Argentina heading for a repeat of 2001 collapse

[howardb]

http://online.wsj.com/articles/u-s-supreme-court-rejects-argentina-appeal-in-sovereign-debt-case-1402926119

Argentina is in serious trouble with it's debts, and may now default within the month. The last time this happened peoples bank accounts were frozen (cypress style), and they suffered hyperinflation (still are, currently estimated at 100%). They have a massive thriving very public black market in US dollars.

This default could be the Black Swan event that everyone is looking for. It's impact on Bitcoin could be massive given the generally high level of internet usage in Argentina witha  desperate middle class looking to protect themselves (or even make money!) this time around. If I was an argentinian I certainly would not be keeping my hard eardned peso's in any bank right now, and certainly keep them in bitcoin if I could.

[zimmah]

Argentina is indeed in some serious currency crisis but I didn't know they were already that far down.

Either way due to the restrictive money laws it will be quite hard to sell bitcoins and get useful money out of the country I guess. So they would likely sell for a high price in Argentina just like the dollar which is traded for more than it is 'officially' worth.

Also I heard a lot of people in Argentina are not very technical so bitcoin could still be a bit problematic.

I still hope bitcoin will really take off in Argentina. At least it will provide a way out of hyperinflation for those who truly want change.

[byronbb]

Jorge will save them.

[cypherdoc]

Wow, great link.   

A few points:

1. Why a foreign country would allow a trial in the US when litigating against a US hedge fund is beyond me.
2. The size of these hedge funds show you just how distorted the capital allocation process has become when they can hold an entire country hostage.
3. rules can be bent but rarely is debt ever forgiven, especially for the big boys.  We saw this in the GFC of 2008 when most of the bailout monies were handed over to big boy creditors at the expense of debasing the dollar.
4. Finally,  and most importantly, you can see that the only practical solution for most of these crises, especially when they hit the US,  will be to print money. It's a one trick pony, the Fed. 

[Raystonn]

The more interesting takeaway from this is:

1) The U.S. Supreme Court is telling banks they must give access to Argentina's assets stored in their banks.
2) Bitcoin can be used by countries just as easily as it can by individuals to protect wealth from seizure.

If Argentina so decided, it could transfer all assets to Bitcoin and there is nothing their creditors could do, short of war (sending forces in to seize the private keys), to collect.

[Erdogan]

There seems to be a problem with the lax public attitude towards the government money system, money transfer controls and outright assfucking from the government.

There is also far reaching government spying on the public in Argentina, see panampost:

http://panampost.com/adam-dubove/2014/06/10/argentinas-orwellian-state-rises-with-public-apathy/

I wish someone from Argentina could tell me the opposite, that there are lots of people who will take action to defend their savings.

[abercrombie]

This entrepreneur, is from Argentina.  Lived through 2 liquidations of his family's wealth.

Edit: I'm too new to post links so just Google:

WSJ Bitcoin Price…to $1 Million

[snakebit]

For those who are too lazy to Google:

http://blogs.wsj.com/digits/2014/04/02/bitcoin-price-to-1-million/

[howardb]

This entrepreneur, is from Argentina.  Lived through 2 liquidations of his family's wealth.

Edit: I'm too new to post links so just Google:

WSJ Bitcoin Price…to $1 Million

$1 million is a stretch, I recently calculated that if bitcoin was to replace all REAL money (ie hard cash and bank account deposits) commonly known as m0, that it would be worth about $450,000. Of course if it HAD replaced everything, then that sentance would be a nonsense, as we would need to compare it's value to something that still existed. See https://bitcointalk.org/index.php?topic=646186.msg7255495#msg7255495

[bitcoinsrus]

This entrepreneur, is from Argentina.  Lived through 2 liquidations of his family's wealth.

Edit: I'm too new to post links so just Google:

WSJ Bitcoin Price…to $1 Million

$1 million is a stretch, I recently calculated that if bitcoin was to replace all REAL money (ie hard cash and bank account deposits) commonly known as m0, that it would be worth about $450,000. Of course if it HAD replaced everything, then that sentance would be a nonsense, as we would need to compare it's value to something that still existed. See https://bitcointalk.org/index.php?topic=646186.msg7255495#msg7255495

That was a great thread (and nice calculations)

[murraypaul]

1. Why a foreign country would allow a trial in the US when litigating against a US hedge fund is beyond me.

Because their credit rating was so bad the only way they could sell bonds was to agree to forgo sovereign immunity and agree to settle any disputes in the US court system.

[Febo]

If they win Mondial, then they will forget they are in crysis.

