RUTHFULLY YOURS

On April 22, a unique chapter in the history of the international bond market drew to a close when the Republic of Argentina settled with the largest remaining holders of the bonds unresolved from its 2001 default on more than $80 billion. Elliott Management, the firm I founded and manage, was one of these holders, having purchased bonds both before and after the default.

The 15-year saga has generated reams of articles about what lessons should be drawn to improve the sovereign-debt restructuring process. Now that the Argentina story is winding down, we would like to add our perspective to the debate.

When we first invested in these bonds in 2001, we believed that a negotiated restructuring could help Argentina avoid default. We also believed that if we participated in a negotiation, we could help achieve a good deal for all of the country’s bondholders.

As it turned out, Argentina chose to default, and its leaders refused to negotiate. Normally, sovereign restructurings are completed quickly—a 2013 study by the Moody’s rating agency put the average at around 10 months. But it was nearly three years before Argentina’s leaders even put an offer on the table.

When they finally did, bondholders—including many individual Argentines—were given a take-it-or-leave-it offer of new bonds worth just 30 cents for every dollar owed on the old bonds. Argentina’s leaders even took the extraordinary step of passing a law prohibiting payment to any bondholder that rejected the offer.

Despite these coercive tactics, more than half of Argentina’s foreign bondholders rejected Argentina’s unilateral terms. Five years later, in 2010, Argentina repeated the 30-cent offer. Many participants in this second exchange were bondholders who were worn down by the financial crisis or just tired of waiting.

At that point, Argentina’s leaders could have easily negotiated a settlement with the remaining bondholders and put the 2001 default behind them. We tried again, as we had in the past, to initiate a settlement discussion with Argentina.

Our entreaties were again refused. Instead, Argentina’s leaders chose to use us as scapegoats for the country’s mounting economic problems, insisting that bondholders like us would never be paid a single peso. CONTINUE AT SITE

Britons now know how Americans feel. The most politically polarizing U.S. President in modern history decided on Friday to inject himself into the British debate over the June referendum to leave the European Union, as ever leading with a dubious political threat.

President Obama spoke at a joint press conference with Prime Minister David Cameron, who is leading the Stay in the EU campaign. Mr. Obama began, as he often does, by saying that he wasn’t going to do what he then proceeded to do.

In this case he announced that he wasn’t trying to influence any British votes, and he wasn’t issuing a “threat.” But he went on to attack the argument of the Leave campaigners who say that, if the Leave vote prevails, the U.K. could strike trade deals that have similar benefits without the EU’s bureaucratic barnacles.

“And on that matter,” Mr. Obama said to British voters, “I think it’s fair to say that maybe some point down the line, there might be a U.K.-U.S. trade agreement, but it’s not going to happen anytime soon, because our focus is in negotiating with a big bloc, the European Union, to get a trade agreement done, and the U.K. is going to be in the back of the queue—not because we don’t have a special relationship, but because, given the heavy lift on any trade agreement, us having access to a big market with a lot of countries—rather than trying to do piecemeal trade agreements is hugely inefficient.”

The problem—apart from the blunt political threat to a stalwart ally—is that Mr. Obama is stating his policy choice, not what is inevitable. The U.S. is negotiating a trade deal with the EU, but the talks haven’t been going well in part because of the demands of the EU’s multiple special interests and French economic nationalism. The talks might extend into the next U.S. Administration, and they could fail. CONTINUE AT SITE

Would veterans of the Waffen SS be welcomed as marchers on Anzac Day? The very idea is appalling, yet every year we hear only of the bravery of the Turks — nothing of the genocidal massacres of Armenians and others which, long after Germans accepted their guilt, the leaders continue aggressively to deny.

A century ago, in a misconceived encounter on the history-soaked precipices of Asia Minor, the sons of ANZAC received their initiation in battle against the German-trained soldiers of the Ottoman Empire. The Turkish forces, well prepared behind excellent defences, used their tactics to good effect, ably led by a professional officer who would go on to bigger things, Kemal Ataturk.

Now is celebrated, in an annual event that grows in mythology and status in proportion to the passing of the years, the shared combat ordeal of Gallant Johnny Turk and the Bronzed Anzac. Pause for a moment to this: What if, say, instead of Gallipolli, the ANZACs forces went into combat against an SS Battalion somewhere in Poland during World War 11? Would we then, decades later, be joining with our former enemies to celebrate what both sides had gone through, all enmities long forgotten? Could one with clear conscience commemorate battle experiences shared with representatives of enemy forces acting as the military arm of a state carrying out a terrible genocide at the same time?

