Another screwed up idea from the Politician’s “Expedient Non-Solutions Handbook”
President Cristina Fernández of Argentina now wants a controlling stake in Argentine oil company, YPF, which happens to be the Spanish owned part of the company. When your country is in shambles, I guess its sounds like a good idea to start nationalizing things to say that you are “doing something.” This may include resurrecting the longstanding provocation of Britain with renewed interest in the Falklands. Because that went so well.
A decade after the largest Sovereign default ever, now talk of nationalization will further damage any shred of credibility the Argentine government has. If you want to discourage further resource development, this is a good way to do it.
You simply cannot trust a government and it is still surprising how many bonds were sold back in the 1980’s in South America. The track record hasn’t been good for generations.
1) Spain Comments on Cristina Fernández’s new Proposal
2) Political Risk in Argentina