US COURT RULING re ARGENTINA - Argentina receives support from over 100 economists and prominent academics

Argentina blames US for debt woes, denies default AFP By Paula Bustamante 2 hours ago  US District Judge Thomas Griesa has blocked Argentina from paying its "exchange creditors" -- those who agreed to take a 70-percent write-down after the country's 2001 default -- without also paying two American hedge funds that took it to court demanding full payment. Argentine stocks plummeted Thursday, closing 8.43 percent down as the repercussions of the default began to set in. President Cristina Kirchner's cabinet chief, Jorge Capitanich, blamed the US government, Griesa and a court-appointed mediator for the messy legal dispute, which made Argentina miss a $539 million payment to exchange bondholders. "If there's a judge who's an agent of these speculative funds, if the mediator is their agent, what is this justice you're talking about? There's a responsibility of the state here, of the United States, to create the conditions for the unconditional respect of other countries' sovereignty," he said. He accused Griesa and mediator Dan Pollack of "incompetence" and said Argentina would take the matter to international courts. Argentina says paying the holdouts the $1.3 billion it owes them could expose it to claims for up to $100 billion from exchange creditors, who are entitled to equal treatment under what is called a Rights Upon Future Offers, or RUFO, clause. ... Argentina got a show of support from more than 100 economists, including Nobel laureate Robert Solow and other prominent academics, who sent a letter to the US Congress urging it to intervene. "The district court's decision... could cause unnecessary economic damage to the international financial system, as well as to US economic interests (and to) Argentina," said the signatories, warning the ruling created a "moral hazard" by guaranteeing creditors full payment no matter how risky their investment. With Argentina scrambling to find a way to placate the hedge funds until the RUFO clause on its restructured debt expires at the end of the year, sources close to the case told AFP that JP Morgan and other banks were in negotiations with the holdouts to buy some or all of their bonds. JP Morgan declined to comment. Analysts said the damage could still be controlled if the default was fleeting, but warned a lengthy standoff would deepen Argentina's current recession, fuel inflation and unemployment and further the country's isolation from global financial markets. Argentina's 2001 default on $100 billion in foreign debt, the largest in history at the time, plunged the country into crisis. Rioting left 33 people dead after the government froze savings accounts to halt a run on the banks. But analysts say the global impact of the new default will be far smaller, since Argentina has since been locked out of international capital markets. Extracts only - full @ Source - Yahoo News - here.

This sounds full-on.

Wonder if the letter to Congress will make any difference?

Don't know anything about hedge funds, so I don't know what's going on. 

But it's obvious whatever is going on is punitive towards Argentina and likely damaging to Argentina, by the sound of it.