Warning: Creating default object from empty value in /home3/tandem/public_html/golemXIV/wp-content/themes/canvas/functions/admin-hooks.php on line 160

Argentina and America – of Vulture Funds and Justice. Part Three

In parts one and two I looked at how Argentina came to default and at how Vulture funds manage to take entire nations to court and contrive to enforce court  judgements upon them. They were concerned with history and the law of sovereign defaults. In this last part I want to look more broadly at the moral swamp out of which our spires of legal imperialism have grown.

It focuses on the moral weakness of trumpeting the rule of law and how we treat people equally, but only doing so, only applying the laws and principles, selectively, to the cases where we expect to benefit and then suspending our interest in cases that might go against us.

Sub-level Four

One of the things Judge Griesa, in his ruling against Argentina, lamented was the way it had taken 10 years to finally force Argentina to pay up.

Oh, what it must be like to have the moral high ground.

Back in 1993  the indigenous people of Ecuador filed a lawsuit against the American oil company Conoco alleging that the company had polluted and despoiled their land and water. It was, in fact, the case that the area had been heavily polluted, especially the rivers. It was the case that in those areas Conoco had been a major and sometimes the only large industrial concern. It was also the case that the pollution that had occurred was typical of oil drilling and oil production activities. In 2001 Texaco who had bought Conoco admitted that its operations had dumped 16 billion gallons of the highly saline and toxic water, that is a by-product of drilling, in to the forest’s rivers.  When the oil company left the area, it left behind around 900 open and untreated  waste pits.

The case filed against Conoco alleged the company had knowingly used sub-standard equipment and practices, including waste treatments which the  company knew were so inadequate they would have been illegal in the USA.

For over 10 years Conoco denied guilt or liability and refused to pay recompense. When it was clear that a case would be filed against them Texaco/Conoco lobbied hard – spent hard cash – to make sure the case was NOT heard in an American court but in Ecuador. Cynics at the time suggested this was because the company had calculated that buying an Ecuadorean court and judge would be easier and cost less than buying the same back home. It is certain that a US court battle would have cost more than one in Ecuador.

But then the unthinkable happened. In 2011 the court in Ecuador found against Texaco/Conoco and ordered the company to pay $18.2 billion in costs and compensation. The company rejected the ruling and appealed. The Appeal Court rejected the appeal and upheld the original ruling finding against the company again.

Texaco/Conoco’s response  was to refuse to pay and instead to declare,

“The Ecuador judgment is a product of bribery, fraud, and it is illegitimate … We do not believe that the Ecuador judgment is enforceable in any court that observes the rule of law,”

If Texaco/Conoco had lost in an American court would they have been so quick to assume and declare, they could ONLY have lost because the court must have been bribed and the process corrupt? It seems to me this is rather blatant racism. If the white man loses in a brown people’s court then..well… you know those brown people , corrupt and on the take. Unlike Western Oil companies obviously.

Now where has been the moral indignation over Conoco refusing to obey a court decision?  In the financial and even popular press Argentina is cast as morally in the wrong for refusing to obey a lawful ruling, but in those same papers I have read hardly a word about Conoco.  Is this Pari Passu?

Well in one rather fun aspect it is. The problem for the Vulture Fund was finding a way to enforce its home court ruling. It was the same problem for Ecuador. When Conoco left Ecuador it made sure it left no valuables, no assets behind. Nothing for Ecuador to seize.

The break through for Elliot Associates in getting its money was to find a way to tap in to Argentina’s assets as it tried to use them to pay the bond holders it had settled with. The trick was to find that those assets would be passing through a NY bank and get at the bank.  So in a delicious parallel Ecuador has found a way of getting at an oil company which is richer than it is. And it has done it with Argentina’s help. As reported in CorpWatch

Adrian Elcuj Miranda, a judge in Buenos Aires, has ordered the seizure of Chevron’s assets in Argentina, to force the company to pay a $19 billion penalty for polluting the Amazon in Ecuador.

You’ll note the ruling is against Chevron. Chevron bought Texaco/Conoco a while back. Chevron is now the second largest U.S. oil company after Exxon. The report goes on,

If Elcuj’s ruling is enforced, Chevron may forfeit as much as $2 billion in Argentine assets and also lose roughly $600 million a year in revenue from ongoing operations in that country, according to estimates by the plaintiffs.

Why Argentina is doing this may not be entirely simple or altruistic. But it does at least have a certain Pari Passu about it, does it not?

As one of the plaintiffs said,

“We have fought now for almost two decades to correct the injustice created by Chevron in Ecuador,” commented Pablo Fajardo Mendoza, the lead lawyer in the lawsuit, who grew up in the oilfields polluted by Texaco. “While Chevron might think it can ignore court orders in Ecuador, it will be impossible for Chevron to ignore court orders in countries where it maintains substantial assets.”

