Tuesday, 17 June 2014

Deadbeat government gets butt kicked.

SCOTUS ruled 7:1 against the Republic of Argentina today even though the US Government begged the Supreme Court to go easy.  Will sovereign nations (read "politicians") now find it harder to default, losing their traditional "privilege" to do so? Argentina defaulted in 2001 on bonds that it had double deep cross your heart promised to pay honourably.  SCOTUS says Argentina must disclose where it has overseas assets that the plaintiff (NML Capital Ltd.) could collect on.  The peso plunged.   (Summarized from The American Interest article.)
President Cristina Fernandez de Kirchner unveils new money.

In related reading from John Mauldin:

"The financial world is beset by sovereign debt in nearly all corners.  (This is) reshaping the investing landscape (to a degree)unprecedented in human history.  Central bankers exacerbate this debt bomb by expanding central bank balance sheets, pressing interest rates to the floor, and trying to quantitatively ease the global economy back to widespread prosperity."

Sovereign debt is floating upwards like the sweet smell of farts in the outhouse and by large percentages even in the last six years.
A diverting little chart, also from Mauldin:

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