A BLANK PAGE

I kept staring at the screen yesterday...nothing.  Inspiration was nowhere to be seen.  Today isn't much better.  I really have come to believe that the weather plays a huge influence on one's ability to create and our weather has been absolutely stinko lately.  I remain uninspired and un-creative.

Of course the 7 billion people in the world aren't helping very much.  This is like the week before Christmas with nothing going on of any particular interest to anyone unless you are seriously in to whether Dilma is going to be impeached in which case this is your day as the Brazilian Senate did just that today.  Now comes the trial which might be a better show than the Olympics.  Sad part of it all is that it had to be done as her (and her followers) removal was critical to anything good happening there in the near future.  The country was paralyzed with the political drama.   These are hard economic times; the rebirth of the Brazilian economy is going to be a truly hard slog.

Then again, it's not Puerto Rico.   I don't know what Jacob/Jack accomplished--hell, I don't even know where he is not that it makes much difference.  One thing for sure, absent some sort of a super-duper political deal, this is shaping up to be one hell of a mess somewhat akin to Argentina but with perhaps far more reaching implications.  The U.S. really didn't have a dog in the Argie fight; yeah, the hedge funds were U.S. entities but who cared.  In Puerto Rico's case there are hedgies involved as well but should they be treated in the same manner as those in Argentina the implications for the Municipal Financing arena could be immense.  A single holder in due course could bugger-up any agreement.  Mind you, the problem has arisen only because no-bod-ee ever envisioned a problem of the magnitude of, say, Illinois in this market and hence no one ever paid much attention to what was in the bond indentures covering the formulation of debt obligations.  One thing that is NOT in them is a collective action clause.  Indeed, in many cases debt was issued on the basis that documents would follow: a bud of mine made a rather decent living by being the first guy to create a data base for documentation relating to various issues of municipal debt.  No one knew or cared.

Well, you can be sure that everybody is now busily reading their papers just to see what they have and are watching the goings-on in P.R. anxiously to see what it is that they might lose.  Funny.  We easily dismiss the activities of such countries like Greece whilst here, in our own little puddle, we might be creating the biggest financial storm anyone has ever seen.  But it's not here yet and in the mean time all I can do is speculate,  Hell, it's better than a blank page.

REMY II (AND THE ARGIES)

He's really a terrific dog.  I was standing by the kitchen counter when I felt this presence.  Turned and ran into a BIG face lick.  Of course he's about 80 pounds and damn near knocks me over but what a great dog!  Better than some obligors that I have known...bankers, too, for that matter.

The Argie road show goes on.  Nothing solid to report as yet but I think it is fair to say that it is not playing to SRO crowds.  That is not to say this is going to be a flop, just that there is obviously trepidation at the thought of such a credit coming to market so quickly after being, for 10 years, an international pariha.  The amount is not insubstantial either and oh, as suggested, I am told the DeutscheBank's underwriting commitment is waaaaay north of $1 billion.

OK, let's look at this in a manner that is not immediately apparent.  This deal, like most sovereign deals cannot fail.  If it were to fail the political repercussions in Argentina would be immense.  The Macri government, in a very short time has managed to gain the confidence of a far larger portion of the population than was expected.  This is different from just being voted into office for that event was as much of a total rejection and disgust with the previous administration as it was a positive affirmation of Macri's plans.  The agreement with the stand-off creditors has also (surprisingly, in my mind) attracted not only acceptance but highly favorable comment.  An awful lot of that earned good will disappears if the international markets reject this deal.  It cannot fail, and if it does, there had better be a damn good ready-in-place explanation.

Now the way the Argies should have played this is to demand a fully underwritten offer.  That means whether investors buy nary a bond, they have their money.  But that is a HUGE underwriting committment for a junk..ah, non investment grade...rated borrower.  I don't have all the modern tools at my disposal but I have not been able to find a bigger one.  So if this thing doesn't find a home, we have a bunch of underwriters holding non-investment grade debt.

We have gone over this before but it is important to keep firmly in place the rules about underwritten debt.  After a period of time, the unsold portion must either be sold or removed from the status of underwritten debt for sale and placed in some sort of investment account under the assumption that it will be held to maturity.  Different jurisdictions have different rules.  If sold, in  every jurisdiction, the sale price will be used to calculate either a profit or loss from the issue price less commissions.  In many jurisdictions, if the issue is moved to an investment account, the same computation will be used, but not in all.  However, the rating of the investment is certainly in play and will affect the amount of capital required to keep funding the same.  This can get very expensive.   Carrying Argentina risk in a public, regulated institution, will undoubtedly be very expensive these days.  Therefor, from both the standpoints of the issuer and the underwriter, this thing better work........unless when the underwriting really isn't an underwriting.  And that, along with a couple of other things is what we are going to talk about tomorrow with--hopefully--the benefit of more information.  Remy awaits.

REMY

Remy is the neighbor's white Lab, an absolute sweetheart of a dog.  They're off to Spain for a bit and had everything set-up  (no kennel for Remy!) until...Anyway, we have been pressed into dog sitting which is why nothing was accomplished on Friday.

So, Argentina.  The senate OK ed the  agreement with the holdout creditors allowing Argentina to settle their debts and move on.  Good news for all concerned despite the fact that this could have happened years ago at less cost if Argentina had not been run by crooks and morons but no matter.  It's done and it is behind them and they can move on...except that they have not nearly enough money to pay this thing off.  In the real world of yester-year this might have been a problem but in the new, Faerie Coo-Coo world of international finance, No Problema, Che, we just borrow the damn money, no?  I mean what is $12,500,000,000? Nada, por uno pais del premiero mondo.  (I was actually presented with that designation once way back when...damn near died laughing)

Well, maybe.  At last report a road show has been assembled consisting of DeutscheBank, J.P. Morgan, HSBC and...ready for it...Santander, with Bilbao, UBS and Citi along for the ride.  10 years, proposed 7.75% coupon, no other details.

Now for those of you not familiar with this sort of stuff, these things usually consist of two tiers of institutions within the syndicate putting together such deals.  One tier is known as the underwriters--and that tier has various levels--and the second tier are members of the selling group.  They don't really count so we shall focus on the first tier alone.

The underwriting group, in the best of all worlds, essentially guarantees the success of the issue by agreeing to buy, with their own resources, the (in this case) bonds "when issued."  Again, in the best of all worlds, everybody will want a piece of the action and the underwriters will be able to distribute the entire issue for more than they paid for it thereby making their profit on the deal aside from any fees they may have collected.

