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

Let our journalists help you make sense of the noise: Subscribe to the Mother Jones Daily newsletter and get a recap of news that matters.


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?

FACT:

Mother Jones was founded as a nonprofit in 1976 because we knew corporations and the wealthy wouldn't fund the type of hard-hitting journalism we set out to do.

Today, reader support makes up about two-thirds of our budget, allows us to dig deep on stories that matter, and lets us keep our reporting free for everyone. If you value what you get from Mother Jones, please join us with a tax-deductible donation today so we can keep on doing the type of journalism 2020 demands.

payment methods

FACT:

Mother Jones was founded as a nonprofit in 1976 because we knew corporations and the wealthy wouldn't fund the type of hard-hitting journalism we set out to do.

Today, reader support makes up about two-thirds of our budget, allows us to dig deep on stories that matter, and lets us keep our reporting free for everyone. If you value what you get from Mother Jones, please join us with a tax-deductible donation today so we can keep on doing the type of journalism 2020 demands.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly 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