[boumalo]

This entrepreneur, is from Argentina.  Lived through 2 liquidations of his family's wealth.

Edit: I'm too new to post links so just Google:

WSJ Bitcoin Price…to $1 Million

$1 million is a stretch, I recently calculated that if bitcoin was to replace all REAL money (ie hard cash and bank account deposits) commonly known as m0, that it would be worth about $450,000. Of course if it HAD replaced everything, then that sentance would be a nonsense, as we would need to compare it's value to something that still existed. See https://bitcointalk.org/index.php?topic=646186.msg7255495#msg7255495

That was a great thread (and nice calculations)

Using the M3 money supply would give a value of more than 1m$ since only M3 in USD is more than 10trillions and there is a bit shy of 13m bitcoins

If you want to speculate widely you can add the value of Gold as a reserve : a few trillions so a few hundred of thousands

[howardb]

This entrepreneur, is from Argentina.  Lived through 2 liquidations of his family's wealth.

Edit: I'm too new to post links so just Google:

WSJ Bitcoin Price…to $1 Million

$1 million is a stretch, I recently calculated that if bitcoin was to replace all REAL money (ie hard cash and bank account deposits) commonly known as m0, that it would be worth about $450,000. Of course if it HAD replaced everything, then that sentance would be a nonsense, as we would need to compare it's value to something that still existed. See https://bitcointalk.org/index.php?topic=646186.msg7255495#msg7255495

That was a great thread (and nice calculations)

Why thank you

[howardb]

This entrepreneur, is from Argentina.  Lived through 2 liquidations of his family's wealth.

Edit: I'm too new to post links so just Google:

WSJ Bitcoin Price…to $1 Million

$1 million is a stretch, I recently calculated that if bitcoin was to replace all REAL money (ie hard cash and bank account deposits) commonly known as m0, that it would be worth about $450,000. Of course if it HAD replaced everything, then that sentance would be a nonsense, as we would need to compare it's value to something that still existed. See https://bitcointalk.org/index.php?topic=646186.msg7255495#msg7255495

That was a great thread (and nice calculations)

Using the M3 money supply would give a value of more than 1m$ since only M3 in USD is more than 10trillions and there is a bit shy of 13m bitcoins

If you want to speculate widely you can add the value of Gold as a reserve : a few trillions so a few hundred of thousands

If you read the above link you will see that opinion seems to favour narrow money, simply because money that is not doing anything (languishing on ledgers is not acting as a communicator of value). If Bernanke electronically prints up 100 trillion and sticks it on a govt ledger (or some other governments ledger as treasuries), it doesnt affect day to day scarcity of dollars so doesnt affect price. But you are right, if we used M3 the figure would be much bigger since M3 is actually running at about 100 trillion globally.

[rocks]

This entrepreneur, is from Argentina.  Lived through 2 liquidations of his family's wealth.

Edit: I'm too new to post links so just Google:

WSJ Bitcoin Price…to $1 Million

$1 million is a stretch, I recently calculated that if bitcoin was to replace all REAL money (ie hard cash and bank account deposits) commonly known as m0, that it would be worth about $450,000. Of course if it HAD replaced everything, then that sentance would be a nonsense, as we would need to compare it's value to something that still existed. See https://bitcointalk.org/index.php?topic=646186.msg7255495#msg7255495

That was a great thread (and nice calculations)

Using the M3 money supply would give a value of more than 1m$ since only M3 in USD is more than 10trillions and there is a bit shy of 13m bitcoins

If you want to speculate widely you can add the value of Gold as a reserve : a few trillions so a few hundred of thousands

If you read the above link you will see that opinion seems to favour narrow money, simply because money that is not doing anything (languishing on ledgers is not acting as a communicator of value). If Bernanke electronically prints up 100 trillion and sticks it on a govt ledger (or some other governments ledger as treasuries), it doesnt affect day to day scarcity of dollars so doesnt affect price. But you are right, if we used M3 the figure would be much bigger since M3 is actually running at about 100 trillion globally.

The issue is due the massive fractionalization the FED enables, the ratio of "base money" M0 to circulated money M3 is much higher today than under a sound money system.

It is only the FEDs printing press that enables the banks to run at the 10x or 30x leverage ratio's today. This is possible because if any run starts the FED can provide liquidity on demand.

When the US was on a gold standard bank leverage never went above 2x and the ratio of base money to circulated money was much closer. Since bitcoin is a sound money system it makes a lot more sense to consider M3 as the target because significantly lower leverage in the system  is closer to what we'd see.

[PirateHatForTea]

Wow, great link.   

