Joseph Mariathasan: Argentina’s 100-year bond

first_imgWhile investors may have a high regard for the current administration, history cannot be forgotten. In the last 100 years, Argentina has defaulted many times – so much so that Argentinian economic history has become a subject in its own right. There is the “Argentine paradox”: how can a country that at one stage in the early 20th century was perhaps the richest in the world on a per capita basis experience such a deep and prolonged reversal?For Adrogue, the fundamental problem with Argentina is that it does not have a good institutional framework to deal with a commodity-driven economy. It became the richest country in the world after the UK had opened up global trade, and the revolution in refrigeration technology enabled the transportation of soft commodities such as meat. Argentina benefitted from being in the right place at the right time, but it did not necessarily have the right policies. Once that came to an end, the country began a long decline.Adrogue argues that one fundamental problem is that the population has a misplaced belief that the country is rich. The standard joke about Argentinians is that they are Italians who speak Spanish but think that they are English. But if everyone believes they are richer than they really are, the sum of total demand becomes larger than the supply available in the country. This gets reflected in large and persistent fiscal deficits, which never get adjusted and eventually lead to defaults.The current president, Mauricio Macri, may be successful for a time until the population changes its mind and realises that there are limits to the supply of resources and the population needs to share the resources that are available.For Adrogue, the bigger issue is not the type of government that Argentina has but the institutional framework that gives the president too much power and therefore takes away the requirement to negotiate with congress to reach compromises and agreements. Those who achieve power have no constraints, which leads to big swings in economic policy. The last swing, under Cristina Fernández de Kirchner, was to the left. Under Macri we are seeing a swing back. It is very difficult contain those swings because the president has so much power relative to congress.Argentina copied the US constitution but gave the president too much power. It started with the assumption that the underlying institutional structure was similar to the US – this was incorrect. In the US, the individual states were created prior to the formation of the country itself. In Argentina, the provinces were created after the country got its independence. This, combined with a commodity-based economy, made it very difficult for the population to separate good policies from luck. When commodity prices go up, no matter who is in charge, the population always perceives them to be a great government. When commodity prices are low, no matter how good the government is, the population perceives them to be bad.  Barings is not buying the 100-year bond. The company likes to look at countries in which fiscal dynamics are somewhat independent of the ability to access credit – it doesn’t abandon or change its story on fiscal policy just because it has access to credit. This can cause problems and ultimately defaults.Argentina just issued $3bn (€2.6bn) of debt that the government said it didn’t need. For Barings, that is a bad sign. The market could end up having to discipline the government, when governments should have self-discipline. Argentina just issued a 100-year bond. Despite a history of defaults over the past 100 years, investors seem happy to try their luck for the next 100. Are they being wise or foolish?One factor in favour of investors is that the yield on the hard-currency bond when it was issued was 7.9%. If recoveries after defaults are expected to be 40%-50%, they will not have to wait many years to break even.Ricardo Adrogue, head of emerging market debt (EMD) at Barings, and himself an Argentinian, believes that the country should not have issued a 100-year bond.His rationale is quite simple: Argentina is rated B by credit agencies, while Barings would give the country a BB rating by their internal measures. If economic conditions are improving in the country such that Argentina would be able to issue debt at a lower coupon in five years’ time, why not just issue a five-year bond and then roll over the debt at a lower coupon?last_img read more


Update on the latest sports

first_imgUNDATED (AP) — The NBA announced the schedule Saturday for scrimmages at the Disney complex in Florida, with 33 games set for between July 22 and July 28.Each of the 22 teams that will be part of the season restart has been scheduled for three games.All three arenas at the ESPN Wide World of Sports complex that will be used for the restart will also play host to the scrimmages.There will be between three and six games per day during that six-day span. The season will officially resume with the start of seeding games on July 30.Teams begin arriving at Disney for a brief quarantine followed by the start of their training camps on Tuesday. Bottas takes pole position for season-opening Austrian GPSPIELBERG, Austria (AP) — Valtteri Bottas has upstaged Mercedes teammate Lewis Hamilton by taking pole position for Formula One’s season-opening Austrian Grand Prix. The Finnish driver edged out the world champion by .012 seconds at the Red Bull Ring in Spielberg. Red Bull driver Max Verstappen was back in third place and Lando Norris gave McLaren a boost by finishing fourth. Verstappen has won the past two years in Austria. Hamilton was chasing a record-extending 89th career pole. Ferrari struggled with Charles Leclerc nearly one second behind in seventh and Sebastian Vettel a miserable 11th.SOCCER-JAPAN INDIANAPOLIS (AP) — IndyCar and Indianapolis Motor Speedway are making an active effort to increase diversity throughout the industry with a $1 million donation to a new “Race for Equality & Change” initiative. The initiative will support both internal and external programs. IndyCar does not have any Black drivers. Bubba Wallace is the only full-time black driver in NASCAR’s top Cup Series. The initiative announced before Saturday’s race at Indianapolis Motor Speedway is aimed at both developing diversity within the sanctioning body and at the speedway, as well at the grassroots racing levels. MLB-INDIANS NAMEIndians reviewing possible name change July 4, 2020 SOCCER-FC DALLASMLS tournament match postponed by Dallas positivesDALLAS (AP) — The MLS Is Back tournament match between FC Dallas and the Vancouver Whitecaps has been postponed after six FC Dallas players tested positive for COVID-19.The group stage match was scheduled to take place Thursday. MLS officials announced the postponement Saturday and said a new time and date would come later.FC Dallas confirmed Wednesday that players had tested positive upon their arrival in Florida for the month-long tournament. The entire FC Dallas delegation is quarantining in their rooms at the walt Disney World Swan and Dolphin Resort. ATLANTA (AP) — Frances Tiafoe has tested positive for the coronavirus and withdrawn from the All-American Team Cup tennis tournament. He was scheduled to face Tennys Sandgren on Saturday in the weekend tournament in Atlanta involving eight top American men’s players. The event is allowing a limited number of fans and not requiring masks, though will provide them if requested. Tiafoe defeated Sam Querrey on Friday, but was showing symptoms after the match and a test was positive. He says he had tested negative for the virus as recently as a week ago.NASCAR-BRICKYARDJohnson missing Brickyard 400 after testing positive Kansas State players call off threatened boycottMANHATTAN, Kansas (AP) — Kansas State football players have called off a threatened boycott in response to an insensitive tweet by a student about the death of George Floyd.The decision was announced on social media by several players. It follows moves by the school to address diversity concerns.The players say they they will track the school’s efforts and re-evaluate their options if needed.F1-AUSTRIAN GRAND PRIX Japan’s professional soccer league restartsTOKYO (AP) — — Japan’s professional soccer league restarted on Saturday after a four-month break caused by the coronavirus pandemic. All 18 top-flight teams were in action, and the nine games were played without fans. Japan’s popular pro baseball league restarted last month, also without fans.The first division of the J-League suspended play in February after only one round of matches had been played. It is expected to gradually start allowing fans to enter later this month although that could be slowed with Tokyo reporting a steady increase in COVID-19 cases. Manager Brian Snitker says the four players, including right-hander Touki Toussaint and infielder Pete Kozma, agreed to have the team disclose their positive tests. Snitker says Freeman had a negative intake test before having a positive test on Friday. Snitker said Freeman has a fever and “is not feeling great.” He says “it will be a while” before Freeman can return to the team. The Braves signed Smith, the former Giants reliever, to a three-year, $39 million deal in the offseason.VIRUS OUTBREAK-TENNIS-TIAFOEFrances Tiafoe has coronavirus, exits Atlanta tennis event Irish trainer Aidan O’Brien claimed a record eighth win in the race.It marked another triumphant day for O’Brien, who saddled the winner of the Oaks hours earlier. Race favorite Love was his eighth winner of the classic for fillies. Associated Press CLEVELAND (AP) — They’ve been known as the Cleveland Indians since 1915. Those days could be over.Amid new pressure sparked by a national movement to correct racial wrongdoings, the Indians said Friday night they will review their long-debated nickname which has been in place for 105 years.The move mirrors the one made by the NFL’s Washington Redskins, who are embarking on a “thorough review” of their name. The Redskins’ decision came in the wake of FedEx, which paid $205 million for naming rights to the team’s stadium, and other corporate partners calling for the team to change its nickname. There have been previous efforts to get the Indians to rename themselves. But following the death of George Floyd in Minnesota and other examples of police brutality against Black people in the U.S., there has been a major move nationwide to eradicate racially insensitive material.RACIAL INJUSTICE-KANSAS STATE INDIANAPOLIS (AP) — NASCAR’s extravagant weekend at Indianapolis Motor Speedway has been rocked by its first driver testing positive for the coronavirus. Seven-time NASCAR champion Jimmie Johnson will miss what was supposed to be his final Brickyard 400 as he quarantines following the Friday test result. He was asymptomatic but wife Chani had tested positive, so Johnson had himself checked. Johnson on Sunday had hoped to tie Jeff Gordon and Michael Schumacher as the only drivers with five victories at Indianapolis. Instead, Justin Allgaier will drive the Hendrick Motorsports No. 48 Chevrolet. NBANBA announces schedule for Florida scrimmages Update on the latest sports Vancouver’s team is scheduled to arrive in Orlando on Monday.MLS said the postponement would allow both teams to have additional training days in Orlando before opening tournament play.FC Dallas will now play its first tournament match July 15 against the Seattle Sounders.INDYCAR-DIVERSITY PROGRAMIndyCar donates $1 million to establish diversity program Japan has reported just under 1,000 deaths from the virus, in a population of 126 million. This compares to almost 130,000 in the United States with a population of 330 million.HORSE RACING-ENGLISH DERBYPacesetter Serpentine goes wire-to-wireEPSOM, England (AP) — The first English Derby to take place without spectators has taken a surreal turn as 25-1 shot Serpentine went out as the pacemaker and was never caught for a stunning six-length victory at an empty Epsom Downs. The nature of Serpentine’s wire-to-wire victory added to the bizarre feel of the 241st running of the classic. The course was fenced off and there were only a few hundred people on site at a prestigious event that usually attracts as many as 100,000 race-goers. Share This StoryFacebookTwitteremailPrintLinkedinRedditMLB-BRAVES-FREEMAN TESTS POSITIVEFreeman, Smith among four Braves testing positiveATLANTA (AP) — Atlanta Braves four-time All-Star Freddie Freeman, premier reliever Will Smith and two teammates have tested positive for the coronavirus. last_img read more


