Fittingly for a country boasting the highest number of shrinks per capita in the world, Argentina's economy minister is the son of a psychoanalyst and a psychologist. Some also think he's a real looker.
For the past several years, Kicillof has been President Fernández's point man as the country tries to figure a way out of a seemingly intractable situation.
On the one hand, the Argentine leader has made it clear that she won't "submit to extortion" at the hands of the hedge funds, backing herself into a political corner at home. On the other hand, she literally cannot pay the exchange bondholders without violating a court order. Even if she wanted to negotiate, Kicillof and others have pointed out, the country's lock law prevents paying the holdouts. And if Argentina did pay the holdouts at face value, what would stop all the exchange bondholders — the ones who agreed to accept far less than what Argentina originally agreed to when they sold the bonds — from suing for full value? Some calculations put that amount at nearly $200 billion, more than 10 times all the money Argentina has at the moment.
In the wake of the Supreme Court decision, Argentina deposited the $539 million it was supposed to pay to the exchange bondholders at the Bank of New York Mellon, which is the bank that handles its distributions to creditors. But, of course, the bank is barred from passing those funds on . So the whole situation developed the feel of a nasty high-stakes game of international chicken. Who would blink first?
Outsiders and observers hoped for some radical solution. One proposal involved a group of Argentine banks buying the debt from Singer and the other holdouts and then agreeing to an exchange. Another, floated by Fernández herself, called for Argentina to offer yet another bond exchange, this time using specially written bonds issued and payable in Argentina — far beyond the reach of U.S. courts.
Although the June 30 deadline passed without incident, Argentina had a grace period of 30 days, until July 30, to make the payment without being considered in default under the rules of international finance. This week, Kicillof, who has a doctorate in economics, flew to New York to join in talks with a court appointed mediator. They went nowhere, and reports were that his offer was little different than the ones made to bondholders in 2005 and 2010. On Wednesday evening Kicillof left the meetings and headed to the Argentine consulate in Manhattan. There was no deal. Argentina had, once again, defaulted.