Home Today's Paper Most Popular Video Gallery Photo Gallery
Subscription Blog Signin Register
Logo
Saturday, February 24, 2018 08:17:58 PM
Follow Us On: Facebook Twitter Twitter Twitter Twitter

Venture funds: Argentine experiences

By
10th-Aug-2014       
Comments
Share your thought
Post a comment »
Read all () »

Alan Furth :
It is easy to see moral irony in the arguments of those who support Argentina's President Cristina Fernandez de Kirchner's government in the ongoing dispute against a group of so-called vulture funds, led by the highly litigious Elliot Associates. Anyone even slightly familiar with the corrupt shenanigans of Fernandez, her late husband - former president Nestor Kirchner - and their cronies over the last 11 years is entitled to roll their eyes at claims that the interests of the Argentine people motivate Fernandez's government to resist the vulture funds' attempt to get paid in full for bonds the country defaulted on in 2002 (the largest debt default the world had ever seen until then - surpassed only by Lehman Brothers in 2008).
Egregious as the recent past of the Kirchner administration is, what truly adds insult to injury is the Kirchners' earlier history. During the mid 1970s, Fernandez and her husband established a law firm in Rio Gallegos, in the Patagonian province of Santa Cruz. The firm thrived during those years, especially right after a sharp devaluation of the peso in 1980 caused by the disastrous economic policies of the military junta ruling the country at the time. When inflation-indexed rates on mortgage loans soared to sky-high levels, forcing desperate debtors to sell their homes at fire sale prices, the Kirchners cashed in handsomely, enforcing evictions on behalf of several financial houses and banks.
The methods they used for this purpose could easily be classified as "vulturesque." Lawyer Rafael Flores - a fellow Peronist who would become one of the Kirchners' main detractors during the '90s - took up the case of Mrs. Ana Victoria de Aaset, a distressed mortgage-holder who successfully sued the Kirchners for allegedly keeping Asaet's promisory notes rather than shredding them after payment. When Flores ran onto Fernandez right ouside the courtroom and asked her why she and her husband were doing this, she famously answered: "We want to get into politics, and for getting into politics, we need some serious dough." Tony Montana couldn't have said it better.
Sadly, Fernandez's domestic political opponents, who include most local mainstream libertarians, have pathetically sided with the vulture funds, engaging in one of the most outrageous exercises of false free-market rhetoric the country has seen ever since the Menem years.
Their arguments amount to nothing more than crass rehashes of the well-PR'd statements championed by Elliot's Paul Singer and others at the hedge fund community. As Jim Armitage put it in a recent article at The Independent: "The vultures argue that, were it not for the threat of relentless and unflinching court room battles, tinpot dictators, kleptocrats and plain old irresponsible populist leaders have nothing to prevent them racking up huge debts, wasting (or stealing) the money, and then disappearing off into the distance."
The most outrageous fallacy in this line of reasoning is the conflation of the political class of a country with its citizenry at large. Whenever vultures succeed in collecting the full value on defaulted government bonds, the ones who end up paying are, obviously, the taxpayers, the general citizenry of a given country. The local politicians who borrowed the money in the name of the people, obtaining enormous personal financial gains in process, won't contribute to paying those debts any more than the regular Joe who does real work for a living. How can anyone in their right minds think that will discipline the political class into fiscal frugality of any kind? How can anyone claiming to defend any minimally substantive notion of human freedom advocate for socializing the losses of creditors who lend to corrupt, unaccountable governments, effectively subjecting the common people to government-debt peonage on behalf of crony financial operators?
Actually, many "free-market," pro-Elliot pundits are so eager to counter Fernandez's government at any cost that they end up defending Judge Griesa's bizarrely heterodox interpretation of the pari passu clause in sovereign bonds. As financial blogger Felix Salmon recently pointed out, the clause "is a piece of hoary financial boilerplate that means absolutely nothing in a sovereign context."
The traditional interpretation of pari passu by market players in international financial transactions is that it prevents the borrower from incurring obligations to other creditors that rank legally senior to the debt instrument containing the clause. Outside the framework of typical corporate-bankrupcy proceedings, the notion that a pari passu clause implies that equally-ranking debt must be paid equally is an utter fallacy.
No one with a minimum of common sense and intellectual honesty should portray financial operators specialized in extracting rents through unscrupulous legal manipulation as if they were free-market players seeking to enforce fair contractual terms - especially not those who call themselves "libertarians."

Tariff
Add Rate

News Archive

Inside The New Nation

Editorial »

Indian Army Chief`s allegation means complicity of government of Bangladesh


REMARKS by Indian Army Chief, Gen. Bipin Rawat on Thursday that a 'planned influx' of people from Bangladesh into India's north-east is underway as part of a proxy war by Pakistan with support from China, so to keep the area disturbed. Moreover, he also said migration from Bangladesh are happening ...

