External Debt and bonds in default. The Exchange: Who Benefits?

Bond Debt and Default. The Exchange: Who Benefits?

All we are excited about what is happening in Argentina regarding the payment of debt in default resorting to the use of accumulated reserves in the Central Bank of the nation.

The argument used by the Argentine government to pay the said debt to reserves is the urgent need to improve the country's international image and thus encourage potential investors to renew their confidence and return to buy the new bonds, which will be issued, after difficult negotiations agreed with the creditor banks.

This decision to cancel the debt using reserves, has led to a confrontation ríspido the Argentine government and the opposition, and is reflected in a paralyzed national congress which does not achieve the necessary agreements and has led them to rely on more than Once, the Judiciary, to intervene and prevent it so that both contenders, government and opposition, trying to perform.

Against this background, international banking, which qualifies the status of the debt, has greatly improved the rating of it, noticing a certain joy in depreciated bondholders and unpaid, at the prospect of huge profits, if carried out the terms the government raises the negotiation.

But Who are the current holders of the bonds in question?

To answer this question, we suggest that a small collection of certain events which make the origin of the first purchasers of bonds issued by the Argentine state, as they arose and what were the reasons that motivated them to buy.

Let's see:

On the occasion of being in countries with developed economies, I became interested in the situation of large segments of the population, who, prompted by an extremely aggressive propaganda, had fallen into the clutches of consumerism, reaching extremes really worrying about their ability to maintain a basic balance in the growing gap between their limited income and mounting debt result of greed by eating everything offered by offering ever more tempting.

This situation was also observed by the financial sectors, which face the barrage of bad debt that was eroding the credibility of the system, note that this is merely mentioned that the preamble of the enormous crisis that shook the world's economies recently and only mentioned in passing in this article, we are referring to the germ and the harvest of this tragedy we are living.



Had to give an intelligent response to contain and channel capacity subject to fixed income groups, as can employees and retirees, to name a few, and it was put into practice, a very interesting mode, the concern that we have mentioned. regarding the social harm caused by fever consumerist society, has led to an ingenious work of a personal financial advisor or family member.

These counselors take very strong financial institutions and respectable, often prestigious economic groups, trying through the activities of its agents, offer a free financial advice in order to help these people to get out of debt uncomfortable and accommodate a budget commensurate with their level of income, with the hope that it causes positive balances financial recovery that can be poured into the savings and investment.

As will be understood a venture of this nature has the approval of governmental authorities, chamber of commerce, credit institutions, religious institutions and all other organizations directly and indirectly involved in this problem is a major effort to overcome to achieve difficulties and provide a means of achieving greater stability and solvency within families.

How does these institutions?, As was careful to include the selection and training of these agents advisers, who were professionals with a strong background and experience.

These advisers once defined work area will contact potential customers, in public or private pre-selected, the first contact

was intended to break the ice, there may be a brochure, an invitation to an informal chat or any other means deemed fit to awaken the interest of the candidate, the goal is to make an appointment, preferably in the home, and possibly with the presence of the whole family.

A trained counselor could get to be on the agenda from 15 to 20 interviews a day.

Following the close of the interview, the counselor should tactfully, to present his plan for financial advice, leaving for the next visit a possible foray into financial problems particular family.

With increasing confidence in his adviser, the family raises its difficulties and the advisor tells what are the aspects which it considers should be improved to achieve better results in the income ratio - expenses, discuss with them measures to take to to clean up the negative aspects.

When the situation calls can provide a soft loan to clean up and credit and thus improve your chances of getting cash surpluses.

Having achieved the first objective of organizing family finances, they worked in the surplus will be generated by a balanced budget and managed to achieve this purpose, often the primary goal is to obtain surplus in the order of 10% of household budgets, with destined for the purchase of a savings and investment plan.

In financial markets so-called first world, interest rates were around 1% to 1.5% annually, so that if the candidate is offering double or triple this indicator in its investment plan was surely a strong incentive to achieve acceptance.

These investment plans ranging contributions in a strip that goes from 150.00 to 350.00 (U.S. dollars) per month, are engaged in plans for 12, 24, 36 months, or extended at the discretion of the candidate, with compliance commitments by both parties own contracts of this nature.

This is a legitimate operation and regulated by the federal financial system which is very strict in enforcing its rules.

From the point of view of the system, obviously we see no objection and the activity of these financial advisors is highly commendable and valuable.

The fate of the billions of dollars entered into the system through the mediation of these agents, is turned to the emerging economies, with the express authorization of the subscriber savings and investment agreement.

These emerging countries come to pay extremely high rates, our country came

to pay a 15% annual interest, by withdrawal of these funds which entered through the international banking.

When Argentina defaulted on these bonds plummeted, leading to the ruin and despair to countless dagnificados, reaching many of them to madness or suicide.

The big question was: What to do with these bonds so devalued? And the answer was none other than fall into the hands of speculators, who took pay the residual value hardly exceeds 20% of its nominal value.

They are currently negotiating with the Argentine government, and no wonder why they are so happy, what will not improve the rating of a debt that generously gives their chests similar gain.

Hugo W. Arostegui