But the fierce opposition Allende faced was primarily a response to his own flawed economic policies, which hurt not only the wealthy but the middle and working classes as well. Perhaps fearing that his narrow margin of victory gave him little time to pursue his vision of a socialist Chile, Allende rushed into a program of land reform, nationalization of industry, and government spending to stimulate the economy. Initially, it seemed to work. In the government’s first year, real GDP grew by nearly eight percent, production increased by more than 12 percent, and consumption levels grew at a rate of 13 percent. But by early 1971, Allende’s economic populism began to backfire. Landlords became reluctant to maintain properties that might be seized at any moment. Business owners began leaving the country, taking their capital and entrepreneurial knowledge with them. And the public in general suffered shortages of basic goods.

[2]   Allende faced political problems, too. The moderate Christian Democrats were alarmed by his nationalization of industry and opposed his agenda in parliament. Meanwhile, leftists in Allende’s ruling coalition thought he should move even faster. Their impatience encouraged the Revolutionary Left Movement, which sponsored confiscations of privately held land in the countryside, often by violent means, creating a climate of fear and worsening food shortages.

[3]   Among my group of secret helpers at the time was an elderly middle-class woman, a grandmotherly type. She suggested putting together a demonstration in which women would carry pots and pans along with banners protesting the scarcity of food and basic household items. It sounded like a good idea, at least worth a small CIA investment. I gave her several hundred dollars but had low expectations. So I was stunned a few weeks later when I was walking near a park not far from the U.S. embassy and heard the thunder of thousands of women parading down the street, pounding on pots and pans. There, among those directing the marchers toward the presidential palace, was my helper. Later that night, as the demonstrators gathered outside the palace, leftist students arrived on the scene and physically attacked the women. Images of Chilean housewives getting harassed by leftist youths flashed around the world, creating a publicity nightmare for the Allende government and a rallying point for the opposition.

[4]   The demonstration came to be known as “the March of the Empty Pots and Pans,” and soon, similar protests were organized by other women’s groups, sometimes aimed at the military, which the women challenged to act against Allende.

Adapted from Foreign Affairs, July/August 2014.

ELECTRONIC BOOKS AND PRINTED BOOKS

By James Surowiecki

[1]   As a recent report from the Codex Group showed, looking around bookstores is still a far more common way of finding new books than either online search or social media. In fact, independent bookstores are now thriving, thanks in large part to their close ties to both publishers and customers. “Stores that can help you not just find what you’re looking for but also help you discover books you haven’t heard of are still very valuable to readers,” says Daniel Raff, a management professor at Wharton.

[2]   Of course, a lot of people believe that physical books are “technologically obsolete,” and that the book industry is heading down the path that the music industry took, where digital downloads decimated CD sales and put record stores out of business. It’s true that, between 2009 and 2011, ebook sales rose at triple-digit annual rates. But last year, according to industry trade groups, e-book sales rose just forty-four per cent. (They currently account for about a fifth of the total market.) This kind of deceleration in the growth rate isn’t what you’d expect if e-books were going to replace printed books anytime soon. In a recent survey by the Codex Group, ninety-seven per cent of people who read e-books said that they were still loyal to print, and only three per cent of frequent book buyers read only digital.

[3]  E-books obviously have certain advantages (like the fact that you can carry lots of them around with you), but for many book buyers their main appeal is that they’re cheaper. Against that, the Codex Group finds that people of all ages still prefer print for serious reading; e-book sales are dominated by genre fiction—“light reading.” This may be just a prejudice that will vanish as e-books become more common. But we do read things differently when they’re on a page rather than on a screen. A study this year found that people reading on a screen tended to skip around more and read less intensively, and plenty of research confirms that people tend to comprehend less of what they read on a screen. The differences are small, but they may explain the persistent appeal of paper. Indeed, hardcover book sales rose last year by a hundred million dollars.

[4]  For many people, as a number of studies show, reading is a genuinely tactile experience—how a book feels and looks has a material impact on how we feel about reading. This isn’t necessarily traditionalism or nostalgia. The truth is that the book is an exceptionally good piece of technology— easy to read, portable, durable, and inexpensive. Unlike the phase-change move toward digital that we saw in music, the transition to e-books is going to be slow; coexistence is more likely than conquest. The book isn’t obsolete.

Adapted from The New Yorker, July 29, 2013.

ELECTRONIC BOOKS AND PRINTED BOOKS

By James Surowiecki

[1]   As a recent report from the Codex Group showed, looking around bookstores is still a far more common way of finding new books than either online search or social media. In fact, independent bookstores are now thriving, thanks in large part to their close ties to both publishers and customers. “Stores that can help you not just find what you’re looking for but also help you discover books you haven’t heard of are still very valuable to readers,” says Daniel Raff, a management professor at Wharton.

[2]   Of course, a lot of people believe that physical books are “technologically obsolete,” and that the book industry is heading down the path that the music industry took, where digital downloads decimated CD sales and put record stores out of business. It’s true that, between 2009 and 2011, ebook sales rose at triple-digit annual rates. But last year, according to industry trade groups, e-book sales rose just forty-four per cent. (They currently account for about a fifth of the total market.) This kind of deceleration in the growth rate isn’t what you’d expect if e-books were going to replace printed books anytime soon. In a recent survey by the Codex Group, ninety-seven per cent of people who read e-books said that they were still loyal to print, and only three per cent of frequent book buyers read only digital.

[3]  E-books obviously have certain advantages (like the fact that you can carry lots of them around with you), but for many book buyers their main appeal is that they’re cheaper. Against that, the Codex Group finds that people of all ages still prefer print for serious reading; e-book sales are dominated by genre fiction—“light reading.” This may be just a prejudice that will vanish as e-books become more common. But we do read things differently when they’re on a page rather than on a screen. A study this year found that people reading on a screen tended to skip around more and read less intensively, and plenty of research confirms that people tend to comprehend less of what they read on a screen. The differences are small, but they may explain the persistent appeal of paper. Indeed, hardcover book sales rose last year by a hundred million dollars.

[4]  For many people, as a number of studies show, reading is a genuinely tactile experience—how a book feels and looks has a material impact on how we feel about reading. This isn’t necessarily traditionalism or nostalgia. The truth is that the book is an exceptionally good piece of technology— easy to read, portable, durable, and inexpensive. Unlike the phase-change move toward digital that we saw in music, the transition to e-books is going to be slow; coexistence is more likely than conquest. The book isn’t obsolete.

Adapted from The New Yorker, July 29, 2013.