For it was the night before the landing at Gallipolli on April 25 in the capital of the Ottoman Empire (then called Constantinople) when occurred the arrest, detention and subsequent liquidation of 625 intellectuals, priests and leading Armenians. This event is widely held to signal the onset of the first major genocide of the twentieth century, the most bloodthirsty period in human history.

What followed was the mass murder of an entirely innocent group of citizens by means still horrifying to contemplate. By the time Turkey sued for peace in 1918, up to 1.5 million Armenians had been slaughtered, decimating the population of a group whose ancestors had lived in the Fertile Crescent since the dawn of human settlement. It did not stop there. The Assyrian people lost at least 75,000, three-quarters of their population; the numbers have not been made up to this day. Later, the Greeks in Asia Minor, in some of the bloodiest scenes of city-sacking since the fall of Nineveh and Tyre, were driven out of ancient homelands, never to return. And, largely lost in the high tide of bloodletting at the time, there were pogroms of Jewish settlements in Anatolia.

The South Korean military says that North Korea fired a submarine-launched ballistic missile off its eastern coast on Saturday. The missile flew about 30 miles before crashing in the ocean.

Reuters:

North Korea will hold a congress of its ruling Workers’ Party in early May for the first time in 36 years, at which its leader Kim Jong Un is expected to say the country is a strong military power and a nuclear state.

The missile flew for about 30 km (18 miles), a South Korean Defence Ministry official said by telephone, adding its military was trying to determine whether the launch may have been a failure for unspecified reasons.

South Korea’s Yonhap news agency said the missile flew “for a few minutes”, citing a government source.

The U.S. State Department in Washington said it was aware of reports the North had launched what appeared to be a ballistic missile.

“Launches using ballistic missile technology are a clear violation of multiple U.N. Security Council resolutions,” said State Department spokesman John Kirby.

The North first attempted a launch of the submarine-based missile last year and was seen to be in the early stages of developing such a weapons system, which could pose a new threat to its neighbours and the United States if it is perfected.

However, follow-up test launches were believed to have fallen short of the North’s expectations as its state media footage appeared to have been edited to fake success, according experts who have seen the visuals.

President Obama stuck his nose in the Brexit question in Great Britain, provoking outrage and scorn when he threatened the Brits by warning that if they left the EU, the UK would be “at the back of the queue” on any trade deal.

Obama claimed that his threat wasn’t a threat but rather he was trying to “enhance the debate.”

At a press conference with Prime Minister Cameron, a BBC reporter asked the president if it was any of his business whether the UK remained in the EU.

“Thank you, Mr. President. You’ve made your views very plain on the fact that British voters should choose to stay in the E.U. But in the interest of good friends always being honest, are you also saying that our decades-old special relationship, that’s been through so much, would be fundamentally damaged and changed by our exit? If so, how? And are you also, do you have any sympathy with people who think this is none of your business?” the reporter asked.

“And Prime Minister, to you, if I may, some of your colleagues believe it’s utterly wrong that you have dragged our closest ally in the E.U. referendum campaign, what do you say to them?” the reporter asked. “And is it appropriate for the Mayor of London, Boris Johnson, to have brought up President Obama’s Kenyan ancestry in the context of this debate?”

Obama’s lecture to the Brits included references to World War II and the creation of NATO as examples of how America and Great Britain have cooperated in the past. But the president had people shaking their heads in disbelief because the U.S. had nothing to do with the creation of the EU.

The U.S. president said he feels it’s his prerogative to clarify the U.S. position rather than have it defined by British politicians.

So President Obama has come right out in assuring us Brits that the special relationship with Great Britain is alive and well, – so well in fact that if we voted out of the EU, we Brits would be at the back of a the queue for a trade deal with the USA. Funny! I did not think we needed a trade deal, when our relationship was so special.

The President is clearly unaware that the EU Energy Directive adds 40% to our energy bills. By a Directive! This Directive has greater force of law than the laws promulgated at Westminster in the Houses of Parliament. Can you imagine Mexico or Venezuela or Brazil issuing a Directive that had more force than a law passed by Congress?

