DON'T CRY FOR THE BOND MARKET

              

  ARGENTINA BONDS

With much fanfare and financial press commentary, Argentina has returned to the International Bond Markets.

·         It raised $17 billion mixture of 3/510and 30year bonds at a yield of 7.5%
·         Orders were $70 billion, 4 times over subscribed
·         It is largest one-day issuance by a developing nation in history
·         Argentina has a dreadful track record as a borrower
·         It has defaulted on government debt nine times since independence.
·         In 1890,global credit markets panicked when Barings almost collapsed due 

      to a hefty Argentine default.
·         It was rescued by arch enemies Rothschild for the second time that century;Not so lucky in 1995 when it collapsed and was bought by the Dutch bank ING       

 In 2001, unemployment in Argentina reached more than 20%, causing riots,looting and political instability

       

·         The country saw five presidents in two weeks,

·         It  defaulted on ≥ $100 billion in debt – the world’s largest ever sovereign default

·         It even defaulted on $10 billion of debt to the IMF, a problem not resolved until 2006 

·         By the end of the crisis the country’s economy had shrunk by a fifth

• In 2001,U.S.hedge funds -“the vultures”  bought deeply discounted bonds and blocked  restructuring by the Kirchner[Peronist]governments   
•         
• This despite the fact that the other 93% of bondholders had agreed a severe restructuring  and had begun to be repaid

• The newly elected Mauricio Macri government has now settled with all past bond holders; allowing for Argentinas spectacular return to the credit market
•  Argentina raised enough to pay back existing creditors and still have some left over

                                                                       

                

•  Macri have been given the red carpet treatment by global leaders and the bond markets
•   Maybe this time the nation won’t default.

This week’s news gives me an excuse to write of my affection for this benighted,abundant, mismanaged, infuriating country ,its people and Futbol .I have been Argie-phile since childhood. Readers of this blog may have picked up a few clues.The reasons are peculiar to my family.

   

Der Oncle-Der Yiddisher Arbeiter Bund

As a little boy I heard tales of the Argentine “oncle’. My father’s uncle was his only surviving relative. He had been his favourite uncle in “der heim”-Poland before WWII. The story goes that he, like my father subsequently, had been a member of the Jewish Workers Party. Formed in the late 1880’s to protect Jews from the Tzar and to promote International Socialism. Der Yiddisher Arbeiter Bund was a major political movement in the revolutionary era from the 1880s until the Jewish genocide of WW II. His uncle had been a body guard to the leadership at meetings and rallies.

  

My dad told me his mother’s brother had “escaped” to Buenos Aires in the 1920's after a rally had been violently attacked by the authorities. A policeman had been killed and “der Oncle” left for Argentina. Presumably he did not have enough cash for the man at the US consulate.

I must have been about 9 years old when I heard this story for the first time. I was sworn to secrecy in case my dad could be deported by association .It never occurred to me to ask: to where, by whom and for what—it was several years before I became an obnoxious inquisitor. I was not to speak of the Oncle’s past with my mum or my two sisters; they were 6 and 2 at the time and already revolutionary enough. Needless to say I never met my uncle when I was a child, nor do I recall knowing his first name –he was “der Oncle Kukiolka”.

   We finally met when I was twenty seven. His wife and he came to my sister’s wedding in London. They were in their eighties , the first time out of Argentina  since he immigrated  50 years  earlier .They were undertaking  a world tour to see relatives “before we die”, the Auntie had a cousin in Canada, there was a rediscovered cousin in Germany and there was Leon’s daughter’s wedding to attend in London. The uncle was in his eighties; about four feet eight inches tall and the same wide. This was a body guard for the Bund? Why not, his nephew, my dad, had had a similar role and he only grew to five feet five. Young, uneducated, idealistic,angry boys of the Jewish Proletariat; they could not write political tracts or make powerful speeches but they could try to protect those who did. Awful times.

   

    Anyway, the couple was the guests of honour and stayed with my parents. They spoke no English and my parents no Spanish. The Yiddish flowed, many tears and remembrances.My own indelible memory is of a family dinner before the nuptials .My father kept nagging the bride to be, a fluent Spanish speaker, to “speak to the Oncle in Spanish”. Finally she told dad that she could not understand a word his uncle said “Dad he speaks a weirder Spanish with a stronger accent than you speak English" The nagging stopped. 

