http://eenbrown.

com/2014/08/25/coonzaton-by-bankruptcy-the-hgh-
stakes-chess-match-for-argentna/
Een Brown: Fighting of the G7 banking vultures and
confronting the austerity scam. Argentina is doing what
Ecuador and Iceland have already done successfully, but what
Greece did not.
Argentna s payng hardba wth the vuture funds, whch have been
tryng to force t nto an nvountary bankruptcy.
he vultures are demanding what amounts to a !""# return on
bonds bought for $ennies on the dollar, defeatng a 2005
settement n whch 92% of credtors agreed to accept a 70% harcut
on ther bonds.
A %& court has backed the vulture funds' but in the middle of
August (")*, Argentina sideste$$ed its +urisdiction by
transferring the trustee for $ayment from ,ank of -ew .ork
/ellon to its own central bank. hat $lay, if a$$roved by the
Argentine 0ongress, will allow the country to continue making
$ayments under its (""1 settlement, avoiding default on the
ma+ority of its bonds.
Argentina is already foreclosed from international ca$ital
markets, so it doesn2t have much to lose by thwarting the %&
court system. &imilar bold moves by Ecuador and Iceland have
left those countries in substantially better sha$e than Greece,
which went along with the agendas of the international
3nanciers.
The upsde for Argentna was captured by Presdent Fernandez n a
natonwde speech on 19th August 2014: "When t comes to the
soveregnty of our country and the convcton that we can no onger be
extorted, and that we cant become burdened wth debt agan, we are
emergng as Argentnes. If I sgned what theyre tryng to make me
sgn .... we woud enter nto the nferna cyce of debt whch weve
been sub|ect to for so ong."
The deeper mpcatons of that nferna cyce of debt cyce have been
expored by Adran Sabuch: Where terrtores were once captured by
mtary mght, today they are beng annexed by debt.
he still4evolving $lan is to drive destitute nations into an
international bankru$tcy court whose decisions would have the
force of law throughout the world. he court could then do
with whole countries what %& bankru$tcy courts do with
businesses5 sell of their assets, including their real estate.
&overeign territories could be ac6uired as the s$oils of
bankru$tcy without a shot being 3red.
Global 3nanciers and interlocking $rivate megacor$orations
are increasingly su$$lanting governments on the international
stage. An international bankru$tcy court would be one more
institution making that takeover legally binding and
enforceable.
At $resent, sovereign governments can say no to the strong4
arm tactics of the global bankers2 collection agency, the I/F.
7owever, an international bankru$tcy court would allow
creditors to force a nation into bankru$tcy, where territories
could be involuntarily sold of in the same way that assets of
bankru$t cor$orations are.
For Argentina, says &albuchi, the likely $ri8e is its very rich
9atagonia region, long a favorite settlement target for e:4$ats.
;hen Argentina sufered a massive default in (""), the G7
mainstream media machine $ro$osed that 9atagonia be ceded
from the country as a defaulted debt $ayment mechanism.
<ebt for erritory5 swa$$ing $ublic debt for government land.
The corporate banksters' dea woud be to transform a $erceived
Argentine $ublic debt default into direct e6uity investment in
which creditors can become land owners where they can
develo$ industrial, agricultural and real estate $ro+ects.
0eding 9atagonia from Argentina was 3rst suggested in )=>!
by heodor 7er8l, founder of the ?ionist movement, as a
second settlement location for what became ?ionist 9alestine.
In 2002, an IMF deputy manager caed Anne Krueger asked: "Shoud
countres ke Argentna be abe to decare themseves bankrupt?"
Krueger's artce was posted on the IMF webste and agged up as
proposng some new and creatve deas on what to do about Argentna.
Wth the %& <0 cor$oration and its Fed money laundry itself
now bankru$t and facing imminent $ublic default, this
American4sourced idea has become contem$oraneously risible
In todays decate post-2008 bankng system, a new sovereign debt
crisis could thwart the cor$orate @lite2s $lans for an orderly
transition towards a new global legal architecture which would
allow orderly li6uidation of 3nancially4failed states like
Argentina.
Argentina2s $resent debt crisis can be traced back to )>11,
when 9resident Auan <omingo 9erBn was ousted in a very
bloody %&C%DCmega4bank4s$onsored military cou$.
9erBn was hated for his insistence on not indebting Argentina
with the G7 mega4bankers. In )>*! he re+ected +oining the I/F.
In )>1E he fully $aid of all of Argentina2s sovereign debt. Fnce
the mega4bankers got rid of him in )>1!, they shoved
Argentina into the I/F and created the 9aris 0lub to engineer
decades4worth of sovereign debt for van6uished Argentina,
something they2ve been doing until today.