Now $12.5 billion is a fairly good piece of change; in fact this would be the largest new issue from an emerging market country in history (sorry, Argies, you are not First World and never have been) by a wide margin.  The coupon of 7.75% is priced off the mega-deal done by the Mexican oil company, PEMEX.  Insider note:  Argentina would NEVER be seen paying more than the Mexicans..."Little Brown Gringos" as they are called in B.A.  Suffice to say, this is not going to be a walk in the park.  Why?  Consider the following.

1.  It is a hell of a lot of money.
2.  Emerging market debt, while recovering, has just taken a hell of a beating.
3.  Argentine creditors over the past 10 years have taken a hell of a beating.
4.  DeutscheBank does bonds.  Morgan does bonds. HSBC doesn't do bonds.  Santandere...who?
5.  To say that Argentina is less than prime rated...
6.  7.75% coupon.  Well, it beats the 10 year Bund but Argentina has defaulted on one thing or another every 35 years for the past 200 years.
7.  One of the problems with Argentina is that the provinces can issue debt in international markets.  That's what caused the problems in 2001.  They are going to do it again in competition with the Sovereign...at a higher yield.  Really want Argie risk...wait a month or two.

Then again, on the positive side, the yield whores are alive and well.  The Mantra?  I will always have a chair when the music stops.  Greed always overwhelms experience.

There is one thing, however, I don't quite get.  Take DeutscheBank...please!  This is not an institution in the best of shape at least by the standards that the world overseers use today.  To lead this management group DB MUST have an underwriting commitment of at least $1 Billion and probably a good deal higher than that.  How in heaven's name can the Bundesbank, in good conscience, turn to the rest of the world and admit that they are comfortable with this risk...and make no mistake, an underwriting risk is a REAL risk.  This is a deal that cannot fail from a whole variety of reasons, but if DB winds up wearing half a billion dollars of Argie risk and has to take a 10-20% mark on that, what are Mr. & Mrs. Schultz, taxpayers, going to have to say?  Then again, I'm a long time out of this fray and I could be completely wrong.  If I am, however, I'm afraid we are in even worst trouble.

Will be following how this goes all week.  It's fascinating.  Oh, went over to see Remy in the middle of writing this piece.  Somebody still loves me.

I'LL START TOMORROW

OK, OK, I said I would get off this kick but I have to put in this short note before we move on to other things...and this time I REALLY promise that we will start tomorrow.

The headline will be markets slump as investors flee to quality.  As part of the discussion, the dollar.Yen relationship will be mentioned in the sense that the dollar continues to slump against the Yen which terrifies everyone.  Why is the Yen so strong?  Not a clue and you will not find the answer in any of the reports and it is precisely this phenomenon that is scaring people, because you see, the Yen, with all of the QE activity of the B of J piled onto negative interest rates the Yen is supposed to weaken.  OK, you say, so what?  Well, a strong Yen does nothing for the Japanese economy; inflation stays low and exports go down.  But we've gone through this before, haven't we?  Yep, but times are a bit different.  You see, everybody (the Central Banks) is, in one way or another trying the same thing.  And slowly, but with increasing frequency, people are beginning to ask if they have gotten the whole thing wrong.  That perhaps--just perhaps--the result will not be economic stimulus and higher inflation but stagflation, and that is not a very good thing at all particularly when both the public and private sectors are up to their eyeballs in debt.  It is a very bad place indeed,which, by the by, has been what this has been all about.  Preventing the world from getting there.

But all is not lost.  Tomorrow, we will discuss how Argentina is poised to save us all.  $12,500,000,000 coming next week.  Get your check books out guys.  Can't miss this one.  It's your duty.

FIFTEEN YEARS

Elliott Management and the Argentines announced that they had reached an agreement in principal to settle the 15 year old dispute over Argentina's restructured debt plan to which Elliott did not agree.  This could mark the end to one of the longest international financial disputes (there were a few wars) that I can remember and marks--perhaps--a return to sanity on the part of Argentina and a true statesman-like approach by its newly elected President.  How much time, effort and treasure was wasted on behalf of the Argentine people by the fools who ran that country for years will never be known, but it had to be immense.  One should also give a bow to the courts of the United States for upholding principals of law that have been with us since we were Englishmen.  We'll continue to follow this but I do wish everyone well and a speedy final conclusion to this sad chapter.  There are many issues that will arise which are certain to affect international and especially sovereign risk transactions in the future which should be explored and we shall attempt to do so in the course of time.

                                                                   _________


Well, the boys and girls got together in Shanghai this weekend and for the life of me I can't figure out what was accomplished except for the addition of more confusion piled atop of that pile of mass confusion known as the international economic outlook.  China did absolutely no one any good by announcing a reduction of 0.5% in the amount of banking reserves required at the Bank of China which would seem to indicate a loosing of monetary controls which would result in the fall of the Yuan (which did happen), but no, said the Chinese, their intention was to continue to support the currency...which they didn't do today.  So you tell me.  There was at least some good-natured bantering about the degree to which one could rely on the economic figures released by the government( one cannot to any degree) and what the REAL growth rate might be; 4% you say?  HA, HA, HA!  If correct it may be no laughing matter; that would be one hell of a slow-down, a level for which most every other country in the world would kill but not every other country has half a billion people marginally employed.  Coupled with slow to marginal growth in the rest of Asia, the numbers out of Europe (what numbers?) and the mess of Latin America,  that leaves the U.S. as One Great Hope for the world economy in the near term.

Problem is--not that anyone cares--I'm more confused than ever.  Last week we had a revision in the fourth quarter GDP from 0.7% to 1.0% and everyone went nuts.  OK, sez I, OK, but it's not gangbusters.  Inflation was reported to be heading for the 2.0% range which the Fed has been targeting since...hell, for so long I've forgotten...and wages were looking better.  The weekend was looking up.  Then comes today and the Chicago purchasing numbers were released and they absolutely stank which is where I start getting confused.  The global picture is poor to bad and the data Over Here is so contradictory, I keep telling myself that something has to be off.  Finally, equities sold off today across the board but WTI was UP over 3.0% as was Brent...a one-day-at-least de-linkage...but in the face of continued reports that the world is running out of places to store all the crude that is being pumped that no one wants.  We have more data than we have ever had but can we believe any of it or has the world just gone weird.  It's February 29 today so that's weird in itself but things are beginning to get out of hand.  I guess we just keep watch and see when and if all this matches up and look forward to more madness in March.  At least that kind of madness is fun.

TO THE MATTRESSES!

It appears that Mauricio Macri has beaten Daniel Scioli for the Presidency of Argentina thereby ending too many years of Kirchner rule culminating with Cristina, know as the Queen of Botox in various circles which is rather sexist but completely accurate and quite funny (I think).  She is of course a terrible person and a worse leader of a nation and whilst Scioli was not joined with her at the hip, the Peronista influence in Argentine politics may be reduced for a while which would not be a bad thing.  Further, Macri has promised to re-engage with the international financial community which would be a very good thing as at the rate Argentina is running through their reserves external help may well be needed as early as next year.  But this war between the families is hardly over; it is just beginning and may wind up making Chicago in the Thirties look like a kid's game.

Power and money are at stake and for Macri to have any chance of being successful he will have to do a deal with the vulture funds (as they are known in B.A.) in order to get the country back in the good graces of the international community.  This will be fought tooth and nail by Kirchner and her under bosses.  There is no assurance that Macri will be successful and if he is not, the country could well be in crisis by this time next year.  In the minds of Argentine Politicians the state of the nation is never important unless the Party benefits from it.  This is going to get nasty and the Vultures might be well-advised to temper their position a bit in order to give Macri a fighting chance...and for a better chance for a smaller yet monumental payday.

Meanwhile, back in D.C. Big Danny Tarullo, self-appointed under boss for bank supervision in the Yellen Family, was talking tough again.  Subject:  Stress Tests.  Message: they are going to be tougher than ever and will undoubtedly create the need for even more capital on the part of the largest eight banks in the system.  This comes on top of the story of last week regarding new capital requirements which took on a different twist today as some of the finer details regarding the nature of the capital came to light.

Big Danny, who had always talked a good game about international cooperation seems to have decided that in regard to the banks from whom he collects the vig, they are going to play by his rules and bugger the international guys in a number of important aspects, to wit the the capital eligible bonds the banks will be forced to issue must be issued in the U.S. which means that if you have any of those financed outside of the U.S. and subject to non-U.S. law, they will probably have to be refinanced.  Major pain in the bum.   Seems Big Danny doesn't trust the Draghi Family Over There.   "Our Thing" in the world of Central Bankers ain't Danny's thing.

What also got dropped on the magical eight today was that the only thing that is eligible must have a maturity of more than two years.   Now that gets interesting because it means any repayment due on a bond of any maturity is no longer eligible within two years on that repayment date.  The effect of this piece of genius is to force financing into longer maturities, which in general will have higher costs, which eat into ROA, which affects stock prices, which affects asset mix, which creates more capital needs and in the end which means absolutely nothing in an attempt to avoid a repeat of 2008 which we have previously discussed.  Of course what it also does is to increase control over the allocation of assets in the economy through the back door which is exactly in what Big Danny is interested.  Danny likes to pick winners and losers.  Remember back a year or so ago when he ordered the hit on Citigroup in the stress test process?  Oh yeah, that was him.  No one to this day can figure out what going on with him and the Mike and Mike show and why he's so in love with Wells Fargo unless he likes Savings and Loans because they are so nice and safe (yeah, sure), but the funny thing about his new rules is that they hit Wells the hardest.  Estimates are that Wells will need about $40 billion in new capital and--amazingly--Citi will need but $10 billion.  Why?  I can't figure it out but in order to do so you need a complete breakdown of the assets of both institutions and their capital structure which I don't have..

To be safe in the neighborhood with a guy like this running around loose, what you have to do is what he and the family want you to do...no questions asked.  Fund the Government...buy bonds.  That keeps Janet's boss, the Capo di Tutti Capi in business...at least for a while.  But Big Danny had best keep in mind that the Capo's under boss may not make it to the top when he goes and if this happens, there are going to be contracts put out all over the place.  One of them is going to have Big Danny's name on it.   I hope he likes fish.

MONDAY, MONDAY...

...so bad to me.  There is zippo of interest happening anywhere.  Given the lack of current events I though I just might touch on one of the more bizzar things playing out in that singularly dreadful political spot called Argentina.

It all goes back to the famous Griesa ruling which banned the payment of interest to the restructured bonds through the enforcement of the parri passu payments provision of those bonds subject to U.S. law  (the Law of the State of New York actually).  But what happens when a banking institution, subject to that ruling, operates in Argentina and gets precisely the opposite instructions from the Argentine government?  Wait, it gets worse.  What happens when the same institution is the trustee and paying agent for Argentine bonds governed by Argentine law?  In the banking business it's known as buggered.

Anyway, that is precisely the case in which Citibank found itself.  It petitioned the court in New York to allow them to obey the request of the Argentine government and was told nothing doing.  So what did the Argies do.  They fired the head of Citibank!   I mean, have you ever hear of nonsense such as this!  I haven't, but in the mean time, some very interesting issues are raised.

The bonds under Argentine law are not subject to the ruling of the court in New York.  But the currency of the bonds is the U.S. Dollar.  Now ever since I was a pup it was assumed that the place of payment of a U.S. dollar obligation was the United States irrespective of governing law or the nationality--or domicile--of the institution making the payment.  Indeed, that was the original definition of a Eurodollar: an obligation to pay dollars from an account in the United States to a person not resident in the United States  or to reverse the thought, a claim upon a deposit in the United States.  So come on, what's a girl to do?  If that is correct, Citibank is clearly at the mercy of Judge Griesa and the poor manager, who is damned if he does and damned if he doesn't is on food stamps (not quite).  Well, I thought that this was simply and amusement as Graham Greene might have called it until I got a call from my Really Smart Friend, Larry who asked, "What's a place of payment clause?"  Stumped.

It turns out that The Great Buchheit of whom I have oft spoken has come up with a little gem to avoid the effects of a parri passu clause on agreements written under the laws of the State of New York or other such dastardly jurisdictions.  He is arguing that if the docs make not statement as to where any payment should be made it can be made anywhere designated by the borrower which of course has the effect of...well, you get the picture.  This came about not as a result of Argentina but in regard to Cyprus.  Fancy that.

Now I am going to stop right here before I get into real trouble, but I am going to find out more about this.  Keeps me out of trouble but then again I still have this feeling that we all would be better off if people payed what they owe...especially to banks who as we all know do God's work.