    

    Thus began a fondness for Argentina. England had provided one old bodyguard with a refuge and Argentina another to his Oncle .The body guards survived, had families and grand children. Henryk Ehrlich, Victor Alter and other Bundist leaders escaped the Nazis to seek refuge in the Soviet Union. They were shot or sent to the gulag. Rootless Cosmopolitans no doubt. No soft spot for NKVD/KGB for me. Sorry Jeremy.        

     

Abandoned Opus

     The next sections of this opus were to be about Argentine culture;political history; and dysfunctional populist economics.Finally about my first trip in 1990 and my experience doing business there --an oil deal for the IFC[World Bank] in 1991 which is still on the books and paying dividends; and on the board of a small bank between 1993-99 I think.By that time the Oncle and auntie had died but I did meet distant cousin Boris and his family.We went with his young son to a Boca Juniors game.I was going to duck a commentary on the Malvinas[British diplomat that I am] but not on the Generals Dirty War or the "Disappeared".

Any readers still with me will be relieved that all this has now been abandoned. A treatise on the Argentine -English football rivalry will be in a future blog. 

    I will finish today with the following  

Key things to know about The Argentine Self Image

 An ethnic survey of Argentines 45 million people revealed that 60% believed they were Spanish, 60% Italian, 35% other European and the rest Jews, Arabs or Welsh. Most also believed that the population was 4^th in the International Maths Rankings. They all despised the government.

It is well known that other Latin Americans believe Argentines are arrogant and narcissistic. Argentines proudly accept this and believe the rest of the region is envious.

 The country is dominated by Buenos Aires,supported by an extraordinarily abundant and productive agricultural sector .

Portenos, those living in Buenos Aires, have a unique self image. They say about themselves : that they are Italians, who speak Spanish, live like the French and wish they were English.When not dancing the Tango,they are watching futbol,romancing  and eating Parilla- Barbecue .  

                                                   

One begins to guess that Portenos arrogance,fine living and love of style may be  a protective veneer against the desperate state of Argentine politics,history and generations long mismanagement of the economy.                                                                                                                                                                       

                                                            

                                                   

 .                                                                 

Oops sorry wrong cartoon --but Argentines would recognise this style of political leadership.

One of the richest nations on earth at the turn of the 20th century.The enormous potential of its sophisticated population and abundant resource base wasted by a succession of populist,Peronist  governments  interspersed with fascistic military Juntas.

Perhaps no coincidence,Argentina has more psychologists per capita than any other nation.WHO estimates it has 145 per 100,000 residents far more than second place Denmark, with 85,or ninth place US with 31. Many analysts in Buenos Aires, cluster in the neighborhood Villa Freud. 

 It is estimated that almost half of Portenos have had Freudian analysis. There is no estimate of the percentage that benefitted. Psychoanalysis is a very important part of the culture, almost as significant as Futbol. In 2008 the newsweekly,Noticias asked a panel of 10 psychoanalysts to explain why ex-president Néstor Kirchner was stealing the policy making spotlight from his wife, President Cristina Kirchner. Another asked: What to make of Mrs. Kirchner's statement that her husband sleeps in the fetal position.

Much of the above has been researched so that I can justify writing the following joke.

How does an Argentine commit suicide? 

By climbing his own ego and jumping ! 

Electile Disfunction

One of my most devoted readers has sent me a thoughtful and valuable definition of what ails us in  the  current election cycle.He wishes to share this insight .                                                                                    

 ELECTILE DYSFUNCTION:  the inability to become aroused by any of the candidates put forth by either  political parties.

       {I knew someone would come up with a smart diagnosis}

                                                             

                (I shall now double down on les double entendres--forgive me)

This could explain why Bernie is so reluctant to pull out.

Why Trump claims he needs more protection and complains about his delegate count.

Cruz is courting Evangelicals even though many have pledged not to vote before marriage.

And why the pundits believe Kacich is f*****d.

I trust that it is noted that I am refraining from making any cheap cracks about Secretary Clinton.I did not want blow back from my Lady Readers. 

  

Now we know what the problem is ,we need to harden  our resolve,stiffen our sinews ,gird our loins and rise with firm resolve to thrust  towards that electoral climax we crave.

   

The UK has similar chronic problems at Sexminster:

Dodgy Dave has problems with his offshore  affairs.