Sports »

Bronze medalist in the women`s Big Air snowboard Synnott Zoi Sadowski of New Zealand, poses during the medals ceremony at the 2018 Winter Olympics in Pyeongchang, South Korea on Thursday.


.

Entertainment »

Priyanka Chopra terminates contract with Nirav Modi, not suing him yet


Priyanka Chopra has decided to cut ties with billionaire diamond trader Nirav Modi's brand following the news about the alleged banking fraud carried out by him. "In the light of recent allegations, Priyanka Chopra has chosen to terminate her contract with the Nirav Modi brand," a spokesperson of Priyanka, who ...

City »

BNP Standing Committee Member Barrister Moudud Ahmed speaking at a protest rally organised by Khaleda Zia Mukti Parishad at the Jatiya Press Club on Friday demanding release of BNP Chairperson Begum Khaleda Zia.


.

International »

Ex-Trump campaign associates face more charges


AP, Washington  :Dramatically escalating the pressure and stakes, special counsel Robert Mueller filed additional criminal charges Thursday against President Donald Trump's former campaign chairman and his business associate.The filing adds allegations of tax evasion and bank fraud and significantly increases the legal jeopardy facing Paul Manafort, who managed Trump's campaign ...

Front Page »

Amnesty accuses President Trump of HR violations


Human rights group Amnesty International has accused Donald Trump of "hateful" politics and of being a threat to human rights. "President Trump takes actions that violate human rights at home and abroad," the group said. Amnesty put Mr Trump in the same group as the leaders of Egypt, Russia, China, ...

Editorial »

Serving people not making money must be the motto


PHYSICIANS must provide treatment, President Abdul Hamid said to common people at affordable cost so that no one remained deprived of receiving treatment for lack of money. He made the call while addressing the third convocation of Bangabandhu Sheikh Mujib Medical University in the city on Monday. He has also ...

Sports »

Karolina Pliskova of Czech Republic celebrates after she beats Carla Suarez Navarro of Spain during the Dubai Duty Free Tennis Championship in Dubai, United Arab Emirates on Wednesday.


Entertainment »

Alicia Vikander loves `big adventure films`


Oscar-winning actress Alicia Vikander said she loves "independent and arthouse" cinema, but is also attracted towards the big adventure films.The actress, who will be soon seen as Lara Croft in the forthcoming film 'Tomb Raider', also shared that she found training and muscle-building exercise for the role, empowering. "My mother, ...

International »

Merkel calls for Europe to step up to global challenges


Reuters, Berlin  :The European Union must develop a response to growing global political and economic pressures and this will be the spirit of an EU summit this week, German Chancellor Angela Merkel said on Thursday.Merkel pointed to the crisis in Syria and the growing importance of Asian economies as needing ...

City »

SNAPSHOTS ON AMAR EKUSHEY OBSERVANCE


Editorial »

Ekushey tells us to be free and fearless against injustice


THE Nation celebrates 'Amar Ekushey' today with due solemnity and colourful festivities to remember the Martyrs of the 1952 Language Movement. It is a landmark occasion and a day of awakening in the history of Bengali people that gave us the clear realization that we have our own language and ...

Cricket »

Captain of Bangladesh National Cricket (ODI) team Mashrafe Bin Mortaza handing over a crest of honour to Hafiz Yasin Arafat at the Bashundhara International Convention Centre in the city recently. Yasin Arafat became Hafiz-e-Quran in 86 days. He was a student of Tanjimul Ummah Hifz Madrasah of Cox's Bazar. Ahlul Huffaz Foundation Bangladesh arranged the reception programme.


Sports »

Medalists in the ice dance, free dance figure skating (from left) : Gabriella Papadakis and Guillaume Cizeron, of France (silver), Tessa Virtue and Scott Moir of Canada (gold) and Maia Shibutani and Alex Shibutani of the United States (bronze) pose during their medals ceremony at the 2018 Winter Olympics in Pyeongchang, South Korea on Tuesday.


International »

Trump backs improved background checks on gun buys


US President Donald Trump signaled support Monday for improving background gun checks amid mounting pressure for reform in the wake of the Florida school shooting, as the accused gunman appeared in court.Nikolas Cruz, charged with killing 17 people, sat silently with his head bowed during a procedural hearing in Fort ...

 
Items that you save may be read at any time on your computer, iPad, iPhone or Android devices.
 
Are you new to our website? Do you have already an account at our website?
Create An Account Log in here
Email this news to a friend or like someone
Email:
Write a comment to this news