It seems to me the parallels could hardly be clearer, with two exceptions. Elliot’s case against Argentina is for the benefit of a Vulture fund only and to the detriment of a nation AND the rest of its creditors. Ecuador’s case and its Argentine extension is for the benefit of a nation and its people, and to the detriment of a polluting global corporation. And while Argentina’s original default is unfortunate, it is accepted  that default can and does happen in the normal course of business. Massive despoliation and pollution, on the other hand, is NOT an accepted facet of doing business.

If we in the affluent countries of the North wish to lecture others on moral probity and the rule of law and rub terms like Pari Passu in their faces then perhaps it might be a good idea for us to actually live up to what we preach? The trumpeting of Pari Passu rings rather hollow to me when it is only applied very selectively.

Striking back from the bottom up

For those feeling this has degenerated in to an anti American rant please bear with me. The American government – some parts of it at least – argued against Elliot’s Vulture tactics. The American courts have also not been terribly friendly towards Chevron/Conoco/Texaco’s sudden enthusiasm for a new trial in the USA after they lobbied so hard to avoid a US trial in the first place.

My argument is not with ‘America’ as if it were one single entity. My argument is with American corporate power and how it uses the courts, and fears little or no criticism from the press. Which by now is largely corporate owned or advertising dependent anyway.

If you remember I wrote a couple of articles called The Eurofiscal Corruption contest. Consider this an honourary US entry.

Americans like to portray themselves as moral and fair and their nation as a place where justice and the rule of law prevails. But abroad American corporations have operated as colonial powers. As have ours in Europe. Global corporations, American and European, operating in poorer nations especially, expect to buy those whose compliance they need and simply ignore laws they don’t like. Expensive lawyers can tie up any objections in pointless and endless legal battles for a fraction of the benefits that came from breaking the law.  They have become used to being above the law. The US citizen, especially I think, has been either largely ignorant, thanks to the best efforts of the US media to keep them that way, or has just not cared.

When BP polluted the Gulf Coast of The USA there was widespread outrage at BP’s corporate arrogance and guilt. And quite right too. BP deserved everything thrown at it and more. But where was the outrage and press campaign over Conoco? Or for that matter over Union Carbide in Bhopal. Thousands died in Bhopal and the US response, governmental as well as corporate, was to fly the Union Carbide chief out of the country and stonewall all enquiries.

Now however US corporate power, led by financial power, is bringing those habits back home. The rule of law? What happened to the robo-signing fraud?  Swept aside or talked till it died. What happened to all those threatened court actions from all those State Attorney Generals? Not a lot.  What happened to the cases brought against Citi, or Goldman or JPMorgan or Wachovia or even HSBC?  Mostly token fines and no-admission-of-guilt settlements.

For decades too many citizens of the United States and Europe have turned a deaf ear to injustices as long as they happened to someone else and might have benefited ‘our’ interests. But those ‘interests’ have become used to being above the law and are importing their habits back home. Now it will be the American and European people who find it is one rule for the global companies and banks, and another for ordinary citizens.

I think perhaps Americans and the rest of us should look to Argentina for both a warning of what could happen to us – I think this is particularly true for countries like Greece who are on the cusp of the same exact path, but also for inspiration of how nations and their people can strike back.

What I like about the Argentine ruling to sequester Chevron/Conoco assets and profits is that it points how global companies, even banks have assets and assets can be seized. Argentina has been using the idea quite a lot.

Only a few weeks ago the Argentine government nationalized the formerly national oil company, YPF, which was sold off in the era when Argentina was being looted by its creditors. The oil company  ended up owned by Spain’s Repsol oil company. Spain is now furious.

The chairman of Spain’s Repsol told a Spanish newspaper he still hoped for an agreement with Argentina,

“to compensate us for that which belonged to us.”

“That which  belonged to us”? You could not make this stuff up. Irony? Whatever the intricacies of the legal arguments about nationalization I surely can’t be the only one to find a wonderful, poetic justice in hearing Spain cry about how someone stole treasure FROM them in S. America. That’s not a crime that’s Karma for all those tons of stolen gold and silver.

Argentina is showing that what companies can do, so can nations. They use the courts to sequester assets. So can we.

Of course you could ask will fighting back, as Argentina is doing, work? Won’t such action backfire on Argentina? Won’t companies and nations simply refuse to deal with a nation that plays that way? Well actually not at all.  Argentina has shown that if a U.S. court tries to sequester its assets and force bankruptcy then Argentina can strike back and seize the assets of a U.S. company. I suggest this was more Argentina’s motive than solidarity with Ecuador. But they have said, as reported in this informative FT article that the hold on Chevron’s assets will stay till the company pays what it owes to Ecuador.

But having sequestered $2 billion’s worth of assets belonging to Chevron and its subsidiaries what has happened to relations with Big Oil? Actually they have never been better. How can that possibly be? Simple, when Argentina nationalized YPF they did so knowing the company was sitting on,

approximately 774 trillion cubic feet of shale gas in the Vaca Muerta basin…

This is a large and potentially very lucrative asset. Enough to revolutionize Argentina’s fortunes. What has Big Oil done in response? It has formed an orderly line at their door asking if they can be partners. Waiting politely in line are …Chevron, Exxon and Apache. In fact Chevron has already signed a memorandum of understanding with YPF!  Presumably ‘understanding’ that Argentina may have sequestered their assets but doing more business is better than doing none.