To say nothing of that pigs head.

Chancellor  George Osborne complains he does not get value for his large expenditures.

                                      

London Mayor Bonking Boris Johnson  has a famous problem keeping his-- well Johnson --in the Right place.

And Home Secretary Thersa May.

I will not pile on poor Mr.John Whittingdale ,Minister for Culture, and his Dominatrix.He has had  a long,discrete ,low key political career including serving as Political Secretary to the then Prime Minister Margaret Thatcher.The tabloids have been cruel enough .Anyway a downing Street Spokesman has said Mr Whittingdale "is a single man entitled to a private life" and that he had the "full confidence" of David Cameron.

 So it seems he will be at the employment exchange by next Friday.

    

  Electile dysfunction may be at a terminal stage for The Labour opposition : we shall see in May.

There does not seem to be any truth to the gossip that Jaunty Jeremy is planning a nostalgic  biking holiday to Berlin with Delectable Dianne Abbott the shadow Culture Minister.

                      

Nor are any of Corbyn's  inner circle planning a trip to Israel to pander to the vast and influential Jewish vote.

Despite Leader Nick Clegg[over] 's best efforts--"no more than 30" notches on his bedpost--the Liberal Democrats were clearly firing blanks at the last election.Resulting in a dramatic LIBDEM population decline at Sexminster.

Their time cohabiting with the Tories proved a total cock up; leading to a major droop in their vote.

They hope to get it up again at the local elections in May.

And they stand firm behind the EU.

Finally, the Scottish Nationalists march forward with great confidence towards their next election--as do all young male Scots every Saturday night.

                                      

They have successfully maintained  the National Secret of what a Scotsman wears under his kilt.

Scottish women I have known assure me that there is nothing to make an international fuss about.

Signs of Electile Dysfunction are appearing all over the world.It is an existential threat to MANkind.

    

         The French Intelligentsia have been the first to seek a cure

       "Courage mes Braves ! Cherchez les femmes"

               

SHOCK HORROR SCANDAL: CAMERON IS A TOFF

                                        WELL I never. Who could have Known! 

         The Tory Prime Minister of the UK is a Toff who had a rich dad.

                                        

Were there no clues? 

                                  

Cameron descends from King William IV and his mistress Dorothea Jordan through their illegitimate daughter Lady Elizabeth FitzClarence. 

He is fifth cousin once removed (by illegitimacy) of Queen Elizabeth II.

His forebears include various Viscounts, Dukes, Earls and Barons.

The family has served British Sovereigns since at least the 1700's; both in England and Scotland.Cameron is a nephew of Sir William Dugdale who was chairman of Aston Villa Football Club. Hence his claim to be a Villa supporter; the saddest part of this saga.

His father was senior partner in Stockbroker Panmure Gordon as was his father and grandfather.                    

He was Educated at Eton and Oxford. He was a member of the all male Oxford Bullingdon Club. Where he is reputed to have had unspeakable relations with a pig’s head .It is not clear whether at the time the head was or was not attached to rest of the pig.

          

Grooming:your the only pig for me

                             

                                                                                              


                                                                                                                                                                                        Bill :Eat Your heart out

                                                         

The aftermath

Following Oxford he worked 5 years at conservative central office and from there to Downing Street to work directly for PM John Major. Hell of an internship for a boy with such a humble background. This was followed by a 6 year stint as a Public Relations man before being elected to Parliament in 2001

                                 

                                   

        

Within four years he had been elected leader of his party .And by 2010 had returned to his career as a PR man with the title of Prime Minister.

                        

                           In 1996 he married Samantha Sheffield.

                             

Her lineage is as replete with Barons, Earls, and Knights etc as is David’s.

She is the daughter of Sir Reginald Sheffield ,8^th Baronet Normandby , great-granddaughter of Sir Bede Edmund Hugh Clifford, Governor of the Bahamas, Mauritius and Trinidad and Tobago ; and descended from King England. Her mother, after the breakup of her marriage to Lord Sheffield, married William, 4th Viscount Astor the scion of the fabled and immensely wealthy Astor family. William’s mother, the redoubtable American born Lady Nancy Astor, was a suffragette and, in 1919, became the first female Member of Parliament.
                                  

   

                               

This last gives me an excuse to present 2 quotes from that arch reactionary and sexist Winston Churchill. Churchill of course opposed female suffrage and despised Nancy Astor—not least because the Astors were much wealthier than the Marlboroughs—albeit noveaux.

                 

                          

   Both David and Samantha Cameron come from wealthy and privileged backgrounds stretching back though the British aristocracy for at least 400 years. And all this was known and in the public domain long before he became PM. Yet the media has feigned shock and horror at the discovery that his father ,a fourth generation stockbroker and financier;  with a 40 year career in the London Markets ordered his affairs in a tax efficient manner within the law.

   There are apparently 2 issues:

1.      Cameron, Pater, Ian, created a “unit trust” or fund, which rose and pooled money from various investors using it to invest in a variety of securities .The fund was incorporated offshore allowing profits to be tax free UNTIL distributed to the funds owners. Apparently Dodgy Dave paid British taxes on income the couple received and capital gains taxes. This is a similar structure to investing in a UK ISA fund or a US IRA or Roth account—but incorporated offshore. Nothing that has emerged suggests that the prime minister’s family broke any rules. One may legitimately question why the British government allows such structures but they have existed for as long as I can remember and been allowed—indeed encouraged—by successive Tory, Labour and Coalition controlled governments.

           If one does not approve: the pertinent question is not why did Cameron           invest in his dad’s fund but rather why did not Blair/Brown close this “loophole”?

Cameron has faced sharp criticism from the Labour Party, including its leader Jeremy Corbyn. That’s fair enough .It is consistent with Corbyn’s world view.

And The Cameron government can justifiably be accused as the world champion of hypocrisy on money laundering, international tax evasion and the harbouring of the international kleptocracy. London is the destination of choice for oligarchs and kleptocrats from  Russia,Ukraine,Belarus,kazakhstan,Nigeria,Egypt,Kenya,Uganda,China, Myanmar ,Malaysia, the Gulf and on and on. Osborne and Cameron have continued to protect the legal, financial and real estate services that make London so attractive. This of course continues the policy of protecting the “City” followed by Blair/Brown/Mandelsohn.

     I would be more impressed by Corbyn if he had the consistency to also condemn the much more egregious thefts revealed by the Panama Papers. Most notably those of Putin and his Cellist friend god father to his daughter –at least $2 billion .Or as my Russian friends call it: the petty cash.

     The newspapers are having a field day.Unfortuneately few journalists understand numbers beyond the ones in the corner of each page. Those that do are wondering what the fuss is about and the rest are asking the wrong questions. There is little doubt that Cameron did or is doing nothing illegal. But given Pater Camerons wealth, connections and expertise is this all there is? Why did he need to set up this fund in Panama if all it does is defer tax payments for UK  residents ?Could this not have been done through less exotic locations ?How much money was sourced from jurisdictions that did not allow this type of  deferral ?or  from sources that would not have passed even HSBC know your customer processes?[ actually that’s a silly rhetorical question, everybody seems to have passed the HSBC scrutiny if they put up sufficient cash].How many other vehicles did Ian Cameron  create and for whom? Is Tony Blair on the board of these vehicles, if not the Cameron ones then….?

   I believe that hounding politicians about their legally garnered income and wealth is unhealthy for democracy. But if like Cameron you are claiming virtue, by putting out your income tax filings for revue then  it is legitimate to ask questions .For example , given Cameron’s  pedigree and obvious wealth  then the tax forms he has published seem to raise legitimate questions. They simply are not substantial enough. If, as I believe, his wealth is all legal then I do not care how rich he is. 

The problem is less with Cameron than with the law, not least that dealing with the second revelation.

2.      On his father’s death David Cameron inherited £300,000.This was tax free of Inheritance Tax. His mother then made him a gift of £200,000 in order to equalize what he received to match his siblings. This was all legal but in some quarters Cameron Mater has been pilloried for avoiding future IHT. Poor [not financially] woman was just taking care of her kids ---legally. It so happens that the IHT in the UK is a law with a bizarre set of rules that actually favours the very rich over the just quite affluent. Various reforms being proposed by the Tory government in fact make the tax even less sensible, fair or effective. This will be the subject of a separate blog if my vast readership has got far enough with this one to request such.

                    

President Trump on his first state visit to Saudi Arabia

This was sent to me by one of my most devoted readers.I felt the need to share.     

                                                                                                                                                                                                                                              The Saudis may find him puzzling but the Argentines will love him.