This is a principle reason that our Steel Industry is in such dire straits. In normal circumstances the British Government would step in to help the industry out, but does President Obama realise that under EU rules State Aid is forbidden? Our Prime Minister’s hands are tied. Can you imagine Canada telling the mighty USA what it can or cannot do? It is inconceivable.

While all eyes are on the Middle East, Alexis Tsipras of Greece has to make a terrible decision. He was elected by the Greeks on an anti-austerity ticket and now he is being forced by German Bankers into furthermore draconian austerity. The only alternative is to leave the Eurozone and go back to the Drachma. Undoubtedly this is the only sensible solution, already suggested by Nigel Farage in the Parliament at Strasbourg months ago. He has until next Wednesday to decide. What would be President Obama’s advice to Alexis Tsipras?

The truth is that the dominant power in the EU is Germany. Perhaps the President has forgotten that together we fought two World Wars against the imperial dreams of the would-be master race. Even now Germany is forming a European Army together with the Dutch and Czechs. Does President Obama comprehend that danger?

Meanwhile the US Secretary of State has used his God-like powers to sign off an agreement to limit the rise of Global Temperature to just 2 degrees Celsius. Just how deluded can we get?

Almost twenty years ago Margaret Thatcher wrote:

That such an unnecessary and irrational project as building a European super-state was ever embarked on will be seen in future years to be perhaps the greatest folly of the modern era. And that Britain, with her traditional strengths and global destiny, should ever have been part of it will appear a political error of historic magnitude. There is, though, still time to choose a different and a better course.
Is Brexit, the issue on which the British public will vote in a referendum on June 23, the doomed dream of those who wish to restore British national sovereignty? Or is it the nation’s political destiny? At the time of writing, two weeks after David Cameron returned from Brussels with a deal to change the terms of British membership of the European Union, online polling suggests roughly equal support for the Leave and Remain campaigns, while telephone surveys—which proved to be a more accurate guide to Britain’s 2015 general election outcome—point to the probability of a vote to remain. All polls indicate that many voters still have not decided.

The level of support enjoyed by the Remain campaign should not be taken as a reflection of enthusiasm for the European project; there is ample polling data to show that most people in Britain neither trust nor like the EU. Nor do many people think much of Cameron’s deal, which falls far short of his earlier promises to bring about fundamental change in Britain’s relations with the EU and to get back powers ceded to Brussels. It is also clear that the modest concessions he achieved are not secure, since they must be confirmed in subsequent treaties which the twenty-seven other EU members must approve and because British law remains subordinate to European law. No, it is clear that the main reason people give for saying they will probably vote to remain is that they believe leaving would represent a step into the unknown.

Remain campaigners do not sing the virtues of the EU, or promise that continued membership will lead to a golden economic future. Given the troubles in the Eurozone and the migrant crisis which has effectively killed the Schengen Agreement, such claims would not merely lack credibility; they would invite derision. Instead, while admitting that the EU has its faults and requires further change, they have launched what Eurosceptics have come to refer to as “Project Fear”, dire predictions that Britain would face a series of disasters on leaving: British families living in Europe would no longer qualify for state health care; collective security would be undermined; international co-operation to fight jihadists would be jeopardised; three million jobs would be lost; migrants in Calais would no longer be restrained from reaching Britain; air fares would rise; UK residents would be expelled from Portugal.

Much of the scare-mongering has been successfully dealt with by Leave campaigners and the Eurosceptic sections of the media. When Downing Street issued a letter signed by thirteen senior ex-military officers suggesting that Britain would be safer remaining in the EU, one of the officers protested that he hadn’t signed it and disagreed with its content, another said he had signed “only under pressure”, while other senior military men made known their opposition to it. Major-General Julian Thompson, a military historian who led the Royal Marines during the Falklands War, argued that membership had damaged Britain’s security and that intelligence—the key to effective anti-terrorist activities—could be more reliably shared with members of the Anglosphere than with members of the EU.

Islamic jihadist groups are threatening Lebanese Christians and demanding that they submit to Islam. Lebanon’s Christians, descendants of Aramaic Syriacs, were the majority in the country a mere 100 years ago.

Saad Hariri, a Sunni Muslim politician supported by Saudi Arabia, has invited every Lebanese party to his office to sign a document confirming that Lebanon is an Arab state. This is clearly intended to turn Lebanon into yet another officially Arab Muslim state.

