Argentina slider — 18 October 2012

Argentina’s Wounded Pride and Diminished Navy

Among the pleasures of life are reading “The New Yorker” and anything written by Hunter S. Thompson or David Foster Wallace. These two writers are perhaps the best writers in English in the past twenty years. What these two have in common besides an engaging writing style is their genius led to madness which led to suicide. Among Hunter S. Thompson’s lesser known works which is perhaps his greatest is “The Curse of Lono”. Thompson sets out to cover a marathon as a writer for some sports magazine. He and his drunken buddy hurl epithets at the runners as they race up the hill wringing with sweat. “Hey fatso. Move your ass”.

If you know of Thompson he hardly had a sober moment except when he sat at his typewriter and maybe not even then. The race concluded the two head off to Hawaii for some sport fishing. They charter a boat head off into the wine dark sea taking care not to forget their stash of vodka, LSD, and marijuana. Bobbing up and down on the ocean the captain and his charters lose interest in the fish as they drink more and more booze and take more and more drugs. The captain throws the anchor over the side so he can park instead of having to steer his craft. But he forgets to make the line fast and the anchor together with the rope and chain sail over the side and drift to the bottom. The captain proclaims “No self-respecting captain would dare return to port without his anchor.” He would have been subjected to ridicule and shame, he said. So the captain dons his scuba tank and fins and drunken with vodka and hallucinating with LSD he swims down to the bottom to bring the anchor back up.

For a captain, the only thing worse than to lose one’s anchor is to lose one’s boat. But this is what happened to the captain of the Argentine Navy’s sailing ship Fragata Libertad. Most modern navy’s have old fashioned sailing ships like this in the belief that modern sailors should learn the old fashioned sextant in addition to the modern GPS and trimming the sails in addition to learning to use a marlin spike. This training ship, with 289 crews and 36 invited guests, had their craft taken from them by debt collectors when the ship sailed into port in the African nation of Ghana. The creditors had found a New York court willing to attach a lien to the vessel as a means of securing repayment of $100 million dollars in bonds upon which Argentina had defaulted in 2001. Like the captain who loses the anchor, the heady of the navy who loses his ship resigned in disgrace, although he might have been forced to do so.

It’s hard not to be bewildered and at times amused at what happens in Argentina. The country of Eva Peron, Kichnerism, the tango, and currency controls in 2001 decided it could no longer pay bond holders. At that time the peso was officially pegged at 1 peso = $1 USD. Foreign reserves poured out of the nation causing the currency to collapse. To try to slow the run on the banks the government put into place currency controls to prevent Argentines taking all their pesos from the bank. This was called the “corralito”. Now Argentina is doing the “corralito” again although this time there is no crisis because the government still has dollar reserves, although they are dwindling.

Anyway some clever hedge fund managers in the USA bought these worthless bonds at prices for pennies on the dollar and found some clever lawyers to help them regain payment. One supposes the Argentine government thought they had put this problem of insolvency behind them forever. But as many people know the USA bankers and lawyers exert their influence across the globe with the long reach of lawsuits and commercial treaties between nations.

Argentina knew that its sailing vessel was at risk. So for a time it sailed only in the friendly waters of Latin American nations. But someone made the unfortunate decision to change course towards Africa. Now the country is a broil as the government is trying to find who decided that.

Diplomats from Argentina and the Chilean liaison in London have been dispatched to try to recover the pride of the Argentine navy and perhaps some wounded pride as well. So far the ship remains moored in African waters the captain having lost her anchor as well as her boat.

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