Saturday, August 2, 2014

Chronicles In Unfortunately Timed Puff Pieces

On Wednesday, July 30, as you may or may not have heard, Argentina defaulted. The 99-cent version of what happened is this: in 2002, Argentina, well, also defaulted. Argentina set about offering bonds to victims of the 2002 default, some of which ended up being bought by New York hedge funds. In 2005, Argentina, short on money again, offered to restructure their bond payments with their newfound creditors (cutting about 65-70% off their payments); the hedge funds stayed pat. In 2010, Argentina again tried to restructure, and again, New York said no. Nearly everybody that wasn't the New York hedge funds said yes, so it's basically just the hedge funds holding things up when Argentina, who was by now deriding them as "vultures", comes up short on a payment. The hedge funds take them to court... a New York court. The court ruled that not only does Argentina have to pay the full amount, they also have to stop paying the restructured bonds until the hedge funds get paid. Argentinian law says that they can't do this, because the restructured bonds state that they can't offer the holdouts better terms without giving them to the restructured bonds too.

Which basically meant that obeying the court order means the restructured bonds become unrestructured and they have to make full payment to everyone all over again. Argentina does not have that kind of money (or at least they don't believe they have it). And so they defaulted all over again, meaning nobody gets any money at all. The judge, U.S. District Judge Thomas Griesa, is angry at Argentina for defying his ruling and is ordering them back to the negotiating table with the hedge funds. Argentina has in no uncertain terms told Griesa where he can stick his ruling and any other words that might come out of his mouth in the future. So this is probably going to get worse before it gets better. I advise you to take writeups from the usual sources regarding this with a couple extra grains of salt over and above the usual, because remember, most American business media has feet on the ground in Wall Street, deals with New York traders every day, and in many cases the reporters' personal backgrounds have them going from Wall Street trading straight into journalism. So be really careful with anything beyond basic statements of fact.

That all having been noted... would someone please go over to Treehugger and tell Michael Graham Richard that Friday, August 1st, is literally the worst possible time to run an article with the title "Buenos Aires is doing a fantastic job of transforming itself into a more livable city!" First off, an exclamation point? Really? Second, you not only had two days after Argentina had already declared default to perhaps rethink not only that headline but also the possibility that the sparkly new bus system of theirs might be a thing they suddenly aren't going to have any money to maintain now that Argentina has defaulted, you also had the MONTHS leading up to the default to go 'now wait, this transformation isn't going to suddenly go poof or anything as the result of a default, right?' Maybe if they'd built a park or something, it'd be different. Parks are cheap. You leave stuff sit for long enough, parks more or less build themselves. Ask Detroit sometime. Buses are not parks. Buses stop when you stop spending money to pour fuel into them.

It's not totally fatal to your website's lifespan to just scrap a piece that turns out to be a supremely bad idea to run. You could have binned it and nobody would have noticed. But you didn't and now I'm here to yell at you. Think next time.

No comments: