Friday, March 22, 2013

Revisiting the Argentinian Nationalization of YPF

About a year ago, I posted about how the government of Argentina nationalized the assets of the oil company, YPF, a division of the Spanish company Repsol.

This week I received a paper which surveyed finance professors about the value of YPF at the time of the nationalization. The consensus was about $10B.

Argentina has still offered no compensation to the owners of Repsol.

There are two broad similarities to this semester’s crisis in Cyprus. First, it isn’t impossible for governments to steal billions of dollars. Second, Argentina defaulted on its debts about 10 years ago, and implicitly stole from many retirees (mostly in Italy and Spain) who had bought Argentinian bonds.

So, we’ve seen stuff like the Cyprus situation before. It doesn’t end well. The difference this time around is that Cyprus is inside the EU.

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