spotAfrica

spotAmericas

spotAsia Pacific

spotEurope

spotMiddle East

spotSouth Asia


All keywords


Americas keywords:

Argentina (20)

Bolivia (30)

Brazil (87)

Canada (17)

Caribbean (6)

Chile (46)

Colombia (8)

Costa Rica (2)

Cuba (40)

Ecuador (2)

Guadeloupe (3)

Haiti (12)

Honduras (5)

Jamaica (6)

Latin America (42)

Mexico (32)

Minneapolis (5)

Montreal (1)

Nicaragua (7)

Peru (4)

Puerto Rico (1)

Quebec (6)

Seattle (58)

US (1163)

USA (134)

United States (21)

Uruguay (1)

Venezuela (79)

Argentina


Highlight keywords  |Print this articlePrint this article
From: The Socialist issue 821, 6 August 2014: Unite to fight pay robbery

Search site for keywords: Argentina - Debt - US - Government

Argentina: Another debt default

End extortion of vulture markets

Danny Byrne

Thirteen years after the biggest sovereign debt default in history, Argentina has defaulted yet again, on the same debt.

The latest round of crisis was sparked by a US Supreme Court ruling which ordered Argentina to immediately pay $1.5 billion to 'holdout' bondholders. These are the minority of holders of Argentinian debt who refused to participate in the debt restructuring of the governments of Cristina Kirchner, elected in 2010 and her husband in 2005.

The holdouts waged a decade-long legal battle to demand full repayment and the US Supreme Court ruling found in their favour. This represents a momentous victory for private bondholders over national governments, and sets an important precedent.

Vulture capitalists, inclined to ignore the pleas of countries on the abyss of default for a restructuring or "haircut" of debt to save their economies from collapse, will be bolstered internationally.

For socialists and the working class movement, however, it should serve to hammer home the reality that there is no lasting viable solution to debt crises on the basis of capitalism.

The 'solution' of the Kirchner dynasty to last decade's default was previously acclaimed from pro-market quarters as a shining example of how countries can recover from debt crises on a capitalist basis, through negotiation and a later return to the markets.

The rapid unravelling of this much-lauded solution shows that it was built on sand. This should stand as a powerful warning to those in Europe, such as the leadership of Syriza in Greece, who entertain illusions in similar 'solutions', ie within the framework of capitalism.

In some respects, the recent court case represented a showdown between the Argentinian government and super-speculator Paul Singer, whose investment firm NML led the creditors' claim. Singer, a well-known supporter and funder of the US Republican Party, is reported to have a fortune of $1.1 billion and specialises in sovereign debt speculation.

The court's ruling confirms who the laws and courts of capitalism are designed to serve - the Paul Singers of this world. Only a break with this system and a socialist alternative can make the rights of people and their livelihoods come before the right of a multi-millionaire to make more profits.

Whose interests?

This Kirchner government has proved itself unwilling to take such a path. It is talking tough following the breakdown in negotiations, with Finance Minister Alex Killicof, pledging: "We are not going to sign any agreement that compromises the future of the Argentine people".

But it proved willing to bend over backwards to come to a deal with the vultures in the preceding weeks. The government struggled until the last minute to find a solution which could please the bondholders.

However, it found itself caught up in a legal mess, linked to agreements made with those creditors who had accepted its previous restructurings, and was left with no alternative but to default, admitting that to pay the full demands of all creditors at once was simply impossible.

A workers' government would respond to the US court ruling and extortion of the bondholders with defiance and repudiation of the debt in its entirety.

However, this would need to be accompanied by the nationalisation of the banks and financial sector under democratic control, and the implementation of a state monopoly on foreign trade, in order to protect the economy and prevent a flight of capital.

These and other socialist policies would be part of an emergency plan to confront the crisis. Such a plan would be aimed at making the super-rich both at home and abroad pay for the crisis while protecting the salaries and living standards of working class and poor people, and the middle class, against the effects of inflation and devaluation.

Instead of pouring billions into the pockets of bondholders, a massive plan of public works could be put in place to drive genuine economic growth.

If implemented, such policies would gain widespread sympathy and support internationally. This could be translated into the building of an international movement to break with the vulture markets and establish a socialist world.

This is a short extract of an article available in full at www.socialistworld.net







Join the Socialist Party
Subscribe to Socialist Party publications
Donate to the Socialist Party
Socialist Party Facebook page
Socialist Party on Twitter
Visit us on Youtube

LATEST POSTS

CONTACT US

Phone our national office on 020 8988 8777

Email: info@socialistparty.org.uk

Locate your nearest Socialist Party branch Text your name and postcode to 07761 818 206

Regional Socialist Party organisers:

Eastern: 0798 202 1969

East Mids: 0773 797 8057

London: 020 8988 8786

North East: 0784 114 4890

North West 07769 611 320

South East: 020 8988 8777

South West: 07759 796 478

Southern: 07833 681910

Wales: 07935 391 947

West Mids: 02476 555 620

Yorkshire: 0114 264 6551

ABOUT US

ARCHIVE

Alphabetical listing


April 2018

March 2018

February 2018

January 2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999