/any sovereign countries have been sub+ected to similar
treatment. ;hen the country cannot $ay, the I/F swee$s in
with re3nancing agreements with strings attached, including
selling of $ublic assets and slashing $ublic services in order to
divert government revenues into foreign debt service.
It s worth askng a fundamental common4sense 6uestion5
;hy should national governments indebt themselves
in hard currencies, decades into the future with
global mega4bankers, when they could +ust as well
3nance these $ro+ects and needs far more safely by
issuing the $ro$er amounts of their own local
sovereign currency insteadG
he big bankstersH 3nancial claims on wealth 4 bonds,
mortgages and bank loans 4 are lent out to become somebody
else2s debts in an e:$onentially e:$anding $rocess. -ational
economies have been obliged to $ay their debts by
cutting back new research, develo$ment and new
$hysical reinvestment. his is the essence of I/F
austerity $lans, in which the currency is IstabilisedJ
by further international borrowing on terms that
destabilise the economy at large. &$iraling debt
results in $rice inKation, since businesses have to
raise their $rices to cover the interest and fees on the
debt.
For governments to escape ths austerty trap, they need to spend not
ess, but more money on the tangbe capta formaton that ncreases
physca productvty.
But where to get the nvestment money wthout gettng sucked nto
the debt vortex? ;here can Argentina get funding if the country
is shut out of international ca$ital marketsG he common4
sense res$onse, &albuchi observes, is for governments to issue
the money they need directly.
An aternatve whch can have vrtuay the same ehect s for natons to
borrow money ssued by ther own pubcy-owned banks. 9ublic
banks generate credit +ust as $rivate banks do' but unlike
$rivate lenders, they return interest and $ro3ts to the local
economy. heir mandate is to serve the $ublic, and that is
where their $ro3ts go.
Funding through their own government4issued
currencies and $ublicly4owned banks has been
successfully $ursued by many countries historically,
including Australia, -ew ?ealand, 0anada, Germany,
0hina, Lussia, Dorea and Aa$an.
&overeign nations do need to be able to buy foreign
$roducts that they cannot ac6uire or $roduce
domestically, and for that they need a form of
currency or an international credit line that other
nations will acce$t. ,ut today, a global change is
becoming manifest5 sovereign nations are breaking
away from the dying oil and wea$ons driven %& dollar
as the global reserve currency.
Do we need a new Bretton Woods Accord? Or, as the BRICS seem to be
suggestng, s that exacty what we do not need?
Een Brown's fu text s on her Web of Debt bog here (25.08.14).
#
Mchae Kenny, on August 26, 2014 at 4:30 am sad:
Note Ms Browns defensveness as regards Greece. Argentna was
presented as the poster boy of the vrtues of defaut whch Greece was
to foow. Now, yet another neocon scam has bown up n ther faces!
Ecuador s an o producer. It thus has a vauabe resource to se and
can buy oh credtors wth o or o concessons. Iceand ddnt defaut
on ts soveregn debt. One or more Iceandc banks defauted on ther
prvate debts and were not baed out by the government. As a matter
of aw, those are two totay dherent stuatons. In addton, Iceand s
tny (300 000), roughy the same popuaton as St Lous, haf that of DC
and smaer than the smaest Amercan state. Argentna has 42
mon.
2 0 Rate Ths
Repy
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Coonzaton by Bankruptcy: The Hgh-stakes Chess Match for Argentna
Posted on August 25, 2014 by Een Brown
If Argentna were n a hgh-stakes chess match, the countrys actons
ths week woud be the equvaent of ppng over a the peces on the
board.
- Davd Dayen, Fsca Tmes, August 22, 2014
Argentna s payng hardba wth the vuture funds, whch have been
tryng to force t nto an nvountary bankruptcy. The vutures are
demandng what amounts to a 600% return on bonds bought for
pennes on the doar, defeatng a 2005 settement n whch 92% of
credtors agreed to accept a 70% harcut on ther bonds. A US court
has backed the vuture funds; but ast week, Argentna sdestepped ts
|ursdcton by transferrng the trustee for payment from Bank of New
York Meon to ts own centra bank. That pay, f approved by the
Argentne Congress, w aow the country to contnue makng
payments under ts 2005 settement, avodng defaut on the ma|orty
of ts bonds.
Argentna s aready forecosed from nternatona capta markets, so t
doesnt have much to ose by thwartng the US court system. Smar
bod moves by Ecuador and Iceand have eft those countres n
substantay better shape than Greece, whch went aong wth the
agendas of the nternatona nancers.