THE LOST CONTINENT

It's gone from funny, ha-ha to funny peculiar.  South America or to be more specific, Argentina and Venezuela.

Yesterday, Argentina was declared in contempt of the United States Court for the Southern District of New York by Judge Griesa.  Now I have no idea as to whether this has ever happened before but if it has it was certainly in BC (Before Charlie) times.  How a nation could allow itself to get in this position is a bit beyond me, but I did get a bit of insight from a retired financial buddy of mine who just returned from a brief trip to BA last week.  He met with a broad range of Argentine financial and political officials and had the following reaction:  with the exception of the central bank governor who has no stroke whatsoever, they are all insane.  Worse yet, the collective attitude is, "We are out of here in 14 months, let the next government deal with it."  His highlight was the minister of finance, a 27 year old committed Marxist/Leninist explaining to him that the only reason Communism failed was because the capitalists had better IT systems.  I didn't understand the argument; neither did he.

Now to be honest, I don't know what being in contempt means when a sovereign is involved.  I mean, like, what does the court do?  Hoist White Ensign and sail up the Plate guns blazing?  The Hedgies are asking for a fine of 50 Large a day but where does that come from and if you are looking at a liability of a couple of billion, should you care?   As for a further damage to your reputation, do you stay up late worrying about it?  And if your goal is really to hang on for 14 more months and then slither out of town with all the money you can steal, so what?  Finally, I can't imagine that Christina has given a thought as to future effects on capital markets for her country.  Then again, you can, always it seems, find someone stupid enough to lend you money which history, unfortunately, teaches us.  Perhaps this is the dawn of a new day.  Oh, in the mean time the Argie ambassador has written John Kerry about the unfairness of it all.  Big John is looking into it.

From the sublime to the…really, I don't know what.  The Bolivar, the currency of the Zulus reached a new low yesterday of +100 to the dollar in the black market.  That kinda means the only thing you can buy in Caracas is gasoline unless you have dollars and working stiffs don't have many of those. If you think about it, the two most potentially rich countries on the entire continent (OK, Brazil is far bigger but with the size comes vast problems) are rapidly becoming--or have become--economic basket cases because of politics.  Having said that, their politics receives greater acceptance throughout the continent than that associated with capitalism.   Can this be anything more than a monumental failure in our foreign affairs for the past 100 years?  And today we for all intents and purposes ignore Latin American except for the issue of illegal immigration.  What a waste.  Makes you want to cry for Argentina…Just saying.

THINGS ARE LOOKING UP

Carter checked in the other day a touch emotional over a piece in the latest edition of Foreign Affairs.      My copy arrived yesterday and I read it whilst preparing for sleep which, as a result of the article, came at about 0530.  I awoke this morning still quite incredulous but before I could get my arms full around it came news of the latest piece of stupidity from the Argies and another new twist to this tale.  Anyway, I'll deal with Foreign Affairs tomorrow but lets try to get the latest chapter in this soap opera out of the way.

There was an old joke about the terrorists that took themselves hostage and threatened to commit suicide if their demands were not met.  Clearly, they were Argentines.  You might remember that the trustee for all the New York law bonds as well as many of the bonds goverened by English law is the Bank of NewYork/Mellon.  Until yesterday.  The Argies fired BNYM…at least in regard to the N.Y. law bonds.  They also kicked them out of Argentina which probably brought a great sign of relief from the directors, but does little to resolve the dispute. B.A. has decided that Nacion shall be the trustee which raises the interesting issue of how Nacion expects to make the payments that the government expects them to make given that they must go through New York where sits Judge Griesa in what now must be Fully Pissed-Off mode.  I have no idea how one places a sovereign nation in contempt of court but perhaps we are about to find out.  Nor do I understand what happens to the Argie argument that since the funds owed (according to them) were in fact deposited with BNYM--in BNYM's account with the central bank--and as I suppose Mellon has given the funds to Nacion, that no default has occured.  Or maybe they haven't.  Wouldn't it be a kick if before turning off the lights Mellon somehow got the funds to Nacion but in Nacion's account with the N.Y. Fed!  Oh joy!  Oh bliss!  Of course I have no idea how they could pull that off.

Anyway, while all this was going on, George Soros and a couple of other zillionaires filed suit in the  Court of the Assizes or some such place to compell BNYM to make payment on Argie restructured bonds covered under English law, claiming that the American courts have no jurisdiction over these instruments.   Interesting argument.  Leave it to Georgie Porgie, the vulture of all vultures to come up with this one.  Now that raises the question is BNYM fired just as the New York Law trustee or or as trustee, period, and if the latter, how does a non-trustee act like a trustee, and what difference does the governing law make if the payments are in dollars and must be made in New York?  I mean do you think I can dust off my diploma, get re-qualified in New York after 40 years and start getting in on this thing?  I mean they must be running out of lawyers!  This is just wonderful and for distinguished and learned counsel, it must seem that money is raining down from the sky…but that's tomorrow's story.  Let's not get ahead of ourselves.

IN THE COMFORT ZONE

I like it when I know why things happen.  Take the Argies.  Their newest idea (although they actually rolled this one out about a year ago)  is to swap the restructured bonds under New York and English for the same-oh, same-oh bonds under Argentine law and have Banco de la Nacion pay the amounts due as trustee.  The Argies do this for a number of reasons:

1.  They are stupid.

2.  They think they are smarter than everyone else.

3.  They never listen to anyone…see #2 above.

4.  They've run out of other things to be stupid about.

Now, they might have in this grab-bag a couple of guys that are stupider than they are who will bite on the morsel, which will be the greatest thing that could happen to me as it will open up litigation that has yet to be imagined and no doubt lead to Banco de la Nacion being kicked out of the United States if they even try to comply; which will end that chapter entitled "Argentina's Leading International Bank" and may end the bank altogether.  If the Big Trader keeps me around, I have fifty years of material.  Look, if you want to know all the things wrong with this, read the WSJ.  They have it chapter and verse, but Christina is going to forge ahead because she may get a stage show out of it.  She sure as hell is going to get a lot of votes for the party--the country be damned--which is all she cares about.  In the meantime, unemployment is up, reserves are down, inflation is way above the official 12% and there isn't a bean for them in any market in the world.  But Mom, your little boy Charlie is in the tall grass.