A few points:

1. Why a foreign country would allow a trial in the US when litigating against a US hedge fund is beyond me.
2. The size of these hedge funds show you just how distorted the capital allocation process has become when they can hold an entire country hostage.
3. rules can be bent but rarely is debt ever forgiven, especially for the big boys.  We saw this in the GFC of 2008 when most of the bailout monies were handed over to big boy creditors at the expense of debasing the dollar.
4. Finally,  and most importantly, you can see that the only practical solution for most of these crises, especially when they hit the US,  will be to print money. It's a one trick pony, the Fed. 

1. What makes you think they have a choice? Clearly they do not. The restructured bonds created after the 2001 credit event were written under New York law. Argentina can do whatever it likes within its own legal system, even declare that debt to be invalid. They don;t want to do that, what they really want to do is to continue to pay their restructured debt-holders, whilst not paying anything to the hold-outs that didn't accept the haircut back in 2001.

However because of the pari passu clauses in the (original & restructured) bond contracts, which guarantee 'equal treatment of all bond holders', they cannot legally under the terms of the contract they themselves wrote, pay the restructured holders and give nothing to the holdouts. The substance of the NY court decisions was to reinforce that interpretation, AND to bind third parties under it as well.

This means, for example, that if the Bank of NY (their current payment partner) continues to help Argentina pay its bond holders it will be in violation of the injunction and US law. It may even mean that bond holders themselves, if they accept interest payments without same going to holdout bond holders, may be in violation of the law.

2. Probably right, though supranational corporations are hardly a new thing, and Argentina is a relatively small player in global capital markets mainly because they are generally spurned due to their terrible track record of bad behaviour (this is a case in point!)

3. Debt is very often forgiven. You would do well to look at the history of sovereign credit crises. Hell, haircuts were given on Greek debt as recently as last year. A haircut is textbook 'debt forgiveness'. Also your statement about bank bailouts debasing the currency is a non-sequitur - please elaborate.

4. Yes, money printing is a great way to achieve a 'soft default' via monetary inflation, but only if the debt is denominated in a currency for which you control supply! This debt is USD denominated, so Argentina can print as much money as it likes and it will have no effect on this debt in real terms (but will create rampant inflation and probably reduce NGDP domestically!)

[Torque]

More news:
http://news.yahoo.com/argentina-says-wont-next-bond-payment-us-042325671.html

This could be a perfect storm black swan event.

[boumalo]

This entrepreneur, is from Argentina.  Lived through 2 liquidations of his family's wealth.

Edit: I'm too new to post links so just Google:

WSJ Bitcoin Price…to $1 Million

$1 million is a stretch, I recently calculated that if bitcoin was to replace all REAL money (ie hard cash and bank account deposits) commonly known as m0, that it would be worth about $450,000. Of course if it HAD replaced everything, then that sentance would be a nonsense, as we would need to compare it's value to something that still existed. See https://bitcointalk.org/index.php?topic=646186.msg7255495#msg7255495

That was a great thread (and nice calculations)

Using the M3 money supply would give a value of more than 1m$ since only M3 in USD is more than 10trillions and there is a bit shy of 13m bitcoins

If you want to speculate widely you can add the value of Gold as a reserve : a few trillions so a few hundred of thousands

If you read the above link you will see that opinion seems to favour narrow money, simply because money that is not doing anything (languishing on ledgers is not acting as a communicator of value). If Bernanke electronically prints up 100 trillion and sticks it on a govt ledger (or some other governments ledger as treasuries), it doesnt affect day to day scarcity of dollars so doesnt affect price. But you are right, if we used M3 the figure would be much bigger since M3 is actually running at about 100 trillion globally.

The issue is due the massive fractionalization the FED enables, the ratio of "base money" M0 to circulated money M3 is much higher today than under a sound money system.

It is only the FEDs printing press that enables the banks to run at the 10x or 30x leverage ratio's today. This is possible because if any run starts the FED can provide liquidity on demand.

When the US was on a gold standard bank leverage never went above 2x and the ratio of base money to circulated money was much closer. Since bitcoin is a sound money system it makes a lot more sense to consider M3 as the target because significantly lower leverage in the system  is closer to what we'd see.

People use to care if their bank was taking too much risk because there was no state guarantee of deposits

I think the potential for Bitcoin is in the hundreds of billions of dollars of valuation within a few years

[GangkisKhan]

People use to care if their bank was taking too much risk because there was no state guarantee of deposits

I think the potential for Bitcoin is in the hundreds of billions of dollars of valuation within a few years

When the value of bitcoin is high enough, there will be other coin to compete with it.