The next step will be to ask that the constitution of Lebanon be changed so that the country be ruled by Sharia law, as with many other Arab and Islamic states, including the Palestinian Authority (PA). The PA constitution declares: “The principles of Islamic Sharia shall be the main source of legislation.”

Recent upheavals in Lebanon are making local Christians communities worry about their existence as heirs and descendants of the first Christians. Christians in the Middle East now are facing a huge genocide — similar to the Christian genocide the followed the Islamic conquest of the Middle East in the 7th century A.D.

Islamic jihadist groups are threatening Lebanese Christians and demanding that they submit to Islam. Lebanon’s Christians, descendants of Aramaic Syriacs, were the majority in the country a mere 100 years ago.

The demand for Christians to convert to Islam was one of the declarations issued by ISIS and other Islamic groups hiding in the mountainous border between Syria and Lebanon.

Saad Hariri, a Saudi-backed Sunni Muslim politician and the son of assassinated Prime Minister Rafik Hariri, recently invited every Lebanese party to his office to sign a document confirming that Lebanon is an Arab state. Arab state equals Islamic laws, as with all members of the Arab League. Why is it so important to Hariri or to the Sunni and Islamic world to include Lebanon as an Arab state and cancel its current name as a Lebanese state only?

The European Union now finds itself in a classic catch-22 situation. Large numbers of Muslim migrants will flow to Europe regardless of whether or not the EU approves the visa waiver for Turkey.

“If visa requirements are lifted completely, each of these persons could buy a cheap plane ticket to any German airport, utter the word ‘asylum,’ and trigger a years-long judicial process with a good chance of ending in a residency permit.” — German analyst Andrew Hammel.

In their haste to stanch the rush of migrants, European officials effectively allowed Turkey to conflate the two very separate issues of a) uncontrolled migration into Europe and b) an end to visa restrictions for Turkish nationals.

“Why should a peaceful, stable, prosperous country like Germany import from some remote corner of some faraway land a violent ethnic conflict which has nothing whatsoever to do with Germany and which 98% Germans do not understand or care about?” — German analyst Andrew Hammel.

“Democracy, freedom and the rule of law…. For us, these words have absolutely no value any longer.” — Turkish President Recep Tayyip Erdogan.

Turkey has threatened to renege on a landmark deal to curb illegal migration to the European Union if the bloc fails to grant visa-free travel to Europe for Turkey’s 78 million citizens by the end of June.

If Ankara follows through on its threat, it would reopen the floodgates and allow potentially millions of migrants from Africa, Asia and the Middle East to flow from Turkey into the European Union.

Under the terms of the EU-Turkey deal, which entered into effect on March 20, Turkey agreed to take back migrants and refugees who illegally cross the Aegean Sea from Turkey to Greece. In exchange, the European Union agreed to resettle up to 72,000 Syrian refugees living in Turkey, and pledged up to 6 billion euros ($6.8 billion) in aid to Turkey during the next four years.

European officials also promised to restart Turkey’s stalled EU membership talks by the end of July 2016, and to fast-track visa-free access for Turkish nationals to the Schengen (open-bordered) passport-free zone by June 30.

One of the best catalogues of human folly is the 19th century book by Charles MacKay, “Memoirs of Extraordinary Popular Delusions and the Madness of Crowds.” MacKay chronicles a host of scams, superstitions and mass frenzies, including the South Sea Bubble, Tulipomania, Alchemy and Witch Mania. To this roster, some future historian may someday add the full tale of the early 21st century Climate Mania, in which a throng of politicians, United Nations bureaucrats, film stars and what not promised that if they were just given enough power over our use of lightbulbs, cars, planes, ships, oil, gas, electricity and energy in general, they would — for the greater good of mankind, mind you — arrange to control to within a few decimal points the temperature of the planet.

For the moment, however, this is not history we are talking about. We are stuck in the acute phase of Climate Mania. This Friday, “Earth Day,” brought the signing ceremony at the UN’s New York headquarters of the Paris Agreement on “Climate Change.” More than 170 nations signed on, including such curators of human progress and enlightenment as North Korea, Sudan, Cuba and Iran. Actor Leonardo Di Caprio spoke from the podium of the General Assembly chamber. Secretary of State John Kerry brought his infant granddaughter, and held her on his lap while he signed the accord. UN leaders planted a tree in the UN “Food Garden.”