Beijing, 29 Sep (Xinhua) -- The Federal Reserve's new round of interest rate hikes has triggered turmoil in global financial markets. In previous Fed rate hike cycles, U.S. interest groups and financial institutions have joined forces to create debt crises in a number of emerging market countries, taking huge economic benefits from these countries. Among the "toolboxes" of the United States to maintain financial hegemony, the infamous "Vulture Fund" is one of them.
The history of the "Vulture Fund" has maliciously prosecuted sovereign debt and obstructed the debt restructuring of dozens of developing countries such as Argentina, which is not only due to its bloodthirsty nature, but also inseparable from the overall consideration of the US government's connivance and connivance, financial and judicial power, and US national strategy.
In the current turmoil of the global economy, people have more clearly seen the US government and financial giants such as the "Vulture Fund" joining hands to sharpen their knives and harvest global interests.
Malicious Harvesting: The bloodthirsty nature is revealed
A "vulture fund" is a fund that acquires defaulted bonds at low prices and seeks high profits through malicious litigation, so named because of its interest in defaulted bonds like vultures like vultures, which are essentially junk bond speculators. The recognized characteristics of the "Vulture Fund" are cunning, tough, and barbaric, and once they are targeted, it is inevitable to "lose blood and lose flesh".
"Economic terrorists!" Former Argentine President Cristina once denounced the US "vulture fund" in this way. Ten years of hunting, knocking on the bone and sucking the marrow, the nature of the "vulture fund" was revealed in the Argentine debt crisis.
In the 1990s, Argentina took advantage of the low international interest rate environment to borrow heavily and was also infused with the "neoliberal" ecstasy of the United States, and by the time the financial crisis broke out in 2001, the debt was as high as $100 billion, and it was forced to restructure its debt in 2005 and 2010 because it could not repay it, and about 92% of its creditors accepted the restructuring plan. The "Vulture Fund", represented by NML Capital Co., Ltd., a subsidiary of the Elliott Management Company of the United States, took the opportunity to buy the original bonds at a low price in the hands of creditors who had never accepted debt restructuring, and filed a lawsuit in 2005 to demand that Argentina repay the debt in full.
NML Capital purchased a $630 million denomination bond issued by Argentina for about $48 million, equivalent to paying only about 7.6 percent of the denomination of the bond, but demanding a full return, according to Spain's Le Monde.
The Argentine government believes that the "Vulture Fund" did not provide any loans, but only obtained profits by purchasing defaulted bonds, which was essentially debt extortion.
However, due to U.S. judicial intervention, Argentina was unable to properly meet other repayment obligations, and in 2016 the Afghan government was forced to reach an agreement with several major "vulture funds" to repay a total of about $4.65 billion in principal and interest. This amount is equivalent to 0.83% of Argentina's GDP for that year.
Evil Power Protection: U.S. Financial Justice "Escort"
The "prey" of the "vulture fund" is to some extent created by the United States, and its increasingly speculative behavior is also inseparable from the appeasement and partiality of the US authorities. In the 1990s, Menem's government in Argentina launched neoliberal reforms at the "behest" of the United States, culminating in the 2001 financial crisis. After the left-wing government of Argentina came to power, the debt was restructured, and the US "vulture fund" took advantage of the fire, bought bonds at low prices and obtained high returns through US judicial proceedings.
In October 2012, when the Argentine frigate USS Liberty stopped at the port of Ghana, NML seized the frigate through the Ghana Commercial Court in order to blackmail Argentina into repaying its defaulted debts. The Albanian side appealed several times, and the US Supreme Court finally ruled to uphold the judgment of US federal judge Grissa.
In June 2014, the Afghan government transferred approximately US$540 million to the clearing house Bank of New York Mellon to pay the principal and interest due to creditors who accepted the debt restructuring. However, the assets were frozen by Grissa on the grounds that the Afghan side must first pay the default debt of the Vulture Fund. In view of the failure of the Afghan government and the "Vulture Fund" to reach an agreement, the US rating agency helped the S&P downgrade Argentina's credit rating to "selective debt default", which further deteriorated the solvency of the Latin American country.
