On September 23, 2008, the authors of this letter sent to the Chairman of the Joint Standing Committee on Legislative Procedure of the National Congress, Diana Conti, a letter requesting the rejection of Ordinance necessity and urgency (DNU) 1472-1408, by which the Executive has cash payment to the Paris Club, making use of the reserves of the Central Bank of Argentina (BCRA).
By Mario Cafiero, Ricardo Monner Sans and Francisco Javier Llorens
International Reserves (IRIN) of the Central Bank according to the State Summary of Assets and Liabilities at September 7, 2008, are $ 142,625 million, or u $ s 47,090 million. At first glance, it seems that only a small fraction would be using reserves to meet external debt commitment by the State.
simplistic or naive This impression is supported and reinforced by opinions of knowledgeable experts or "gurus" of the "city." And also by the mass media, both specialized and mass. Repeating the conduct displayed in 2001, during which deceived community and the public regarding the solvency of the Central Bank, the financial system, and the Treasury, until the outbreak of the worst crisis in our history. We were happily into the so-called first world, and suddenly we are in the worst of all worlds.
catastrophic Beginning that year, commending the famous "shield" and the huge reserves of Central Bank and Financial System, which liquid climbed almost $ s 40 billion. And at the end of the year, there was no one available currency or the Central Bank or other banks, whose reserves had been papered with debt securities and the Treasury, which is why it was introduced playard that wiped out the circulation of the street.
Today again so unscrupulous and accomplice is installed in the community and the public the idea that we have a surplus in foreign exchange reserves of the BCRA. And therefore it is appropriate, necessary and convenient to use to normalize our relationship with international financial markets.
But if done with common sense analysis of the balance of BCRA, stripped of unnecessary technicalities and misleading, it shows that international reserves (IRIN) with which they are currently insufficient to meet the commitments already made, and those reasonable and necessary today is provisioned, in a context of growing financial and economic difficulties and external distrust.
Therefore the Central Bank will be unable to fulfill its primary function in accordance with current legislation, is to preserve the value of the currency. Unable to perform their duties is the product of delicate financial assets and current Central Bank, which after the 2001 crisis was exacerbated by the cash payment made to the IMF, and now will be greatly exacerbated by the drain of foreign exchange cash for the payment Paris Club.
we have the consolation that is not the first time the Argentines have we all been deceived. Still resonates in our memory that the `80," the dollar loses that bet, "or you" I spoke with my heart and I answered with the pocket. " Or the "one to one" of the 90s and the great "strength of the banking system with Basel prudential Plus", which however did not prevent bank reserves and the currency will evaporate in 2001, as having been smoke.
Despite the elapsed time, in our Federal Justice delinquent open cases still exist in relation to the latter, known as the "mega-swap", the "yard", etc.. Hopefully there judicial courage to carry them out. The Argentines can say maybe we were the forerunners of a long list of scams and deceptions that have not finished, and that otherwise have spread globally today shaking their first world citizens who see their savings jeopardized.
is therefore not surprising that the risk engineering expert Nassim Nicholas Taleb, author of one of the best seller of the moment recommend: "The basis of my thinking is that you should never trust the predictions of economists and Bankers: always err, lie, you dazzle with colored stones. And academic economists are the worst. " He also asserts: "It is simply that if one knows that they do not know, will make much better decisions. Furthermore, doing nothing is far superior to do something stupid. "
And this seems to be the situation in relation to 1472 DNU treated in this bicameral commission.
The subtext in the balance of BCRA
According to information we present, we are able to expand in detail, the result of a joint investigation with Javier Llorens, we can say that Parliament is actually selling pebbles are colors.
summarized in this sense we can say that
• Showing the brilliance of gross reserves, but nothing is said of the external debt and internal letters and passes liabilities owed to accumulate them.
• Fewer still talks about the difficult situation that has to BCRA debt renewal letters that would be doing now with operations in U.S. roadways in the future, thus giving back the hedges BCRA, a sad memory for Argentina , having given rise to the fraudulent debt that is overwhelming.
• Hides BCRA debt and repo transactions, being freed in practice letters within one to seven days, with a horizon no worse than the worst moments of 2002.
• Worse, it would be unduly bulking Active BCRA in computing the letters in it's own Central Bank, to recover as consideration for repo transactions (1), thus would distort the equity of the BCRA. The rules for this particular form of operation and began posting his own lyrics to the Communication A 4143 issued in May 2004, when President of the BCRA was the former executive with JP Morgan, Alfonso Prat Gay. It is noted that the former President of this institution is not responsible for the approval of the Central Bank balance sheets for 2002 and 2003 by external auditors, which covered the emptying of the BCRA and the financial system in 2001.
• Despite the above, the Heritage BCRA's net shows a substantial fall of around 40% in the last six months. Increased from $ 33,960 million at March 31 last, at $ 20,310 million on 31 August. Parallel Treasury debt to the Bank increased by $ 12,600 million, from $ 96,087 to $ 108,692, climbing to 5.4 times the net worth of BCRA, the highest ratio in the last four years.
• Also during 2006 and part of 2007, the Treasury would put debt for at least five billion dollars, taking triangulated currency reserves of the BCRA, through banks Deutsche Bank, JP Morgan, Citibank and other , which in turn would have been deposited Central Bank reserves. It is no coincidence that the same banks now appear to lead the operation to reopen the debt exchange, providing a bridge loan, which will surely come slyly Central Bank reserves. We show
makeup BCRA numbers, but even more blatant inconsistencies that lies INDEC indicators. With the added here is a game a few points more or less than inflation, but real and effective availability of foreign currency that are backing the money supply circulating in the country, and gives life to our economy.
We note that, if Parliament endorses the decision of PEN, would be put in the hands of a small group of banks, "the lives and fortunes of the Argentine" with the legal and political responsibilities that entails. This is not preaching the constitutional provision about a topic like this would put those who are the protagonists in the category of infamous traitors to their country, but our conviction that beyond the weakness of the judiciary of the nation-will, if appropriate, refer the matter to the relevant court decision. We do not believe that the Argentine people in a position to support this new fraud with impunity.
If paid to the Paris Club, a handful of large foreign banks and speculators may-down or raising the thumb to the renewal of its receivables in repos, Lebacs and Nobacs-control monetary policy and the sustainability of the BCRA. We will have lost in this area and few degrees of sovereignty which have until now.
worth recalling in this connection the concepts expressed by Pius XI century ago in his encyclical "Quadragesimo year," referring to the restoration of social order in accordance with the law of the Gospel: "106. Absolute power and despotic domination is exercised by those who have their hands on the money, control the finances and lord it over the claim, and therefore given the blood of the economy holding in his hands it would seem, the soul of it, so that nobody can not even breathe against their will. "
(1) If a company issues a letter or note typical of 1,000 pesos and delivers as collateral for a loan of cash, no way I could post that letter or note in its assets, arguing that it will recover when due. However, the BCRA without any reasonable explanation posted to its active points (Lebacs) delivered own repo transactions.
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