Singer Blasts Gramercy's Argentina Proposal, Blasts Min. Wage Hike, Lawlessness, Bitcoin

Jan 29 2014 | 10:42am ET

Elliott Management's Paul Singer isn't limiting his outspokenness to the World Economic Forum in Davos, Switzerland.

Singer last week told the gathering that the derivatives he loves trading are bad for society, and held a major forum focused on gay rights. Now, he's tackling all sorts of other hot-button issues in his quarterly letter to investors.

The missive, dated Jan. 27, touches on financial fraud, the minimum wage, gold, bitcoin and his firm's battle with Argentina.

On the latter, Singer dismissed a proposal by hedge funds led by Gramercy Fund Management to settle Elliott's dispute with Argentina in which those hedge fund creditors would pay Elliott. Elliott is seeking full repayment of bonds Argentina defaulted on in 2001, and has won court rulings that could force Argentina to default.

Singer said he'd be happy to cut a deal with Argentina, but rejected Gramercy's move as "a stunt."

"We find this idea beyond bizarre and entirely impractical," he wrote.

"The only way this dispute can be resolved is for Argentina to negotiate in good faith with holders of its defaulted bonds," he continued. "If the Argentine government simply and at long last did what every other sovereign in need of restructuring has done and actually talked to its creditors, we are confident that this long-running saga could be resolved quickly and thoughtfully."

Argentina has vowed never to pay the holdouts from is 2005 and 2010 debt exchanges, calling them "vultures."

Last week in Davos, Singer pointed to the growing unrest in Argentina.

"There have been riots by police and lootings by citizens," he told The Wall Street Journal. "It's a sad thing because it's self-imposed by the government."

"We are willing for quite a while to sit down with Argentina. We could settle this thing in an afternoon."

Singer also, as is his wont, took up some major political issues in the letter, opposing an increased federal minimum wage while also calling for more aggressive prosecution of financial crimes.

"Put bluntly, these policies would destroy jobs and cause companies and even entire industries to move elsewhere," Singer wrote. "These movements are politically motivated—a way for politician to fake compassion."

Singer is similarly tough on banks, saying that many are actually breaking laws with impunity, and calling for stricter enforcement, including more prosecutions of law-breakers from within banks.

"Laws are not self-executing," he said, and "lawlessness is a slippery slope." If a law "is ignored in thousands of subtle ways, then over time the rule of law will be replaced by corruption and whim."

Singer also told investors what he thinks of the digital currency bitcoin, and he doesn't think much of it.

Singer said he was "shocked" by the crypto-currency's popularity, and that "there is no more reason to believe that bitcoin will stand the test of time that that governments will protect the value of government-created money."

Gold, by contrast, is "currently available at a good price."

"Gold is out of fashion, but we think the explanation for why it has been drifting down is not compelling," he wrote. "The economy seems stuck in the doldrums, but most so-called 'experts' have been changing their minds almost weekly about when they think the economy will finally begin a long-term acceleration to the upside."


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.