In this regard, Nobel laureate economist Joseph Stiglitz, a professor at Columbia University in the United States, wrote that a country that is willing and able to repay its debt defaults due to the obstruction of judges is the first time in history that the "Grissa ruling" threatens the normal operation of international financial markets.
Liao Shuping, a researcher at the Bank of China Research Institute, pointed out to the point that the US government could have prevented the "Vulture Fund" from demanding huge compensation through the federal court, but did not take any substantive action, but instead connived and encouraged the "Vulture Fund" to steal Argentine state property.
Zhang Yuewen, a researcher at the Institute of Finance of the Chinese Academy of Social Sciences, believes that the international litigation action of the "Vulture Fund" provides an opportunity for the United States to implement financial hegemony and long-arm jurisdiction. The financial forces of Wall Street have long been closely related to the US Congress and the federal government, and have the motivation and ability to intervene in the formulation of national laws and policies to maintain their unjust enrichment.
According to ABC, Paul Singer, president of the American "Vulture Fund" Elliott Management Company, is a Republican financier and has been called the Republican Party's "most wanted donor."
After Argentina was forced to pay its debts in full to the Vulture Fund, Grissa announced in April 2016 that it would lift the freeze on Argentina's day-to-day accounts. Argentina officially came out of the "selective debt default" and re-emerged as a "normal country" in the international capital market after being deprived of the right to finance the international market for 15 years.
The consequences: deepening the development dilemma of fragile states
The hunt of the "vulture fund" makes the indebted countries pay an incalculable economic price and development costs, directly affects their international market credit and financing channels, and seriously hinders the economies of the indebted countries from stepping out of the quagmire.
Bohoslavsky, a former independent expert on foreign debt and human rights of the United Nations, once said that the "vulture fund" took advantage of the looting, which made it difficult to solve the financial crisis in a timely, fair and orderly manner, delayed the conclusion of a debt restructuring agreement, and aggravated the suffering of the people of the countries affected by the financial crisis.
Former OAS Secretary-General Insulsa said of the Vulture Fund: "A national bankruptcy can do great harm to the poorest, but it is never a 'big deal' for those who are not welcome in global economic activity." On the contrary, the crisis is an opportunity for them. ”
In the five years between the recession in 2012 and the agreement with the Vulture Fund in 2016, Argentina's annual growth rate has hovered between negative 2.5% and 2.7%, while inflation has remained high between 22.3% and 41.1%. Argentina remains one of the most heavily indebted countries in Latin America.
In March 2018, the website of the French Institute of International Relations and Strategic Studies published an article by Pierre Jacquemer, the former ambassador of France to Kenya, Ghana and other countries, pointing out that 32 African countries were entangled with the "Vulture Fund", which bought creditor's rights at low prices and then sued the countries concerned to demand repayment of debts at their original value. In Africa, the success rate of cases such as the Vulture Fund is three-quarters.
According to the Russian news agency in July this year, 47% of the Sri Lankan government's loans come from international financial markets, and its "debt trap" is clearly created by the West. Some of its debt to Westerners was resold to the "Vulture Fund".
In June, protesters armed with slogans and vulture paper puppets stormed the U.S. management company Elliott in New York, strongly condemning the Vulture Fund's consistent predation of fragile states and warning that Sri Lanka's debt would be targeted by such predators.
If there is a "debt trap", the typical operation of the "vulture fund" is to use the rules to create traps.
In order to limit the harm of speculation, allies of the United States, such as Britain and Belgium, have also legislated to crack down on the "Vulture Fund" litigation, but the United States has chosen to tolerate it.
The "Vulture Fund" took advantage of the fire to rob indebted countries but was protected by the US government and the judiciary, which is similar to the US military-industrial complex encouraging the government to ignite fires everywhere and make a lot of war wealth, reflecting the cold-blooded nature of American culture in disregarding the security of other countries for its own selfish interests.
Source: Xinhua News Agency