The other thing that I get is the Pound Sterling going into the take yesterday.  When I was teaching, I used to ask the question, "why is one currency preferred over another?"  The answer I always gave was because of earnings power.  If six month Euros earned 5.00% and the U.S. Dollar earned 2.00%  all other things being equal there will be higher demand for the Euro.  For months, based on the relatively good performance of the U.K. economy, it was a one-way bet that the Bank of England would raise interest rates, and up went the pound.  It didn't, and down went the pound.  I thought, "now that's the way things are supposed to be," and felt wonderful.  It was down again today against the dollar and I feel even better.  If things keep on going like this I will feel GREAT!  It's just when I get confused that I feel bad.  Sad thing is I've been more confused about more things these days.  Which confuses me.


He who Knows All Things called to tell me Terry Checki was more than a little pissed.  And I said such nice things about him too.  Just shows.  No good deed goes unappreciated.

THE TALE THAT NEVER ENDS

To the surprise of no one, talks between the Argies and the Hedgies broke off last week,  although they are still hanging around in B.A.  Of course the President, Mrs. Kretchner, a dumb a woman who has ever held public office anywhere is benefiting from this mightily in the eyes of public opinion and will therefore continue to do anything to alleviate the situation.  Not only that, she once again borrowed reserves from the Central Bank to pay the country's debts owed to official institutions such as the IADB. What remains is some $25 billion which may seem like a lot but for a country the size of Argentina really isn't.  One must also remember that the country benefited enourmously in the past few years in the commodity boom which for soy beans still continues but which can't go on forever.  Inflation continues to rise…not at past levels to be sure…but on a worrisome trend.. Argentines are as adept at getting out of Pesos and into anything else as they are a playing soccer so one can expect the reserve drain to continue.  Not a good prognosis.

As a corollary to this dismal picture, it appears that, as predicted, the mediator appointed by Judge Griesa, Daniel Pollack, has worked out less than well--as also expected.  The Argentines asked that he be removed weeks ago and the good judge refused, also as expected.  Now you might remember, I suggested at the start of the appointment I didn't think the guy was qualified to deal with this mob no matter what is reputation might lead one to believe, and this apparently was so.  Even parties on the plaintiff's' side in this case have remarked that Mr. Pollack was not a clever choice for the job.  And so, the battle rages in the dueling newspaper adds in public proclamations and in a dozen courtrooms all at enormous expense to the benefit of no one.  There is a complete absence of comity and trust.  So, just in case anyone is listening, Judge Griesa, do everybody a favor and replace your present arbiter with Terry Checki, formally of the New York Fed.  All parties know him as the last totally honest man left standing and no party will refuse to deal with him as to do so would automatically label them as the spanner in the works.  Pay him whatever, and get on with this thing.  Even I am beginning to lose interest.


…And then there is Debit Suisse.  Remember when we said there were internal dealings within the Espirito Sancto organization that probably contributed to the collapse because there always are in such cases?  Well, it turns out that our Suisse buddies were right in the middle of this mess having created securities of special purpose companies of Group members in order to finance the same and then selling the paper on to Bank clients as being akin to deposits of all things, only carrying a higher yield!  I had an Uncle from New England at one point and he said to me, "George (for some reason he called me George), at some point a man is going to walk up to you and ask you to buy a two pound mess of crap (he used a different word) in that there one pound bag he was carrying.  Do not do that because a sure as s---'s manure, you will have two pounds of crap on your shoes the minute you pay him…"  The depositors of Espirito Sancto obviously never met my Uncle Buck.  But he sure had met Debit Suisse.

TWO IN A ROW

If you are all-in with the administration today's jobs number was Goldilocks---not to strong, not to weak.  If you are a fairly neutral observer, it didn't quite stink but it wasn't any good either.  Coupled with a lack of anything positive Over Here, continued economic gloom Over There and no real progress with Mr. Putin and his band of thugs, the outlook worsened across the board.

One bright spot was the announced 72 hour cease fire in Gaza which lasted all of 90 minutes with the killing of two Israeli soldiers and the apparent capture of another.  Israel reacted in fury and The Leader actually placed the blame squarely on Hamas for the renewed hostilities.  Where that takes us is any body's guess.  To an ugly weekend I suppose.

As predicted, the Argie Bargies ran into a pretty hot U.S. Circuit Court judge today in the scheduled hearing which resulted in no movement whatsoever and in the Argies renewing their claims that the Judge was bias.  I'm wondering as to the question of despite the millions in fees that Cleary is earning in the representation of Argentina,  whether there is a point where a law firm simply throws up its hands and says, "I just can't deal with these morons any more."  I mean, come on guys, I know dumb is a synonym for annuity but how rich do you really have to be before you begin to lose your self-respect?  I'm sure the well known firm of Sue, Grabbit & Run would be happy to step in which is about what these clowns deserve.  There is certainly a deal to be done but the Argies have turned this entire fiasco into a domestic political issue with the party in power hoping that its stance will give it a leg up in the next elections.  Probably, except that things are getting a bit stickier on the financial.

There is a lot of credit insurance out there and today in record time the ISDA announced that there indeed had been a credit default which means the writers of the CDOs may have to pony up if a compromised is not reached.  Problem is no one know who wrote this stuff or for how much so the longer this hangs around the longer folks are going to be looking over their shoulders.  Confidence and certainty is the glue that binds financial markets.  Markets do not like a state of affairs like this.  Think we're having fun now?  It could get waaaaay better.

Have a good weekend.

NOT A GOOD DAY

If you were searching for a bit of good news today it was hard to find.  Over There, aside from the killing fields of the Ukraine, the news was unsettling and the mood somber.  There was no economic growth, none.  On top of that came the report from Portuguese officials that, as predicted in this space, the loss at Banco Espirito Sancto was far greater than estimated and arrest warrants are being issued as I write.  Quite frankly, with the exception of the United States, I cannot remember any bank calamity anywhere that didn't involve lending to another entity in the financial group.  It's the first place one looks, and this is proving to be the case here…as predicted yet again.  We have seen this all before, only the names have been changed to protect the guilty.  The suspicion is that there is to be more of this seeping out from underneath rocks in other jurisdictions that can no longer be kept hidden or inflated out of harm.  I would agree.

Over Here, questions began to be raised as to the quality of the GDP figures as a whole series of economic data was released including a absolutely dismal Chicago purchasing report that questioned the real state of the economic recovery.  The stock market fell over 300 points, the 10 year thumped back down to it's range of around 2.55% and like Europe, the mood turned somber.  In addition, people are beginning to wake up to the fact that western relations with Russia--even Angies--are in the toilet and what does that foretell may I ask.

