Paul E. Singer and U.S. Hedge Fund Rules the World (And May Destroy It)
By Shlomo Maital
If you believe as I do that increasingly, money rules the world, not ethics, policies, governments, or ordinary people, then this week you got confirming decisive evidence.
A hedge fund manager named Paul E. Singer, right-wing libertarian and Republican, who runs Elliott Management, a $25 billion hedge fund, bought up large amounts of Argentine government bonds after Argentina defaulted on its bonds in 2001 (because the IMF wanted to impose stringent conditions on a bailout loan, a huge mistake). Then he went into U.S. District Court in Manhattan (like a fixed prizefight, he got to choose the venue most convenient and most likely to get a favorable decision) and won a decision from a judge, stating: “unless Argentina pays up the face value of bonds bought by Singer, it cannot legally pay interest on its bonds to its main bondholders”.
The result: Because a $539 million interest payment was not made (it could not be made, because of that District Court Judge, who by the way is ELECTED!), by Argentina, S&P rating agency declared Argentina in default. This likely means that the government of Argentina is barred from raising capital in global capital markets. Argentina’s economy is in recession, in large part due to the Sterling law suit. You cannot run any business, or any country, without borrowing money in capital markets.
Singer has won. Argentina and its 41 million people lose, and so does the world. Why? Because investor panic regarding Argentina will impact other nations, like Portugal, and make their borrowing more expensive.
Argentina’s President Cristina Fernandez de Kirchner has made many mistakes. But this time, the villain is not her but Singer. And America, whose courts allow him to do whatever he wants for personal gain, damn the whole world.
If we do not get control of our lives and our money back from capitalists like Singer, some day Occupy Wall St. will seem like a kindergarten birthday party.