by Andrew Hanauer
(A version of this blog was originally published at The Global Citizen, a blog of Global Solutions)
Last Tuesday, Argentina appealed to the US Supreme Court in its landmark case against predatory hedge funds seeking to collect more than $1 billion in old debts. With phrases like “bondholder” and “sovereign debt restructuring” peppered throughout the news coverage of the filing, following this case may not be as easy as following some of the other high profile proceedings before the court. And that’s a shame. Because for millions of people living in extreme poverty, the implications of this case are enormous.
In 2001, Argentina defaulted on its obligations and reached agreement with around 92% of its creditors to restructure the country’s debts. Some creditors held out, however, including a number of hedge funds that had bought Argentine debt for pennies-on-the-dollar before the default, hoping to cash in later on. These funds were participating in a calculated global strategy of speculative profit seeking that threatens the ability of poor countries to emerge from the burden of high levels of debt - behavior that has earned them their colorful nickname: “vulture funds.”
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