Colonization by Bankruptcy: High-Stakes Chess for Argentina

[Judi Lynn]

Colonization by Bankruptcy: High-Stakes Chess for Argentina
Posted on Aug 28, 2014

By Ellen Brown, Web of Debt

This piece first appeared at Web of Debt.

If Argentina were in a high-stakes chess match, the country’s actions this week would be the equivalent of flipping over all the pieces on the board.

– David Dayen, Fiscal Times, August 22, 2014

Argentina is playing hardball with the vulture funds, which have been trying to force it into an involuntary bankruptcy. The vultures are demanding what amounts to a 600% return on bonds bought for pennies on the dollar, defeating a 2005 settlement in which 92% of creditors agreed to accept a 70% haircut on their bonds. A US court has backed the vulture funds; but last week, Argentina sidestepped its jurisdiction by transferring the trustee for payment from Bank of New York Mellon to its own central bank. That play, if approved by the Argentine Congress, will allow the country to continue making payments under its 2005 settlement, avoiding default on the majority of its bonds.

Argentina is already foreclosed from international capital markets, so it doesn’t have much to lose by thwarting the US court system. Similar bold moves by Ecuador and Iceland have left those countries in substantially better shape than Greece, which went along with the agendas of the international financiers.
The upside for Argentina was captured by President Fernandez in a nationwide speech on August 19th. Struggling to hold back tears, according to Bloomberg, she said:

When it comes to the sovereignty of our country and the conviction that we can no longer be extorted and that we can’t become burdened with debt again, we are emerging as Argentines.

. . . If I signed what they’re trying to make me sign, the bomb wouldn’t explode now but rather there would surely be applause, marvelous headlines in the papers. But we would enter into the infernal cycle of debt which we’ve been subject to for so long.

The Endgame: Patagonia in the Crosshairs

The deeper implications of that infernal debt cycle were explored by Argentine political analyst Adrian Salbuchi in an August 12th article titled “Sovereign Debt for Territory: A New Global Elite Swap Strategy.” Where territories were once captured by military might, he maintains that today they are being annexed by debt. The still-evolving plan is to drive destitute nations into an international bankruptcy court whose decisions would have the force of law throughout the world. The court could then do with whole countries what US bankruptcy courts do with businesses: sell off their assets, including their real estate. Sovereign territories could be acquired as the spoils of bankruptcy without a shot being fired.

More:
http://www.truthdig.com/report/item/colonization_by_bankruptcy_high-stakes_chess_for_argentina_20140828

[Demeter]

1. Fuck the banksters and hang them from lampposts.

Then there will be peace AND plenty.

[Judi Lynn]

2. Banks and Investors Challenge Predatory Funds

Friday, August 29, 2014 - 4:45pm
Banks and Investors Challenge Predatory Funds

Solutions Fall Short of Comprehensive Protection for Poor Countries

WASHINGTON - The International Capital Market Association (ICMA), a group of banks and investors, released a new debt framework this morning aimed at reducing the ability of predatory funds and hold-out investors to undermine debt restructurings. The plan was created after meetings convened by the US Treasury Department in the wake of Greece's debt restructuring and comes in the aftermath of the landmark debt case between Argentina and NML Capital.

"The actions of ICMA are impressive," said Eric LeCompte, Executive Director of the religious anti-poverty group, Jubilee USA. "It really shows there is a global consensus to stop this predatory behavior."

The ICMA's plan would use contract clauses to bind all bond-holders to any debt restructuring agreement. Under the plan, the "pari passu" or parity clauses would require would-be hold-outs to accept restructured bonds approved by the majority of creditors. The ICMA plan states that all bondholders must accept a deal approved by 75% or more of a country's creditors, a clause that would have prevented Argentina's hold-outs from litigating for full repayment. The International Monetary Fund is set to propose similar guidelines in late September.

"While this is another step in the right direction, it doesn't solve the immediate problems. Without statutory approaches the behavior won't be slowed down for 12 to 15 years," noted LeCompte.

The Argentina/NML precedent could have a global impact. Last month, two hedge funds successfully sued the Democratic Republic of the Congo (DRC) for $68 million, including roughly $50 million in interest on loans dating back to the early 1980's. According to United Nations figures, the DRC is the world's second-poorest country. Meanwhile, the Caribbean island nation of Grenada is currently facing a pari passu lawsuit in US courts.

More:
http://www.commondreams.org/newswire/2014/08/29/banks-and-investors-challenge-predatory-funds