And then of course there are the Argie Bargies.

When is a default not a default?  It seems that occurs when the judicial system of the United States tells you that you are in breach of contract if you don't pay ALL of your creditors what they are owed and in light of that you don't pay anybody..or so is the Argentine argument.  Now just to prove that they are correct, they plan…or so they claim…to sue the United States in the International Court in the Hague in violation of their sovereign right to remain deadbeats and liars which they have been since 1823 or so.  Wrapped up in that will be some really progressive arguments which would essentially reverse 500 years of practice relating to bond issues and God knows how many years of Anglo-American law in regard to contracts.  There is a meeting tomorrow at the District Court to see where we go from here which could actually turn into good fun as Judge Griesa may  ask for an explanation of the Argentine claim that he was in cahoots with the plaintiffs.  Probably wont happen, but people have been thrown in jail for contempt for less.  I mean, would that be a kick?  Some Argie Minister thrown in the clink for about 100 days?  Well, one can dream.

I make light of this but what is occurring is that every horse's ass on the left to include no lesser a horse's ass on these matters than Prof. Stieglitz of Columbia University have chimed in as to how this affair, if allowed to continue, will spell doom to international finance as we know it.  Rubbish.  What it will hopefully do is reestablish the rule of law and contract as should have been understood by all parties and undoubtedly WAS as Argentina, throughout this affair has been represented by Cleary Gottleib Steen & Hamilton and as I have said on a number of occasions, there is none better. I KNOW they were advised as to what could happen if things got ugly and they chose the path they have walked in the face of that advice.  They are now choosing to establish their position in the arena of public dialog and finding ample aid in the Stieglitzs of the world who know nothing of this business but a lot of the politics of the left.  It's not going to work, but rather than the non-event that many have predicted of this affair, the course they have taken could make it a very big event indeed.   Don't get me wrong, there is a settlement out there and I hope it can be reached quickly.  But if Argentina chooses to take the course of arrogance and stupidity so familiar to them as a nation I hope for once the proper decision can be imposed and imposed hard.  It begins tomorrow.

MIDNIGHT MADNESS

Six hours away from Argentina's umpteenth default unless a deal is done.  No point in speculating; we like everyone else will just wait and watch and report on the outcome tomorrow.  Can't wait.

Meanwhile, in the alternative universe Madame Chairperson and her Federal reserve announced today that while things are getting better the Fed's easy money policy will remain for the foreseeable future.  Oh, it was announced the GDP for the second quarter rose 4.00% from and adjusted -2.60% in the first quarter.  Gang, I'm sorry, but I just think these numbers are crap, perhaps not (or just perhaps) deliberately so, but swings like these cannot after a while be taken seriously.  It seems from the disconnect, the Fed doesn't take them seriously either and is making it up as it goes along.  So while the tapering continues, nothing happens on the short end…except that the 2-year sold at .54% all on its own--which was a great big jump from the last auction.  Why?  Beats the hell out of me, but everyone says "don't fight the Fed" except that the bond market is doing just that.  And to put a topper on the whole thing, the balance sheet just rose to $4.48 trillion which means that if he only thing Janet has going is this reverse repo idea, it's going to be the mother of all reverse repos to wind this thing down.  But Janet isn't going to do that unless she's forced to.  I wonder what happens if we get a 2% GDP number next time around?



Well, I stayed up past my bed time but it looks as though we have another Argentine default.  I wonder if I will lose any sleep…I guess I can always take a pill.

THE LATEST TWIST

The NY Times ran a beaut today on the Argies accusing the trial judge of not understanding what he did.  Now, maybe they are correct but accusing the former chief judge of the Second District of incompetence is not something that one normally sees done even by an organization like the Times who in recent years on matters of what they consider to contain "special import" has adopted a "ready, shoot, aim" standard for their reportage.  Anyway, I promised not to speak any more on the subject until next week but this event is so unusual that I have to break the pledge.

What the Times is claiming is that the good judge overlooked the fact that the restructured bonds are denominated in all kinds of different currencies and covered under the law of a variety of jurisdictions.  In a nutshell, does his ruling cover payment of interest under what we shall call the polyglot bonds or just the bonds governed by New York Law?  No one seems to know at this point and with that, the Argies showed up in New York yesterday and left today.  I mean, what's a weekend without Punta?

I admit that it is an interesting question but unless something has changed since my day, it might well be mute.  Properly drafted, and I must assume that it was, the parri passu clause in  the unrestructured obligations would cover ALL payments by Argentina irrespective of the currency of denomination from the standpoint of New York Law under which the documents were drafted.  Where one gets into the tall weeds is who controls the payments in jurisdictions other than New York such as Argentina for Peso-denominated obligations and it is there that our old friends, Citibank, finds itself piggy-in-the-middle.  Not a good place to be.

Finally, I've had this thing rattling around in my head regarding the supposed payment the Argies made to the trustee of the restructured bonds, the Bank of New York Mellon.  What was giving me a problem was that I couldn't figure out why the hold-outs, who in no way resemble the Little Sisters of the Poor, weren't all over this half-billion just sitting there; after all, they had beaucoup judgements on their side and going after this through attachment would certainly seem to be an option.  So I asked not He Who Knows All Things but a guy like that.

"So, they paid the payment to BNY/Mellon?"

"Yep."

And it just sits there?"

"Yep."

"Why?"

"Ask yourself, 'WHERE does it sit.' "

When it suddenly strikes you that there is a very strong possibility that you can be an idiot at times, it is not a good feeling.  The Argies paid over to BNY/Mellon all right, but at the institution's account at the Argentine Central Bank.  In other words, it never left the country, and there has been a huge dis-information campaign going on to the effect that the Argies have turned over the payment.  Worst yet, the New York Times et Moi missed it.  The Times still has, or maybe they don't care.  But I do.  You heard it here first.

Have a great weekend in Punta or wherever.

HOLDING PATTERN

I've been holding of on writing more on Argentina until we see if there can be a breakthrough before the grace period of July 31 is reached but it appears increasingly like that may be a date to far.  Yesterday Judge Griesa ordered non-stop negotiations to begin at 10;00 am today but at neen it was announced that the talks would not begin until tomorrow.  Seems as though the right Argies weren't present.  Don't know whether they asked the judge but I assume so, nevertheless, in this day and age with the communications available I can't understand why there is no palavering going on if indeed this is the case.  I guess the Indians don't talk together anymore but now have to wait until the chiefs arrive.

