Quote of the Day: Vulture Fund Suing Argentina Is Just a Lonely Defender of the Free Market

For indispensable reporting on the coronavirus crisis, the election, and more, subscribe to the Mother Jones Daily newsletter.


Here is fellow hedge fund manager Daniel Loeb defending Paul Singer, the billionaire owner of the vulture fund that successfully forced Argentina into default because it was insisting on full payment for old Argentine bonds:

He doesn’t get into fights for the sake of fighting. He believes deeply in the rule of law and that free markets and free societies depend on enforcing it.

You betcha. Anytime a Wall Street tycoon is supposedly fighting for deep principles, hold onto your wallet. They don’t become billionaires because of their deep commitment to fair play and the unfettered operation of capital markets. However, there’s also this:

The big question, however, is whether Argentina will ever pay Elliott what it wants. If the firm fails to collect, that would underscore the limits of its legal strategy. There is no international bankruptcy court for sovereign debt that can help resolve the matter. Argentina may use the next few months to try to devise ways to evade the New York court. Debt market experts, however, do not see how any such schemes could avoid using global firms that would not want to fall afoul of Judge Griesa’s ruling.

This is an interesting point. Normally, Argentina would just continue to pay the holders of its “exchange” bonds and refuse to pay the vulture funds that refused to go along with the terms of its bankruptcy and restructuring a decade ago. Elliott and the other vultures would be out of luck. The problem is that Argentina’s payments are funneled through a US bank, and the judge in the case has forced US banks to halt payments.

But in all the articles I’ve read about this, I’ve never really seen an adequate explanation of why it’s so impossible to avoid funneling payments through the US. I get that Argentina can no longer use an American US bank. Also, I assume, they can’t use a big global bank that does business in the US. But surely there are mid-size banks that do no business in the US that could act as payment agents? If dollars were the issue, they could pay off in euros instead. I don’t know what it would take legally for Argentina to switch either payment agents or the denominations of its bonds, but it doesn’t sound impossible. And yet apparently it is. Why?

DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America will move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America will move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate