Can countries go bust? IMF created new form of
modern mass slavery
Adrian Salbuchi is a political analyst, author,
speaker and radio/TV commentator in Argentina(AFP
When Argentina sank into its worst financial,
economic and social crisis in late 2001/2002 forcing it to default on its
unsustainable Sovereign Public Debt, Anne Krueger - at the time the
International Monetary Fund’s (IMF) first deputy manager - was very
straight-forward about the whole matter. She proposed introducing the
concept of bankruptcy of entire countries as a means to, above all, afford international
creditors fullest protection. One can only wonder how horrific debt crises
caused by artificially created unsustainable debt burdens could ever be
resolved by taking on/imposing ever higher, heavier, long-term debt.
Chapter 11 Bankruptcy for
Nation-States!
A Leading Case…
That revolutionary proposal ended up not being
used on Argentina at the time, mainly because successive local caretaker
governments ended up doing the global mega-bankers’ dirty work for them.
Today, with a new crisis looming for Argentina, it appears that the 'Chapter
11 for Nations' concept is back on the agenda. Will Argentina become a
leading case in macro-managing such a process?
Those were stormy times for Argentina and its
creditors. But when President Néstor Kirchner took office in mid-2003,
the global mega-bankers were able to quickly agree with him on a scheme whereby
Argentina would come out of its debt default in an “orderly manner” (for
the bankers, that is…). Since then, the money began flowing again to
mega-banker coffers big time!
In June 2005 a hodgepodge of more than 127
public debt bonds was replaced with just three new bonds that rolled over
Sovereign Debt as far as 42 years into the future; the key bond series being
adjustable by Cost of Living, which in Argentina means inflation. This
explains why the Kirchner government have tampered with official inflation
statistics all but destroying the credibility of the local statistics office,
INDEC.
At the time, however, around 20% of bondholders
did not agree to play along. They clumped together as a strongly
leveraged group of so-called “hold-outs” – mostly vulture hedge-funds
like the Elliott Management Group - suing Argentina repeatedly so that their
original bonds’ capital and interest yields are paid to them. Thanks to a
series of Second District South Manhattan Court of Appeals sentences by Judge
Thomas Griesa favouring Plaintiffs, these vulture funds now demand their pound
of flesh.
What’s the idea?
In an article published in the CFR’s official journal “Foreign Affairs” over a decade ago (July/August 2002), former US government and Federal Reserve Bank officer Richard N. Cooper backed the country bankruptcy factor supporting Ms Krueger's “bold suggestion” whereby “under certain conditions a government's international debt repayments should be temporarily suspended while negotiations take place on restructuring that debt.” With her statement, the IMF officially endorsed the radical suggestion of introducing an international legal framework addressing country bankruptcy as a way of “improving the international financial architecture”.
In practice, as the IMF’s No. 2 officer, Krueger’s proposal was to introduce a sort of Chapter 11 mechanism permitting orderly management of the transition of countries defaulting on their sovereign debts, back into paying by steering their Nation-States into controlled national bankruptcy.
The implicit objective is to ensure that Sovereign Bond creditors – hedge funds, vulture funds, giant megabanks like Goldman Sachs, Bank of America, CitiCorp, JPMorganChase, HSBC, and the IMF itself – can exert huge leverage taking priority in cashing in on the monies sucked out of a Nation’s taxpayers’ (workers’), central banks, mineral, oil & gas wealth, and other resources and reserFP Photo /
In recent years, Néstor Kirchner’s ill-fated
June 2005 Debt Mega-Swap began backfiring on Argentina creating all sorts of
trouble for the country, that included the attachment of public assets
abroad. Notably, the high profile arrest for over two months of the Argentine
Navy’s School Vessel – ironically named “Libertad”; Liberty – in a
port in Ghana with its full crew on board, heeding one of the New York Court’s
attachment orders.
A new showdown seems to be fast approaching as
Argentina has been ordered to pay up or else. This is making key global
players fidget uncomfortably in their chairs. Although the global banking
elite would love to put Argentina up against the wall, they must however be
cautious regarding the precedent this would create that could bring mischief to
on-going debt restructures in other parts of the world, especially in the
European Union.
That explains why President Obama who had said
he would support Argentina, then decided not to do so. The IMF’s
Christine Lagarde also said she would support Argentina, but then changed her
mind… twice. The French government who were not expected to make any
friendly gestures, now speaks in support of the troubled South American
country…
So, what’s up? Basically, that Anne
Krueger’s concept of setting up the international legal framework that would
allow bankruptcy procedures to be imposed on whole nations is again in the
forefront.
That would “legally” permit turning
Argentina upside down so that it not only gives up every last Dollar but, more
importantly, its immense natural resources, a most attractive prospect for the
Global Power Elite, as long it does not wreak havoc or derails their long-term
plan of the controlled deconstruction of sovereign nation-states – Arab and
(coming) Latin American “Springs” included - as part of the coming World
Government they are engineering
Argentina’s Pound of Flesh
Argentina pulled out of its 2001 default thanks
to President Kirchner’s heeding of all global mega-banker demands, a fact
eloquently symbolized when in January 2006 Mr Kirchner paid to the IMF the FULL amount
allegedly owed to them by Argentina: almost U$S 10 billion in hard cash with no
write-downs, in exchange for absolutely nothing! Sovereign debt indeed acts as
a chronic infection that conditions everything in Argentina.
Alas! As with all chronic infections you can
bring down the fever for a short while but as soon as you run out of addictive
meds, or catch a new cold, you´re again running a full-fledged infectious
fever.
Eight years later, this is Argentina’s sorry
state: annual inflation topping 30%; growth slowing down dramatically; total
government clampdown on the purchase of foreign currencies for imports, travel,
tourism and other needs; government tampering with economic statistics;
slumping popular support for Ms Kirchner’s… Add to that rampant corruption and
public mismanagemenBut this was no accident, for Argentina’s chronic debt
crises has made the country bite the dust under a Catch-22 trap for many
decades. When in July 2000, a little over a year before the country’s collapse,
a sector inside Argentina’s Catholic Church helped organize a “Jubilee Year”
in Congress centering on the country’s ballooning public debt crisis.
This prompted Cardinal Héctor Aguer, Archbishop of La Plata (Argentina), to say
that continuing on its present path could only lead to Argentina’s demise
as a sovereign nation, adding that “one can almost imagine the words that
will be inscribed on Argentina’s tombstone: “She lived paying; she died owing”.
This echoed Ralph Waldo Emerson’s words, “They say the world is close to
bankruptcy; that the world owes more than what the world can pay…”
Solve et coagula
Now the Global Power Masters appear to be keen
on refloating the whole “Chapter 11 for countries” idea. But they
must do this with great caution lest they end up shooting themselves in the
foot, because if Argentina is to be made an example of by a New York Court
ordering Argentina to pay vulture funds who did not accept the 2005 Debt
Mega-Swap, that example could spill over not only into countries like
Greece, Portugal and Cyprus, which mega-bankers could macro-manage, but also
Spain and Italy – even France – which is a totally different and more
complex ball game that could even sound the untimely death-knell of the Euro
earlier than what the global Elite want.
Remember: the Elites pushing all nations
towards World Government need to engineer the CONTROLLED demise of Sovereign
Nation-States; and the CONTROLLED demise of municipal governments like Detroit,
Los Angeles, Washington DC and 120 other US cities earmarked for bankruptcy,
where they propose applying constructive Chapter 9 public bankruptcy conditions
rather than Chapter 11 designed to “orderly” tear apart and gobble up
private companies.
The question is whether declaring nations, provinces,
states and municipalities bankrupt and ripe for liquidation is the next Wave of
Change that will erode traditional public structures, thus paving the way for
that coming World Government. A long-term process echoing the adage of
the alchemists of old: “Solve et Coagula” – Dissolve and Re-build –
which, by the way, ties in with the British Fabian Society’s idea of doing
things gradually and unnoticed rather than suddenly and painfully.
For one of history’s lessons from the failed
Marxist revolutionary experiment of the 20th Century is that stable
far-reaching change cannot be imposed overnight; better to drive change
gradually, seducing people into accepting it. Just like the proverbial
frog which if thrown into boiling water will jump off and survive, but if
placed in lukewarm water slowly heated up, will cook to death without realizing
it.
Finally, the obvious question is: why does just
about every country’s public sector – Argentina, UK, Italy, Mexico, US, France,
Brazil, Spain, Italy, Netherlands, Thailand, Nigeria… - owe so, so very much
money to the same supranational private sector banks: Goldman Sachs, CitiCorp,
Lazards, Bank of America, HSBC, JPMorgan Chase?
Gregg Easterbrook eloquently described the
roots of the problem in an article published in Reuters on 7th July 2011: “Governments
in Greece, Portugal, the United States and elsewhere are borrowing, and often
wasting, money at a reckless pace. Why do banks and financial markets
cooperate? Because there’s something in it for them. They keep a little
slice of the public money being borrowed or wasted. This is the ‘Sliver
Strategy', and it underlies the ways many of the Western world’s wealthy
institutions relate to government: Only a sliver. But the more that is
borrowed, the larger the sliver becomes….”
This begs the question “why did big banks
underwrite the liars’ loans that caused the housing bubble? Because they took
origination fees and other payments, then passed the toxic debt along to
taxpayers. The greater the loan volume the larger the sliver — and most
of the slivers ended up in the pockets of the banks’ top management.”
So, ready or not, here comes the New Wave:
Bankruptcy of “failed states…!”
See you in Court…
Adrian Salbuchi for RT
RT 09/08/2013
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