The upsde for Argentna was captured by Presdent Fernandez n a
natonwde speech on August 19th. Struggng to hod back tears,
accordng to Boomberg, she sad:
When t comes to the soveregnty of our country and the convcton
that we can no onger be extorted and that we cant become burdened
wth debt agan, we are emergng as Argentnes.
. . . If I sgned what theyre tryng to make me sgn, the bomb woudnt
expode now but rather there woud surey be appause, marveous
headnes n the papers. But we woud enter nto the nferna cyce of
debt whch weve been sub|ect to for so ong.
The Endgame: Patagona n the Crosshars
The deeper mpcatons of that nferna debt cyce were expored by
Argentne potca anayst Adrian &albuchi in an August )(th
article titled I&overeign <ebt for erritory5 A -ew Global Elite
&wa$ &trategy.J
;here territories were once ca$tured by military might, he
maintains that today they are being anne:ed by debt. he still4
evolving $lan is to drive destitute nations into an international
bankru$tcy court whose decisions would have the force of law
throughout the world.
The court coud then do wth whoe countres what US bankruptcy
courts do wth busnesses: se oh ther assets, ncudng ther rea
estate. Soveregn terrtores coud be acqured as the spos of
bankruptcy wthout a shot beng red.
Goba nancers and nterockng megacorporatons are ncreasngy
suppantng governments on the nternatona stage. An nternatona
bankruptcy court woud be one more nsttuton makng that takeover
egay bndng and enforceabe. Governments can say no to the
strong-arm tactcs of the goba bankers coecton agency, the IMF. An
nternatona bankruptcy court woud aow credtors to force a naton
nto bankruptcy, where terrtores coud be nvountary sod oh n the
same way that assets of bankrupt corporatons are.
For Argentna, says Sabuch, the key prze s ts very rch Patagona
regon, ong a favorte settement target for ex-pats. When Argentna
suhered a massve defaut n 2001, the global $ress, including
ime and he -ew .ork imes, went so far as to $ro$ose that
9atagonia be ceded from the country as a defaulted debt
$ayment mechanism.
The New York Tmes artce foowed one pubshed n the Buenos Ares
nanca newspaper E Cronsta Comerca caed "Debt for Terrtory,"
whch descrbed a proposa by a US consutant to then-presdent
Eduardo Duhade for swappng pubc debt for government and. It sad:
|T|he dea woud be to transform our pubc debt defaut nto drect
equty nvestment n whch credtors can become and owners where
they can deveop ndustra, agrcutura and rea estate pro|ects. . . .
There coud be surprsng canddates for ths dea: durng the Afonsn
Admnstraton, the |apanese studed an nvestment master pan n
Argentne and n order to promote emgraton. The proposa was aso
consdered n Israe.
Sabuch notes that cedng Patagona from Argentna was rst
suggested n 1896 by Theodor Herz, founder of the Zonst movement,
as a second settement for that movement.
Another artce pubshed n 2002 was one by IMF deputy manager
Anne Krueger tted "Shoud Countres Lke Argentna Be Abe to
Decare Themseves Bankrupt?" It was posted on the IMF webste and
proposed some "new and creatve deas" on what to do about
Argentna. Krueger sad, "the esson s cear: we need better
incentives to bring debtors and creditors together before
manageable $roblems turn into full4blown crises," addng that
the IMF beeves "this could be done by learning from cor$orate
bankru$tcy regimes like 0ha$ter )) in the %&J.
These deas were deveoped n greater deta by Ms. Krueger n an IMF
essay tted "A New Approach to Debt Restructurng," and by Harvard
professor Rchard N. Cooper n a 2002 artce tted "Chapter 11 for
Countres" pubshed n Foregn Ahars ("mouthpece of the powerfu
New York-Based Ete thnk-tank, Counc on Foregn Reatons").
Sabuch wrtes:
Here, 0oo$er very matter4of4factly recommends that Ionly if
the debtor nation cannot restore its 3nancial health are its
assets li6uidated and the $roceeds distributed to its creditors
M again under the guidance of a NglobalO courtJ (!).
In Argentnas recent tange wth the vuture funds, Ms. Krueger and
the manstream meda have come out n apparent defense of
Argentna, recommendng restrant by the US court.
But accordng to Sabuch, ths does not represent a change n pocy.
Lather, the concern is that overly heavy4handed treatment may
kill the golden goose5
. . . |I| n todays decate post-2008 bankng system, a new and ess
controabe soveregn debt crss coud thwart the goba etes pans
for an "ordery transton towards a new goba ega archtecture" that
w aow ordery qudaton of nancay-faed states ke Argentna.