Anyway, the real issue is what's going to happen if somebody doesn't blink?  The word is beginning to get out that the bond market will collapse in the event of an Argentine default.  Horror of horrors, some people may lose money…well at least those who will be found to be long and wrong at the close of business on July 31.  Big deal.  Fact is, except for the Argies, it's NOT a big deal.  Things are going to get very ugly down south but after losing the Copa, the populous is conditioned.  Keep in mind that this isn't the first time the country has been a bit of a financial pariahs and nor will it be the last as long as there is someone stupid enough out there to lend them money and begin the process all over again.  The present government is about at the end of its term and the next will reach some sort of an accommodation with the creditors blaming the humble pie that Argentina may be forced to eat on the previous administration.  You know, sort of "It's all Bush's fault" kind of thing.  Worked here, will work there.  But it will be a while.  In the mean time life will go on.  So we leave this happy land to return only upon default time or if by some fortunate and unforeseen scenario, the parties reach a compromise.  Otherwise we continue to circle in our holding pattern.



Barney Frank appeared today before the House finance and banking committee to reassure them Dodd/Frank was the finest piece of legislation ever enacted.  Of course, no one asked him if that was the case how come less than 50% is in force and of that number nobody knows what 50% of it means.  Might reflect badly on them you see.  Too Big To Fail was a major topic as was the "resolution authority" and the "living wills" thingy we talked about a few days ago.  A colossal waste of time and money all around.  Barney was his usual self but looking a bit more porcine than usual.  General Hospital was far more inviting.

WIN BY LOSING

1-nil to Germany but we're through!  I'm going to be on the Jersey Shore next Tuesday at 4:00 p.m. with a beer in hand and probably a few already down the shoot ready to take on Belgium.  For Club and Country Lads!  Wonder if the Germans gave us any advice?  Keep the right wing strong?  The last man must brush the Channel with his sleeve?  Probably not.

In the mean time, the Argies continue to be just wonderful to bloggers.  Yesterday the managed to ship a bundle of money to the payment agent, Bank of New York/Mellon with instructions to pay the restructured bond holders what they were due.  "Thank you God, so bloody much," said Bank of New York as this action placed them squarely in the middle where they don't want to be.  There is no way they can make this payment in the face of the court order and today the good Judge told them that there is no way they can make this payment in the face of his  order.  I swear, if it wasn't there for all to see I'd pay cash money to get a peek at this thing.  Meantime, while this was bubbling up, the court appointed Daniel Pollack, senior counsel at McCarter and English and one of the nation's premiere trial lawyers in the field of financial litigation to arbitrate the case.  And so I ask:  who the hell is Daniel Pollack?  Aside from winning a big case involving the Investment Act of 1940 about which nobody in the country knows anything and if they do it's not good, I'm not sure that the learned counsel owns a passport in the sense of this situation.  Now Judge Griesa hasn't made many mistakes, but I have a suspicion that the parties know each other well enough and it is not the law, nor the attorneys but the client which is driven by politics and basic Argentine insanity, which is preventing a rational decision from being reached.  Mr. Pollack sounds like a brilliant guy and I am sure Judge Griesa has the greatest confidence in him but neither of them have any idea what the learning curve is like when dealing with the Gauchos.  Good luck to him.

Anyway, Monday the 30th. is coming and somebody better pull a rabbit out of a hat otherwise what I suspect is a 30 day grace period before a default is formally declared begins to run.  Now interestingly, the court did declare today that it has no jurisdiction over payments made of Argentine debt regarding Peso-denominated instruments.  Those, apparently, will be made.  Remember what I said the other day?  I'm sure Peso payments would go down very well, but what precise remedies are available to the court to prevent these from occurring if agreed?  Tell the creditor NOT to accept payment?  I don't think so.  Of course it could be argued that the acceptance is in violation of the court order which creates a cause of action allowing EMC to go after all the creditors individually, but do you really want to go there?  And if you can get the creditors to agree to that, perhaps you could you get them to agree to accept just interest payments and forgo principal for the foreseeable future?  Hedge funds don't like that.  Of course I'm just wildly speculating because the more scenarios, the more material, and I figure I'm good with this story until Christmas.  Sure make a boy's life easier.  Wonderful stuff, just wonderful.

As I said, on the Right Coast next week but I'll be in and out.  Stay tuned

DOES REASON PREVAIL?

There was a story out today that the Argies have decided that rather than raging at the failing of the light, they were going to ask the District Court that issued the now-upheld opinion to assist in negotiations with EMC Capital et. al. in settlement talks to see if in fact this thing can be settled.  Having called Judge Griesa of the Southern District just about every name imaginable, this takes some set of stones, but it appears, that true to his trade the good judge has put all of that in the past and actually appointed an attorney to help in the upcoming negotiations.  Of course one might well ask the question what does the other side have to gain from this having won a resounding victory in the SC topped off by Justice Scalia's almost joyful rendering of the Court's decision.  Well, aside from finally getting rid of this thing and moving on with life--with an  anticipated very healthy profit with out which there will NOT be a deal, there is perhaps a even more practical reason to go forward.

Let's look at it from this standpoint: if I were the Argies and their counsel, despite suffering this very severe and comprehensive defeat, they might have well gained a powerful argument in return.  Keep in mind that the part of the ruling that did not receive as much attention was green light for a very broad discovery as to the size, nature and location of Argentine assets world-wide on the part of the creditors.  If I were them I would start my search not too far removed from 33 Liberty Street in New York…yep, the home of the New York Fed.

Throughout the years, certainly for the last 40 when I was involved, there has always been a discussion of in what way would or could the Fed be involved in a situation such as faced by Argentina.  I have always argued that national assets held by the Fed were not immune from attachment in aid of execution of a judgement against a sovereign as long as those assets qualified as being available under the Sovereign Immunities Act of 1976.  That has not been the prevailing view as for some reason the Fed was felt to hold a special status among depositories.  I have always believed that view was incorrect in fact as well as in law and this decision may well prove my assertion to be correct.  One thing I do know for certain: whilst perhaps not a nightmare scenario, the Fed has always deemed getting drawn into this mess not a good thing as the possibility of a knock-on effect being the disruption of the international payments system by Argentine assets suddenly being held subject to discovery as to their nature under a Federal District Court order could result in chaos.  Soooo, if I were the Argies, I would trot down to Liberty Street and tell the boys that I know it's not what you wanted but now is the time to become involved to a greater extent than just a friend of the court brief.  It's one thing to hold firm to a position affirmed as being correct by the highest court in the land but it's quite another to face the Fed as Queen Victoria making it known that "We are not amused…" or at least that's the way it was in the good old days.  Lads, you are in the business of finance and in this thing there's plenty of money to satisfy everybody.  My advice would be: don't blow it.