Mason City saving money on workers’ compensation claims

first_imgMASON CITY — Mason City’s city administrator says worker safety in the last few years has meant the city is saving money.Aaron Burnett says the city is consistently focused on worker safety, and that safety is producing savings in the form of reduced premiums for worker’s compensation.  “This year, the city will see a reduction of over $40,000 primarily because of work-related injury claims decreased over the last few years. Efforts to evaluate tasks to create safe work environments are constant.”Burnett credits department heads for their efforts in making sure employees are safe.  “While often overlooked, it is a great accomplishment of the department managers and staff to send employees home healthy and safe after they work for the city considering the strenuous nature of many of the jobs within the departments.”Burnett was asked if work-related injury claims through the years typically come from one or two departments or a variety of departments.   “I think we’re seeing that across departments. A lot of times, you’ll see one injury will specifically drive a very large claim or something along those lines, and it looks back over many years when you look at workers compensation. I think when you look at those safety efforts, it’s really a citywide effort to try and reduce claims and look at potential hazardous situations that could create claims.”Burnett made his comments during his report to the City Council at their meeting this week.last_img read more


State Drops Charges Against Pastor Arrested Over Stay-at-Home Order

first_imgState officials dropped misdemeanor charges late last week Friday against a Florida pastor who was accused of violating stay-at-home orders by holding Sunday services in March, during the rise of the coronavirus pandemic.Hillsborough County State Attorney Andrew Warren said in a statement that the prosecution of Pastor Rodney Howard-Browne, who serves at the River at Tampa Bay Church, would not proceed.Warren added that the pastor has conducted worship operations “responsibly” since he was arrested.Howard-Browne had been charged with unlawful assembly and violating quarantine orders during a public health emergency. The pastor reportedly held services at the church despite local orders to limit gatherings to no more than 10 people, according to authorities. “Our office has determined that further prosecution or punishment would not provide increased protections for our community and is not needed to achieve any additional change in Pastor Howard-Browne’s behavior,” Warren added.Mat Staver, founder and chairman of the Liberty Counsel that represents Howard-Browne, released a statement on Friday that calls the arrest “politically motivated”and adds that the case should never have been brought.“Neither the pastor nor The River at Tampa Bay Church did anything wrong,” Staver said. “We are pleased that all the charges have been dropped. It is now time to move forward with healing and restoration.”Florida Gov. Ron DeSantis exempted houses of worship from a statewide stay-at-home order shortly after the arrest.last_img read more