Es$ecially if such debt were to be collaterali8ed by its national
territory Nwhat else is leftPGO
Breakng Free from the Soveregn Debt Trap
Sabuch traces Argentnas debt crss back to 1955, when Presdent
|uan Domngo Pern was ousted n a very boody US/UK/mega-bank-
sponsored mtary coup:
Pern was hated for hs nsstence on not ndebtng Argentna wth the
mega-bankers: n 1946 he re|ected |onng the Internatona Monetary
Fund (IMF); n 1953 he fuy pad oh a of Argentnas soveregn debt.
So, once the mega-bankers got rd of hm n 1956, they shoved
Argentna nto the IMF and created the "Pars Cub" to engneer
decades-worth of soveregn debt for vanqushed Argentna, somethng
theyve been dong unt today.
Many countres have been sub|ected to smar treatment, as |ohn
Perkns documents n hs bockbuster expos Confessons of an
Economc Ht Man. ;hen the country cannot $ay, the I/F swee$s
in with re3nancing agreements with strings attached,
including selling of $ublic assets and slashing $ublic services
in order to divert government revenues into foreign debt
service.
Even wthout pressure from economc ht men, however,
governments routinely indebt themselves for much more than
they can ever ho$e to re$ay. ;hy do they do itG
Sabuch wrtes:
7ere, ;estern economists, bankers, traders, Ivy Qeague
academics and $rofessors, -obel laureates and the
mainstream media have a 6uick and monolithic re$ly5 because
all nations needIinvestment and investorsJ if they wish to
build highways, $ower $lants, schools, air$orts, hos$itals,
raise armies, service infrastructures and a long list of et
ceteras . . . .
,ut more and more $eo$le are starting to ask a fundamental
common4sense 6uestion5 why should governments indebt
themselves in hard currencies, decades into the future with
global mega4bankers, when they could +ust as well 3nance
these $ro+ects and needs far more safely by issuing the $ro$er
amounts of their own local sovereign currency insteadG
Neobera experts shout back that government4created money
devalues the currency, inKates the money su$$ly, and destroys
economies. ,ut does itG Fr is it the debt service on money
created $rivately by banks, along with other forms of IrentJ
on ca$ital, that create inKation and destroy economiesG
As Prof. Mchae Hudson ponts out:
hese 3nancial claims on wealth M bonds, mortgages and bank
loans M are lent out to become somebody else2s debts in an
e:$onentially e:$anding $rocess. . . . RESconomies have been
obliged to $ay their debts by cutting back new research,
develo$ment and new $hysical reinvestment. his is the
essence of I/F austerity $lans, in which the currency is
Istabili8edJ by further international borrowing on terms that
destabili8e the economy at large. &uch cutbacks in long4term
investment also are the $roduct of cor$orate raids 3nanced by
high4interest +unk bonds. he debts created by businesses,
consumers and national economies cutting back their long4
term direct investment leaves these entities even less able to
carry their mounting debt burden.
Sprang debt aso resuts n prce naton, since businesses have
to raise their $rices to cover the interest and fees on the debt.
From Soveregn Debt to Monetary Soveregnty
For governments to escape ths austerty trap, they need to spend not
ess but more money on the tangbe capta formaton that ncreases
physca productvty. But where to get the nvestment money wthout
gettng sucked nto the debt vortex? ;here can Argentina get
funding if the country is shut out of international ca$ital
marketsG
The common-sense response, as Sabuch observes, s for governments
to ssue the money they need drecty. But "prntng money" rases
outcres that can be dmcut to overcome potcay. An aternatve that
can have vrtuay the same ehect s for natons to borrow money
ssued by ther own pubcy-owned banks. Pubc banks generate credt
|ust as prvate banks do; but unke prvate enders, they return nterest
and prots to the economy. Ther mandate s to serve the pubc, and
that s where ther prots go. Funding through their own
government4issued currencies and $ublicly4owned banks has
been successfully $ursued by many countries historically,
including Australia, -ew ?ealand, 0anada, Germany, 0hina,
Lussia, Dorea and Aa$an.
(For more on ths, see The Pubc Bank Souton.)
Countres do need to be abe to buy foregn products that they cannot
acqure or produce domestcay, and for that they need a form of
currency or an nternatona credt ne that other natons w accept.
But countres are ncreasngy breakng away from the o- and
weapons-backed US doar as goba reserve currency. o resolve the
mutually4destructive currency wars will $robably take a new
,retton ;oods Accord. But that s another sub|ect for a ater artce.
____________________________
Een Brown s an attorney, founder of the Pubc Bankng Insttute, and
author of tweve books, ncudng the best-seng Web of Debt. In The
Pubc Bank Souton, her atest book, she expores successfu pubc
bankng modes hstorcay and gobay. Her 200+ bog artces are at
EenBrown.com.
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