In the greatest act since Lazerus, El Tri got through.  Left for dead a few months ago, Mexico qualified only because the United States played 90 minutes against Panama and won although they were already the winners of the section.  Panama needed to but tie to have put Mexico out.  Mexico has justified their inclusion whereas, in the greatest irony of the tournment, the USA must tie or beat powerhouse Germany in order to advance.  A strange, magnificent and yet cruel sport.

ARGIE BARGIES

Rumor has it that the Argies are looking for a deal whilst trying to figure out how to get around the rulings of the Second Circuit which were affirmed this week.  The problem is, they may not have any time for either because a payment under their restructured debt is due at the end of next week and if they, they have to pay EMC Capital under the terms of the court ruling.  It's a really tough ruling; so tough that you almost fell sorry for the Argies…nah, not really.  The court got it so right that it has put other institutions on notice that if they assist the Argies in its avoidance, they too could be liable for damages.  Tough.

What has been suggested is that the restructured creditors agree to change the governing law clause in their agreements to Argentine law, thereby removing the subjectivity to the court ruling.  Not gonna happen, and even if it does, it wont fly.  You see, the trustee for the bondholders--the institution that makes the actually payments--is Bank of New York Mellon and there is no way that the institution make those payments unless specifically authorized by the Second Circuit and that ain't gonna happen either.  Further the court would probably view a institution that agreed to change the governing law as being complicit with the Argentines in avoiding the order of that court and denying the rights of EMC et.al.  So that, too, ain't gonna happen.  In short, unless Argentina's lawyers can come up with something truly brilliant (and as I have said Cleary, Gottleib/Lee Buchheit are as good as there is), the Argies have been had by the shorts.  It don't get no better than this.

Now if I were in the middle of this thing…and I have hardly enough knowledge of the situation to do more than simply speculate…the best I could hope for would be to get an agreement on the part of the restructured bondholders not to bring suit under the default in exchange for an amount equal to payment required to be deposited in pesos with an Argentine trustee in Argentina in the name of the bond holders.  This is not unheard of and there have been in the past some very useful interpretations of accounting rules that, hopefully, could be brought into play regarding performing debt, because nothing has ANY CHANCE of working if the threat of a write-down, i.e., loss, in any way enters the picture. The Pesos would be non-convertable at the present.   Don't get you much but it does buy time.  More importantly, the U.S. courts probably wouldn't jump up ugly.

Look, at some point, despite how much humble pie they are going to have to eat and the money it's going to cost them, the Argies are going to have to agree to a deal on the unrestructured debt.  What that will look like I have no way of knowing, but there's a number out there somewhere between 0 and 100% plus some kind of interest to which EMC and the others will agree.  I would be willing to bet that the hold-outs have already decided on the parameters.  Turning for a moment from giving free advice to the Argentine to offering some to the hold-outs (which I am sure they don't need),  You got the best decision for which you could have hoped, and the courts, in so delivering it no doubt expect that a settlement will be reached.  Don't go back to court.  These guys get bored looking at the same thing again.  As grandma used to say, you win, pick up the marbles, of which there will be quite a few as we will explain next week.


England went out today as a battling side from Costa Rica defeated I Azzuri 1-nil.  Sadness reigns but we still have the USA on Sunday.   Have a great weekend.

BACK ON STATION

Not a lot of fun getting hit in the face with a blast from a leaf blower.  Even less fun when you realize what must be hanging around in the residue from the fall when you eye blows up like a balloon inside of three hours from an infection and not from mere trauma.  Washed the damn thing out as well not five minutes after the event.  From now on I wear gloves when working in the garden.

There was a wonderful little vignette in the Times today about the N.Y. City A.G. bringing an action against some firm for improperly charging clients for loans made.  Sounded like a good idea given the reported facts but the funny part was that the authorities just realized that they could bring such an action only because of Dodd/Frank.  What a kick and where is Nancy Pelosi when you need her?
Somebody actually read this 2000 page piece of rubbish unlike Obama Care which nobody read.  Of course they read it sometime after it became law but, hey, that's the way we do things these days. Onward and upward.

Meanwhile, Over There, our friends were quite pleased to have announced that for the first time in quite some time the Union has met it's target for deficits coming in overall at 3% which had been the bogie at the very formation of the currency union but hardly ever met--or for that matter enforced--throughout these many years.  Of course the manner of achievement, the draconian cuts in governmental spending which has led to near-economic collapse in some states cannot be overlooked.  Nor can the identity of the one member that stands far apart from complying with the fiscal accords; yep, you guessed it, France again.  It's all great fun, really, but it is not far from the truth when one says that European recovery cannot be achieved without France and France is in a bad case right now.  Of course, she is well-capable of sending one of her leading economists on the road to hump his book proclaiming the joys of a wealth tax under the adoring eye of Little Paulie, ignoring of course that solely as a result of France's tax laws, there are more Frenchmen in London than in Lyon; a perfect reversal of the situation of 6-8 years ago when the Brits were moving in droves to France.  Memo to Jacob/Jack: taxes do matter.

Another item in the fun department that occurred during my recovery was the Argies getting there first shot before the Supreme Court  in a case that only a lawyer could love.  You might remember that they got the crap knocked out of them in the Second Circuit on really what was a contract law decision with an overlay of sovereign immunity and nonsense regarding the "safety of the system" if the plaintiffs should prevail.  That decision is under review as a writ of Ceritorari has been asked to be granted but in putting the cart before the horse, the Supremes overheard arguments as to the lengths the creditors could go to seek out and find Argentine assets of any size, shape or color anywhere in the world.  As I said, it's a wonderful case for lawyers only, involving the Sovereign Immunity Act of 1976 and vast reaches of international conflict of law issues but that does not mean it is unimportant.  Indeed it is very important, but why decide this if you haven't decided to hear the argument in the case which brings this to the fore?  Maybe because Cert will not be granted meaning the Argies lose?  Or signals are being sent to the tune of, "common guys, settle this."  We shall soon know.  Don't forget about it.  As Joe Biden would say, "This is a big ^%$*)*^ case."