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Jakobsen: Argentina's beef with 'vultures' leaves bad taste

Argentina has blinked first during a bad tempered stand-off with so called 'vulture funds' and has defaulted on its debt for the second time in thirteen years. A deadline set by a US judge for a deal to be struck passed without agreement betwen the two sides. The Argentinian government says the result from the US court is 'unfair'. Saxo Bank's Chief Economist Steen Jakobsen, who was in Argentina to meet key business leaders earlier this year, gives us his assessment of the situation and the possible wider implications.

Steen warns that the default could knock Argentina's GDP down by between one to two percent with inflation already officially at twelve percent and unofficially at forty percent the fall-out is looking painful.

However, Steen Jakobsen retains his optimism about South America more generally and predicts that this second default, in fact a continuation of the first, could lead to faster political reform and a fresh government elected.

03:45 minutes
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