Argentina Defaults, Those Two Weeks You Really Should Take & Other News You Can't Miss Today

THE DEFAULT IN OUR STARS – For the second time in 13 years, Argentina defaulted on its debt. Despite two days of intense negotiations, the Argentinian government could not come to a deal with the "holdout" hedge funds that demand payment in full from the country's previous default in 2001. Here's Felix Salmon, senior editor at Fusion and a LinkedIn Influencer, explaining the situation pre-default:

Argentina has two classes of external bonds: the ones it’s paying, and the ones it isn’t paying. Because it isn’t paying the latter group (the “holdouts”, who are the plaintiffs in this case), it has effectively lost all access to international capital markets for well over a decade. But it is (or was, in any case) staying current on the former group (the “exchange bondholders”). Thanks to that, it has a non-default credit rating and some semblance of a reputation for paying its debts on time. That was the promise of the big debt exchange in 2005: if we cut our debt by 70%, then we’ll be able to service it no problem. Between then and now, that promise has been kept. (Read the full post.)

But the holdouts – those hedge funds that refused to renegotiate the debt – want their bonds paid at face value, and the US judiciary sided with them, saying that next due date, Buenos Aires should pay everyone or no one. That date was yesterday. The Argentinian government maintained its stance and its habit of calling the other party "vulture funds," while probably accurate, didn't help negotiations. For Buenos Aires, the risk in giving in to the holdouts is that all other bondholders would have legal standing to demand the same deal. The $1.5 billion owed to plaintiffs would become $15 billion, based on an estimate by the Argentinian government, more according to other analysts. The country has about $16 billion it can actually use in its foreign reserves. This would wipe it out. One solution that's been floated is for Argentinian private banks to pay the holdouts and then figure out their own deal with the government.

What does this mean for Argentinians? Time will tell but it doesn't look like consequences will be as catastrophic as in the 2001-2002 default, when millions of people lost their jobs, the middle class fell into poverty and dozens were killed in protests that lasted months. Still, the country slid into recession last month and this isn't going to help: the state already had no access to capital markets, but companies did. The cost of borrowing will likely increase for them. Argentinians are taking it on the chin.

SAUDADE – In other pretty bad financial news, Portugal's Banco Espirito Santo posted losses of 3.6 billion euros and its stock plunged 50 percent on the news. (As of this writing, it's back up to just -25 percent.) Espirito Santo is the weakest link in the EU's banking system, as three of the group's parent companies had to file for protection from creditors and the Bank of Portugal is investigating "seriously harmful acts of management”.

BULL'S EYE – Target named a new chair and CEO. Brian Cornell, until now head of PepsiCo Americas Foods, takes the reins from Greg Steinhafel after a disastrous security breach in which the details of 40 million credit cards were stolen. Not much has been written about Cornell yet. He's not new to retail as he presided over Walmart's Sam's Club before.

GET OUT OF HERE – August is upon us and in these hazy, lazy days of summer, European offices are emptying out, small businesses shutting down. I'm one of the last holdouts here in Paris but finding a baguette in my neighborhood is becoming increasingly difficult. By next week, I'll have to live on canned tuna. Writes Jaguar design director and LinkedIn Influencer Ian Callum:

Right now in Italy, the vast majority of workers will be staring directly into the vast expanse of a full month off. No commute, no office, no e-mails, no meetings. For an entire month. Instead, a family holiday by the beach beckons or, alternatively, the freedom to do precisely what they like." (Read the full post.)

Sounds tempting? Then go for it! If you need to convince your boss and "just because it feels good" doesn't do it, Ian Callum has a few arguments. In the US, a.k.a. "No Vacation Nation," people hesitate to take even the meager two weeks they're granted and opt instead for extended weekends and a day off here and there, he notes. But that's not restful.

You need to create a psychological break from work when you’re on holiday, and you need time to achieve that – time you just don’t get on a long weekend or shorter holiday.

Longer breaks allow you to truly recharge and restore your creativity and productivity. (Also, they just feel good.) And because we all know it's easier said than done, Ian Callum adds it's up to companies to create the kind of culture where people feel comfortable taking off for 2 or 3 weeks, knowing neither they nor their work will suffer. At TED – and I can bet you this article has been circulating in offices around the US – managers decided to simply close down the company for two weeks so everyone not only took a break but also knew there was no point in checking in on their smartphone.

Arianna Huffington notes that legendary US presidents like Lincoln and FDR knew the power of a break and took some of their most important decisions on vacation. "The deficits we should be demanding that Washington focuses on are our leaders' deficits: energy, creativity, insight and wisdom," she writes. "And summer is the perfect time to build up a surplus."

But of course, it doesn't have to be in August.

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