Bankers Suck Lifeblood from Argentina
• Argentine people battling piratical plutocrats behind economic genocide of nation.
By Ronald L. Ray —
Paul Singer is not a nice guy.
The Jewish billionaire head of Elliott Management Corp. and a few mega-rich vulture fund managers have no problem with the likely economic destruction of the sovereign nation of Argentina, birthplace of Pope Francis.
By demanding full value for defaulted Argentine bonds they purchased for a pittance and refusing to accept a reasonable settlement, the unscrupulous profiteers may have forced the South American country to the brink of bankruptcy. If they succeed in their piratical efforts, these plutocratic poobahs will almost certainly cause the total collapse of the struggling Argentine economy, creating rampant poverty, joblessness and chaos. Already in 2006, commentator Adrian Salbuchi, at Canada’s Global Research website, likened this to “financial genocide and terrorism.”
But the story currently reported by friend and foe alike is erroneous. Although it is widely asserted that Argentina defaulted again on its sovereign bonds at the beginning of August, this is untrue. According to information provided by the Argentine embassy in Washington, D.C., the country continues to make timely payments to bondholders agreed upon during its earlier debt restructuring negotiations, except to the few holdouts still litigating. Eighty-four-year-old U.S. District Judge Thomas Griesa, however, has blocked all transfer of those funds by United States custodial banks to the bondholders unless Argentina capitulates to his bizarre rulings in favor of the vultures. Griesa’s illegal and extortionary move, if acceded to, would exhaust Argentina’s U.S. dollar reserves and bankrupt that nation.
Co-conspirators in the effort to ruin the South American country are a small group of ruthless hedge funds that specialize in buying distressed bonds and other debt for pennies on the dollar, and then suing the government or corporate issuers for full face value. Singer—one of the GOP’s largest and most powerful fundraisers—and Elliott subsidiary NML Capital Ltd. have led the attack by the vultures.
Also involved are Aurelius Capital Management, run by Mark Brodsky, James Dondero’s and Mark Okada’s Highland Capital Management, Fidelity Investments, owned by Edward C. Johnson III and the Johnson family, and the ubiquitous Goldman Sachs.
Here’s the background. In 2001, following unsuccessful market reforms and a four-year economic depression, Argentina defaulted on its sovereign bonds. In 2005 and 2010, after much litigation, the Argentine government was able to restructure its debt with almost 93% of bondholders for less than 30¢ on the dollar. Along the way, Argentina for some reason accepted U.S. jurisdiction, and the remaining holdouts, led by Singer and NML, sued in U.S. District Court in New York. In 2013, Judge Griesa ruled for the vulture funds, based on a novel misinterpretation of standard legal language employed worldwide by bond issuers.
The ruling was upheld this past June on narrow grounds by the U.S. Supreme Court, despite interventions by the Obama administration and several others who pointed out the incredible dangers to world financial stability resulting from Griesa’s decision. Now, even a single holder of U.S. dollar-denominated debt can run roughshod over an entire nation, with catastrophic consequences for its people. Apparently, contracts are more important than a country’s survival. America could easily become one of those countries, and lose its reserve currency status, as well.
If Argentina were to submit now to a few Wall Street weasels, its own laws would require it to pay the full amount of debt even to those who accepted the 70% “haircut,” ballooning the debt to $120 billion and bankrupting the nation. Their stressed economy would collapse.
The disturbing part is that several holdouts, like Singer’s NML, bought 2001 defaulted bonds as late as 2008, after the 2005 restructuring, at steep discounts. If they prevail, they stand to make an exorbitant 600% profit from the misery of the Argentines.
The vultures—particularly NML and Aurelius—even refused a purchase offer from a group of international banks. When their intransigence contributed to a failure of negotiations with Argentina, and Griesa blocked further debt payments, the private International Swaps & Derivatives Association—15 megabanks and funds, including Elliott and Goldman Sachs—falsely declared Argentina in default. This seemingly triggered debt swaps, from which the vultures may have also profited.
According to Reuters, Argentine cabinet head Jorge Capitanich declared on August 14 that his nation is “in the hands of an international financial power comprised of small, voracious interests that forma real international mafia” and “The world has to say ‘enough’ to the vultures. They are trying to harm the Argentine people and violate our sovereignty.”
Because sovereign governments cannot file for bankruptcy protection like individuals and corporations, and banksters continue to block any suitable sovereign default resolution mechanism, perhaps Argentina should look to the BRICS nations (Brazil, Russia, India, China, South Africa) for assistance. Their recently instituted New Development Bank and Contingent Reserve Arrangement may provide a serious alternative means for issuing and paying Argentine sovereign debt. Then, free of the usurers, Argentina could hope for real economic growth and tell the vultures to eat crow.
Ronald L. Ray is a freelance author and an assistant editor of THE BARNES REVIEW. He is a descendant of several patriots of the American War for Independence.