Japanese PM Abe says North Korean missile launch a grave threat to Japan
LONDON, April 29 North Korea's decision to test-fire a ballistic missile represents a grave threat to Japan, Prime Minister Shinzo Abe said in London on Saturday.
BUENOS AIRES, July 31 Argentina may have defaulted on its debt for the second time in 12 years on Thursday, but the packed elegant cafes in Buenos Aires show little sign of distress and shoppers rather than protestors fill the streets.
Jose Bini, a 27-year-old Argentine entrepreneur, shrugged off the news of the default with resigned laughter, saying he was used to economic crises. At least this was not as bad as the 2001/02 crash in Latin America's No. 3 economy, he said.
"We are used to living like riding a roller coaster," said Bini, who will not change his plans to expand his microbrewery because of the default. "I have lived through two defaults, hyperinflation, an economic crash, stagflation and I'm only 27."
Argentina, which is already mired in recession, failed on Wednesday to strike a deal with "holdout" hedge funds suing the nation for full payment of their defaulted bonds in time for a midnight deadline.
But unlike during the last default when the state went bankrupt, triggering bloody protests and plunging millions into poverty, this time around Argentina is solvent.
It simply cannot get coupon payments to bondholders due to a U.S. court ruling, meaning it is in "technical default."
News of the default prompted Argentine stocks and bonds to reverse recent gains on Thursday but did not cause a rout. The peso fell 2.52 percent to 12.570 per dollar and currency traders on the streets of Buenos Aires said there had been no rush to buy safe-haven dollars.
The streets of Buenos Aires were calm on Thursday and many said they did not understand how the default might affect them.
"It creates a lot of uncertainty but I don't know how it will impact me," said Silvina Ferreyra, 33, a saleswoman for an airline, who said she followed the news but did not understand it all.
"I have a secure job, but I don't know what will happen. It's difficult to invest in your life, for example buy a house, with so much uncertainty. But what can you do? Life goes on."
The increased uncertainty will weigh on already weak consumption, said 55-year-old shopkeeper Liliana Suaya. Sales already fell 40 percent this year due to inflation that economists forecast will reach 30 percent to 40 percent by the end of the year.
"People will likely be more worried about losing their jobs and inflation accelerating," said Suaya, who has sold clothes in the working-class district of Once for more than two decades. "Lots of shops around here have been closing recently."
Many buildings standing empty in Once are taken over by squatters and Suaya is worried about rising crime.
But Suaya said she was used to economic ups and downs and like many, had saved during Argentina's stellar recovery in the 2000s. Sales rose just as fast then as they are falling now.
How much pain a default inflicts on Argentines will depend on how swiftly the country can extricate itself from it.
A prolonged crisis will raise borrowing costs, accelerate one of the world's highest inflation rates and weaken the peso.
With the country still banned from international credit markets, the government will likely further tighten import and capital controls in order to protect dwindling foreign reserves.
"It seems to be business as usual right now," said entrepreneur Bini, who says many of his friends had already left the country to look for better prospects. "Argentines will get to feel the default but not just yet."
Some Argentines said they were afraid the default would push them from a precarious situation into outright poverty. The government estimates the poverty rate at 5 percent but private analysts say it is at least five times higher
"I'm worried more people will go hungry in 2015," said Daiana Valdez, 19, adding that many people in her provincial home town lived in shanty houses and did not have enough to eat.
But many Argentines' worries, especially among the middle classes, were tempered by optimism that either the government or third parties would reach a deal eventually with the holdouts.
"The impression is that there will be a solution, so people are not taking it all too seriously," said Osvaldo Cornide, head of the CAME chamber of mid-sized companies.
So far, the debt crisis does not seem to be heightening discontent with the government. Instead, many approve of its stand-off with the funds it calls "vultures" for buying Argentine debt at a discount and demanding payback in full.
"Argentina does not cave into extortion" and "Argentina rejects vultures' pressure" read the headlines of Argentina's pro-government newspapers on Thursday. Even anti-government dailies did not place the blame for the default on President Cristina Fernandez.
And as long as the extra economic impact of default remains intangible for most, this looks set to remain the case.
Andrea Yohai, a 59-year old massage therapist, said she approved of the way the government had handled the crisis. "They are just defending Argentina's interest." (Additional reporting by Eliana Raszewski; Editing by Simon Gardner and Lisa Shumaker)
April 28 A top U.S. financial regulator said on Friday that it closed the banking unit of First NBC Bank Holding Co, three days after the lender reported accounting issues dating back to at least 2015.