Who Hijacked Our Country

Tuesday, February 27, 2007

Vulture Funds

I wasn’t familiar with this term until CoolAqua posted about it. What are Vulture Funds? Think of the sleaziest, most immoral economic activity you know of — loansharking, blackmail, selling heroin to 3rd graders, etc. Now try to imagine this activity on a global scale, and you just might start to approach the coldblooded amorality of Vulture Funds.

A Vulture Fund is a company which buys up (very cheaply) the debt of a bankrupt third world government when that debt is about to be written off. Then the company will sue that government for the full amount of the debt, plus interest. They might end up collecting ten times the amount they originally paid to buy the debt.

Zambia was a recent victim. The average wage in Zambia is just over a dollar a day. A vulture fund paid $4 million to buy up Zambia’s debt. Now they're suing the Zambian government to extort $40 million from one of the poorest countries in the world.

A spokesperson for Jubilee Debt Campaign said “Profiteering doesn’t get any more cynical than this. Zambia has been planning to spend the money released from debt cancellation on much-needed nurses, teachers and infrastructure: this is what debt cancellation is intended for, not to line the pockets of businessmen based in rich countries.”

According to the Jubilee Debt Campaign’s website, the world’s most impoverished countries are paying over $100 million in debt repayment every day to the world’s richest countries. Is this right?

Gordon Brown of the International Monetary Fund said “We particularly condemn the perversity where Vulture Funds purchase debt at a reduced price and make a profit from suing the debtor country to recover the full amount owed — a morally outrageous outcome.”

Vulture funds were invented by Paul Singer, an American billionaire. His latest venture: he paid $10 million to buy up a debt from the Congolese government. He's now suing the Congo to collect $400 million for that same debt.

Paul Singer has been George W. Bush’s largest contributor. He's donated a total of $1.7 million since Bush’s first presidential campaign. Now, in case Rudy Giuliani is your favorite Republican — he's a “maverick,” he's a “moderate” — Giuliani is now Paul Singer’s favorite project. Singer has pledged at least $15 million for Giuliani’s presidential campaign.

Capitalism — like every “ism” — has some ugly stepchildren. But vulture funds are the ugliest stepchild I’ve ever seen.

Labels: , , , , , , ,


Blogger Praguetwin said...

Sick, sick, sick, cynical, and sick.

But hey, aren't market forces supposed to solve all of our problems?

February 28, 2007 at 3:24 AM  
Blogger Tom Harper said...

Prague Twin: Yup, it's sick all right. Market forces can solve a lot of things, but they sure have their ugly side too.

February 28, 2007 at 10:17 AM  
Anonymous JollyRoger said...

There are bottom feeders in this country that are doing the same thing.

The good folks at Asset Acceptance Corp are pursuing my ex-wife for a debt she didn't pay about 10 years ago (and they apparently bought post-writeoff.) They've made contact with me several times, due to our regrettable former association. But as bad as my feelings remain towards my ex, I'd rather eat dirt than help those bottom feeders find anything out about her.

February 28, 2007 at 3:42 PM  
Blogger Tom Harper said...

Jolly Roger: Yeah, some of those debt collectors are beyond persistent. And there's nothing they won't stoop to.

February 28, 2007 at 4:27 PM  
Blogger J. Marquis said...

Good post, Tom. I had never heard of this.

February 28, 2007 at 5:19 PM  
Blogger Tom Harper said...

J. Marquis: Thanks. Yeah, I was pretty shocked when I first read about this. This has to be the most coldblooded lowlife activity I've heard of yet.

February 28, 2007 at 7:08 PM  
Anonymous Anonymous said...

What's to stop those countries from saying hell no, or declaring war, or shooting the collectors?

Would our Government back this up with troops?

Seems to me Countries default and start all over again all the time.



March 2, 2007 at 11:00 AM  
Blogger Tom Harper said...

Erik: I'm not sure where the enforcement would come from. International courts have ruled both ways: sometimes in favor of the vulture fund group and sometimes in favor of the debtor country. I doubt if the military would get involved; the countries are probably afraid they won't get any more loans or foreign aid if they don't pay up; or their assets could be frozen by an American or European bank.

March 2, 2007 at 5:25 PM  

Post a Comment

Links to this post:

Create a Link

<< Home