Argentina is cautionary tale as U.S. debates debt limit
You know all those warnings about how America’s addiction to deficit spending is going to make us look like Greece?
Stop worrying. The bigger concern should be that America will look like Argentina.
That could happen, theoretically, if the threatened refusal by Republicans in the House to raise the federal debt limit leads to a default on U.S. government bonds. How bad would it be, you ask?
Think about this: Because of lawsuits over Argentina’s 2001 default on nearly $100 billion in sovereign debt, President Cristina Fernandez de Kirchner rents a private jet for state visits abroad. That’s because she fears that her presidential plane (dubbed “Tango 01”) would be seized by creditors the moment it landed at a foreign airport.
In October, the creditors came this close to grabbing an Argentine naval frigate, the Libertad, when it put in at port in Ghana with 220 crew aboard. Ghana detained the training vessel for about two months, until an international court ruled that, as a military asset, it was immune from seizure.
The creditors, which include Elliott Management, a hedge fund that also has been a big investor in Hollywood, have also taken steps to go after personal assets of Fernandez and members of her Cabinet. They’ve succeeded in freezing Argentine central bank assets in the U.S., and in 2009 even tried to attach a dozen Argentine dinosaur fossils on exhibit in Germany.