The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

From Argentina to Michigan:
Wall Street Vultures Feast on Debt Crises

Aug 4, 2014

A big financial company called Elliott Management Company is trying to force the government of Argentina to pay it 1.7 billion dollars for Argentine bonds that it bought in 2008 for about 49 million dollars. So this company wants to collect about 35 TIMES the amount it paid for the bonds! As outrageous as that sounds, in 2013 Elliott Management got a U.S. federal appeals court in New York, where a lot of Argentine debt was issued, to rule in its favor. Last month, the U.S. Supreme Court upheld the ruling.

According to the U.S. courts, if the Argentine government does not pay Elliott management in full, it cannot make interest payments to the rest of its other creditors. The U.S. ruling effectively puts the Argentine government in default. If the Argentine government does go into default, it risks that the entire Argentine economy would be cut off from world financial markets, as well as international trade. At the same time, it would also further destabilize an already fragile and shaky global financial system.

All so that one company, Elliott Management, run by multi-billionaire Paul Singer, gets its way. Elliott Management is known as a vulture fund because it runs a racket in order to bleed taxpayers and workers, just like the worst loan sharks and gangsters do.

For Singer’s vulture fund, the Argentine government was ripe for the picking. The Argentine economy had been mired in depression and crisis since the previous international financial crisis hit in 2001. With a huge overhang of debt that it could not pay the interest on, the Argentine government offered its big debtors a deal: it would drastically reduce the principal on their holdings – but it would make it up to them by paying very, very high interest rates, so that in the end those financial companies would still make a big profit.

Of course, the Argentine government tried to play the nationalist card, making it seem like it was standing up to foreign companies and financiers. But the reality was that between 2003 and 2012 the Argentine government dutifully paid out close to 200 billion dollars to its foreign creditors – an enormous drain on the Argentine economy that effectively smashed down the living standards of the working class and poor.

After it had bought Argentine bonds at a steep discount, Singer’s vulture fund wasn’t satisfied with making “only” 300 per cent or more on its original investment, which was what the Argentine government was offering. Instead, along with a handful of creditors, these vultures refused the deal – and then got the U.S. courts to put the hammer down on Argentina.

Singer’s vulture fund has done the same in this country as well. In 2008, while Delphi Auto Parts was in bankruptcy, Singer’s vulture fund bought, for twenty cents on the dollar, Delphi bonds – lots of them. With Delphi under Singer’s control, he threatened to shut it down unless taxpayers bailed it out. Singer was holding big U.S. automakers like GM and Chrysler hostage, because if Delphi shut down, the companies would lack essential parts to assemble their cars. After getting 7.3 billion dollars in bailout money from the federal government, Singer then closed several Delphi plants and laid off 25,000 workers, while making a 3,000 per cent profit!

This illustrates how much governments and courts in this country and around the world dance to these vulture funds’ tune, enabling vultures to reap untold riches, by plundering taxpayer money and destroying jobs and working people’s living standards from Argentina to Michigan and Ohio.