The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Brazil's President Dilma Rousseff is fighting for political survival less than a year after being re-elected. Several reasons have been pointed exhaustively to explain how things got so bad in such a short period of time: chief among them are the burgeoning corruption scandal at state-run Petrobras and stubbornly high inflation, out of sync with the rest of the world.
from Alison Frankel:
(Reuters) - Argentina's contempt for the U.S. court system is not even debatable. Argentine officials have openly jeered at court orders enjoining them from making payments to bondholders who participated in Argentine sovereign debt restructurings without also paying more than $1.5 billion to hedge funds that hold defaulted bonds. The government has run newspaper ads vowing not to capitulate, has attempted to bring an action against the United States at the International Court of Justice in The Hague and, most recently, pushed through legislation authorizing its government to replace BNY Mellon with a state-controlled bank in Buenos Aires as the exchange bond trustee, after BNY Mellon made clear that it would not process payments for fear of violating the U.S. injunctions. Contempt, as it's ordinarily defined, practically drips from the words of Argentine politicians when they talk about U.S. District Judge Thomas Griesa of Manhattan, who has presided over their standoff with the holdout hedge funds for nearly a decade.
from Alison Frankel:
There's been a lot of talk in the Argentine debt crisis about whether U.S. courts have overstepped their bounds. At the end of 2011, you'll recall, U.S. District Judge Thomas Griesa of Manhattan ruled that the pari passu, or equal treatment, clause of Argentina's bond contracts entitles hedge fund holdouts that refused to participate in debt restructurings to payments alongside the more obliging exchange debtholders. Since then, Argentina and its allies, including the U.S. Justice Department, have argued that Griesa's interpretation of the pari passu clause -- which was subsequently affirmed by the 2nd U.S. Court of Appeals and left intact by the U.S. Supreme Court last month -- gives too much power to creditors and undermines sovereigns.