Does the history of the financial crisis in Argentina hold any lessons for the US today? Probably not, but there is an Eph connection. Consider this from February 2005:

In December 2001, shortly after Argentina declared the largest debt default in history, Daniel Occhipinti’s furniture company halted production and let several employees go.

“In 2002, it all ended. Work just died,” says Mr. Occhipinti.

What a difference three years makes. Despite nearly universal predictions to the contrary, Argentina’s economy has survived - and thrived. It grew 8 percent in 2004 and is expected to grow around 5 percent this year. Occhipinti has doubled its sales and workforce and now employs 75 people at its warehouse outside Buenos Aires.

“Business is booming these days,” he says.

Indeed, unemployment is at 13 percent, down from a record 22 percent in 2002. And thanks to a weakened peso, domestic consumption is on the rise, exports are bustling, and tourists are flocking here from all over the world.

Now just one obstacle remains to complete Argentina’s economic comeback: paying - or reneging on - the country’s $100 billion-plus debt. Argentina is currently involved in contentious negotiations with disgruntled bondholders from Miami to Milan, who have scoffed at the government’s offer of 30 cents on the dollar. The 70-cent “haircut” that Argentina is asking creditors to take is unprecedented in modern times. The move, say experts, could rewrite the way debt-ridden countries do business with international lenders, giving them new muscle. But it could also backfire, they say, with Argentina becoming a pariah for future foreign investment.

“What the Argentines are playing with now is the fundamental economy,” says Hans Humes of the Global Committee of Argentina Bondholders in New York, whose 500,000 worldwide members hold some $40 billion in Argentine bond debt.

Mr. Humes is convinced that Argentina can afford to pay twice what it has offered and is anxiously awaiting the country’s Feb. 25 deadline to see if the deal will be sweetened. So far, Buenos Aires has convinced only about one-third of its bondholders to sign on and insists it cannot and will not offer more money. Other bondholders may take the country to court.

“They can take it or leave it. We are not going to change. This is Argentina’s final offer,” President Néstor Kirchner said last Friday. To drive home this point further, the Argentine Congress is expected to pass a law next week that will prevent any further debt-exchange offers, a move that some observers say goes against the promise Argentina made to the International Monetary Fund to negotiate in “good faith.”

“The fact that the Argentines have been so abrasive and so antagonistic toward the creditors completely justifies people going to a court and getting the courts to validate their claims before the Argentines try to strip their rights away,” says Humes.

Hans Humes ‘87 as the whip-hand of global capitalism. Who woulda thunk it? Back in June 2004, Hans was playing it tough.

But with the Argentine economy growing at a 10 percent clip and tax revenue booming, bondholders insist the government can afford to pay more.

”Clearly, there is a political issue here between what they want to pay and what they can pay,” said Hans Humes, co-chairman of the Global Committee of Argentina Bondholders, which claims to represent about $37 billion in Argentine debt. ”Come on, they can afford to pay more.”

Famous last words. Argentina refused to pay more and finally stiffed Humes and his fellow hold-outs. Settlement seems to be imminent. I am not sure if Hans is still involved. He seems to have moved on to other countries.

Nicaragua reached an agreement with creditors to buy back more than $1.3 billion of the country’s foreign commercial debt at 4.5 cents on the dollar.

Nicaragua will buy the securities at a price of 4 1/2 percent of the debt’s face value, the Ministry of Public Credit said today in a statement. Participation by financial institutions exceeded 99 percent, including investors who had won judgments in foreign courts to recoup their funds, the statement said.

The agreement was reached with the help of a grant from the World Bank’s Debt Reduction Facility. The operation is slated to close in mid-December.

“This has been hanging over everyone’s head for a long time,” said Hans Humes, president of GreyLock Capital Management, the biggest holder of Nicaragua’s external debt. “We finally sat down and figured out what was reasonable.”

How long before the Hans Humes’s of the world are buying US debt and trying to figure out if we “can afford to pay more?”