I have been reading about the battle to end “vulture funds” today. Vulture funds are funds that shatter the possibility of debt relief, where an investor will buy a defaulted loan from a poor nation, and take them to court, forcing them to pay the loan in full plus interest (even though they couldn’t pay the loan to begin with). What happens at that point, is that these countries that owe the debts, siphon funds off of the aid the government provides to them, and the debt cycle and need for aid only grows. See, it is a catch 22, the money is loaned to them, and they spend it (unfortunately, with a lot of political and governmental corruption involved in that spending), and when they can’t pay it back, the defaulted loan is sold very cheaply to someone who goes to court, and demands that they pay back the full loan with interest (!!!). The problem lies in the fact that these countries are forced to take money that we give them for things like AIDS relief, and use that money to pay off the debt collector (i.e., the vulture), who gets rich in the process, making way more than he invested in the defaulted loan. But why accept the loan, right? Well, these countries are given these loans as a fake promise that they can use this money to step into the 21st century. It is like those low interest, high risk home loans, that allow people to buy houses they can’t afford; they end up defaulting, and losing more than they had before the loan, yet, they are convinced in the beginning that they will be able to get by and improve their lives. It is a vicious cycle.
There is a serious issue here, because this practice, especially with relation to foreign countries and federal funds, is illegal. Currently, there is a call for debt cancellation in these cases, but there are still a few people over here (in the US) getting big bucks from this swindling game. They know these people can’t pay back the debt, yet they force them to with whatever they can come up with; which ends up being the aid we provide in the name of AIDS relief and other federal aid programs.
Even though these people go around buying these loans, and use courts to force these countries to pay back these loans, President Bush can sign a statement locking all federal aid funds into place. This would work to prevent the siphoning of those funds to corrupt government schemes and wealthy debt collectors; but that hasn’t happened yet. I hope that he will, and protect funds like the great AIDS relief that I spoke about a little while back. I can’t believe that people are able to do things like this in the first place, and that the system doesn’t do something to protect those that really need protecting. Until the governments of other nations stop the corruption, and the wealthy vultures stop collecting defaulted debts with interest (debts that the people were never going to be able to pay in the first place), the aid is not going to those that need it, and as such, we aren’t helping the situation at all. That is really depressing, because we really can help, we just have to have a multi-tiered approach, addressing these issues in the process. This is great reporting from Greg Palast, as usual, which is how I found out about all of this. It really makes you wonder what is going on with these uber-wealthy people that literally have no problem taking money from those that simply do not have it, just for the sake of getting richer. When is enough money really enough?
I know that this is going to stir up a few bee’s nests, but I just think that there is a point when you have to say that someone is rich enough, and let that be that. There should be limits on how you can swindle money, and the consequences of your actions should be held accountable. Do I think that people don’t deserve the right to be rich? Of course not! If you are rich, good for you! But, if you gained your wealth by literally taking it out of the hands of the disenfranchised poor, especially in a way that is illegal, or at a bare minimum ethically questionable, should you be allowed to just keep raking it in? I certainly don’t think so. I know that the world isn’t fair, but the least we can do is try to make it more likely to swing in a fair direction. If not, we aren’t really doing anything but making rich people richer, and that certainly is NOT the goal of world wide aid, is it? Perhaps it is just a personal thing, but I don’t think I could sleep at night knowing that I am forcing a foreign government to cough up money that it doesn’t have, just because I could afford to buy their defaulted loan. The government of that country may not suffer (because of corruption, remember), but the people certainly do, and that is something that I couldn’t have on my conscience.
I agree that we should definitely cancel the debts of these poor countries that have suffered from corruption, colonization, and disenfranchisement. Punish those that seek to gain profit from their misfortune, by siphoning funds off of federal aid that we provide them. Or, at a bare minimum, we must prevent them from siphoning off those funds, and make sure that the money goes for what it is supposed to go for. The least we can do, if we aren’t going to stop corruption, is be accountable for the money we are handing out, right?
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