Argentina ruling: U.S. court backs Wall Street vultures

U.S. government actions to promote Wall Street banks, particularly in Latin America, have a long and sordid history.

A highly decorated, retired Marine Corps general, Smedley D. Butler, confessed it quite bluntly in a famous article published in Common Sense magazine in 1935:

“I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. The record of racketeering is long. I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-12. I brought light to the Dominican Republic for American sugar interests in 1916. I helped make Honduras ‘right’ for American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went its way unmolested. … Looking back on it, I feel I might have given Al Capone a few hints. The best he could do was to operate his racket in three city districts. We Marines operated on three continents.”

Recently a federal court in New York extended that same imperialist helping hand to a Wall Street hedge fund. This time the attack is against the nation and people of Argentina and the beneficiary is an Elliott Management subsidiary called NML Capital.

On June 27, Federal Judge Thomas Griesa ruled that Argentina must pay full price to NML Capital on its bonds, amounting to some $1.5 billion.

The Argentine government had earlier negotiated an agreement to avert default by making reduced payments to its bondholders. Some 92 percent agreed, but NML Capital refused the deal. Judge Griesa went so far as to bar Argentina from paying its negotiated debt to its other creditors, which could force the country into default as early as the end of July.

Argentine President Cristina Fernández expressed outrage at the ruling, saying that for NML Capital it “represents a profit of 1,608 percent in dollars. I believe that in all of organized crime there has never been a profit of 1,608 percent in such a short time.”

In effect, the U.S. government is trying to force Argentina to implement harsh austerity measures on its people in order to stuff Wall Street’s coffers.

Doesn’t this sound familiar? Haven’t the federal courts been helping Wall Street banks fill their vaults by squeezing the workers, retirees and community of Detroit through slashing pensions, cutting services, even stopping the water supply to thousands of Detroit homes?

Politicians here are always proclaiming U.S. “sovereignty.” They are invoking it now to justify the detention of thousands of children on U.S. military bases under horrible conditions. These imprisoned migrant youth are fleeing violence in their home countries that was spawned by unbearable conditions imposed by so-called “free trade” agreements with the U.S. that have destroyed their economies and deepened the exploitation of the workers.

So how can a U.S. judge nullify Argentina’s sovereign right to make agreements with foreign debt holders in order to protect its people?

Elliott Management is one of the first hedge funds to specialize in buying up defaulted debt from poor countries — Peru in 1995, Zambia in 2005, the Democratic Republic of Congo in 2012 and the Republic of Congo in 2004 — at a greatly reduced price. Then when these countries try to negotiate a reduced debt payment with their creditors, these hedge funds go to U.S. or British courts demanding full payment. This has provided them with huge profits, many times the amount of their original investments.

Even the Wall Street Journal admits that this strategy “spawned today’s ever-circling colony of so-called vulture funds.” (“What Happens When the Vulture Funds Start Circling,” Wall Street Journal, June 25)

From Greece to Spain, from Argentina to Detroit, the bankers’ greed leaves no options except to unite and fight back. n