Buenos Aires to Athens: The Road to Perdition

12 Pages Posted: 5 Apr 2012

See all articles by Arturo C. Porzecanski

Arturo C. Porzecanski

American University - School of International Service

Date Written: April 2, 2012

Abstract

Three sovereign defaults in the past decade have each inflicted losses of at least 70% on bondholders: Argentina, Ecuador, and now Greece. In each case, creditor rights and the rule of law were trampled, setting troubling precedents that are worrying investors involved in vulnerable European countries. In Argentina (in default since 2002), numerous arbitrary measures were taken that damaged the interests of investors; the debt relief that was demanded bore little relation to the country's capacity to pay; and court judgments and arbitral awards against the sovereign have been routinely ignored. Ecuador (2008-2009) stands as the clearest example of sovereign unwillingness to pay. Investors were blindsided, bullied, and then sacrificed as part of a personal and ideological vendetta on President Correa's part. Investor confidence in Greece was destroyed by persistently negative attitudes coming out of Berlin. The huge losses imposed on creditors were based on questionable estimates and judgments, and various troubling, expedient means were used to achieve the dubious ends. Chances are that the road to perdition for investors will soon be extended to some other capital in Europe.

Keywords: Argentina, Ecuador, Greece, Debt, Default, Restructuring, Crisis

JEL Classification: E60, F00, F21, F34, F41, H63

Suggested Citation

Porzecanski, Arturo C., Buenos Aires to Athens: The Road to Perdition (April 2, 2012). Available at SSRN: https://ssrn.com/abstract=2034570 or http://dx.doi.org/10.2139/ssrn.2034570

Arturo C. Porzecanski (Contact Author)

American University - School of International Service ( email )

4400 Massachusetts Ave, NW
Washington, DC 20016
United States

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