08/17/2014 11:49 am ET Updated Oct 17, 2014

The Obscene Escalation of the Vulture Funds Against Argentina

The one-page advertisement published this week in the Financial Times by the U.S. vulture funds using the tragic situations of Argentinean families as human shields to defend their blackmailing of the Argentinean people is only one more demonstration of their despicable lack of ethics. Hidden behind an anonymous website they use a 77-year-old secretary to pretend that they have a moral stake in the game.
As an expert hedge fund friend was telling me this week that they have the law for them. Not only that: they also have the judge and the Supreme Court supporting Mr. Paul Singer, his Elliott fund. They were also backed by the Nevada courts in their attempts to go after the 123 shell companies of an Argentinean unsavory businessman, Lorenzo Baez, accused of having amassed billions to the detriment of the country.
The rogue Argentinean government.
This post does not defend the attitude of the Argentinean Government and the takeover of YPF Repsol on fallacious grounds that Repsol was not adequately investing while the Government refused to honor its debt and made such financing impossible. Their behavior has had one consistency in business: dishonesty, irresponsibility and absurdity.
Pope Francis has, when he was Archbishop of Buenos Aires, was treated as the devil by President Nestor Kirchner.. He summed it up in one sentence: poverty is a violation of human rights.
Collective Action Clauses must be the law for sovereign borrowers
Since a previous case where the Ovington vulture fund obtained that money allocated by the European Union to Greece be diverted at nominal price, the European Union has decided to make those clauses compulsory in the Euro Area.
Those clauses would have made the action of the US vulture funds impossible: they represent only 8 percent of the Argentinean debt. The other 92 percent have been the subject of an agreement that provides for a reduction of 70 percent of the nominal amount of the Argentinean debt. With the CAC, the decisions of 75 percent of the debt are imposed upon the minority of the debt.
Since 2002, this has been the subject of heated debate.
This is the only solution that will outlaw the vulture funds blackmail.
The Argentinean debt is now in default, because of the vulture funds' legal action. It made a private solution to the crisis impossible.
The net losers are those Argentinean people Paul Singer and his followers shamelessly are using as human shield in his advertisement. This is the capitalist system at its worst.