So Argentina nationalizes YPF, sequesters $2 billion of Chevron’s assets saying they will NOT be released until Chevron pays the $18 billion it owes Ecuador and STILL everyone wants to do business with Argentina. Where is the – ‘You can’t mess with the bond holders – you can’t default, the sky will fall in’ scenario in all this? Other countires should pay attention and learn from what Argentina is doing. Greece should NOT sell its assets. Greece should grow some balls, organize its own ‘chapter 11’ default and bankruptcy protection and then sequester whatever it bloody well takes. Instead of cringing in the gutter like Germany’s whipped dog.

Companies and banks can flit from one jurisdiction to another so can nations. If a court in Manhattan rules to enforce upon a NY bank then move banks. Use banks in Luxembourg or Hong Kong to simply move the money where it cannot be touched. Who says Argentina even needs to tell the USA or anyone else who their agent bank is? Insert a confidentiality clause binding upon the bank and the bond holders that no one can reveal where  the funds are being paid.  Why should we pay fines to companies when they won’t pay taxes to us?

It seems corporations expect nations and their tax payers to pay them but refuse to pay when it is their turn.  We bail them, they screw us. We should pay fines when we owe them but they walk away from their guilt? And they have to cheek to invoke Pari passu? I don’t think so.

Banks and private capital want bankruptcy protection and confidentiality for them but not for us. I say Pari bloody Passu to that.

If people, ordinary people in every country, rich and poor, creditor and debtor, core and periphery alike do not wake up to the way private capital is trying to shift power from us and our vaguely democratic institutions to their entirely undemocratic institutions then we will all be the losers in the end. They will come for the rights and freedoms of the Argentinians and the Greeks first but they will come for yours eventually. Don’t kid yourself otherwise.


, , , , , ,

74 Responses to Argentina and America – of Vulture Funds and Justice. Part Three

  1. Zane Zodrow November 29, 2012 at 8:09 pm #

    Wow. Possibly more epic and enlightening than your previous 4 part essay. Keep up the good work.

    • Golem XIV November 29, 2012 at 9:23 pm #

      Thank you. I was worried – still am – that it might all be getting too technical and/or too political and not what people are lookiing for.

      • steviefinn November 29, 2012 at 9:55 pm #

        It cannot be too technical if I get it, & personally I do not think it is so much a political position you have taken but rather a moral one, which to my mind is much more important.

        Fascinating info on a much ignored part of the world that illustrates what these rapists are capable of & as you say they will if allowed, eventually try to sate their unquenchable appetites on us.

        Also good to know somebody is prepared to stand up to these bullies.

        • Golem XIV November 29, 2012 at 10:01 pm #

          Much appreciated Stevie mate. Thank you.

      • penny bloater December 1, 2012 at 1:46 pm #

        On the contrary, this is exactly the sort of technical and economic detail that is routinely ignored by the mainstream media and which is vital to the maintainence of any notion of a democratic public sphere based upon transparent and easy access to information for all.

        Such things are important for building progressive social movements from the ground up. It is, if you like, genuine social democracy in action. Golem, Nakedcapitalism and The Real News Network have been a revelation to me these last few years in terms of providing an eductaion and understanding of contemporary international political economy. I’m now regularly recommending readings from these sites to my HE students for their assignments and dissertations.

        Nice article David.

      • Baffled Popperian December 8, 2014 at 12:39 am #

        On the contrary, reading about Argentina seizing corporate assets made me laugh out loud in a way that I haven’t for a while. Cheers.

  2. simoncz November 29, 2012 at 10:37 pm #

    Not too technical at all. Very important stuff. The moral dimension is what’s totally missing from the mainstream discussion. That’s because they truly think money is all that matters.

  3. bill40 November 29, 2012 at 10:58 pm #


    You are clearly hitting some nerves in China as even some VNP’s are blocking your site, an honour you share with The Slog, ZH and the Guardian (although the Guardian have ironically banned me). Needless to say the drivel in the Torygraph is completely free to access.

    This is the epic stuff we need in the public domain, a defined fight between them and us. it is amazing how many people thought they were one of them but quickly discover the contempt the real them hold them in. I hope that makes sense.

    Congratulations on a superb series. Just as a PS I hope to provide an insight into Chinas’ banking and political situation. For obvious reasons I can’t publish them from here. If time permits us both I hope you’ll give it a read.

    PPS, that odious little shit Reid has sent me a bill for a tweet about McAlpine. I have requested that they try to enforce the action in China. No reply yet but I live in hope!

    • Golem XIV November 29, 2012 at 11:17 pm #

      One day I’ll tell you a little something about McA.

      Thanks for letting me know of my honourable status in China. And I look forward to reading whatever you can send. Thanks in advance.

    • John G November 30, 2012 at 1:01 am #

      I’ve been banned from the Grauniad for well over a year now. Wear it as a badge of honour, comrade.

      Although now that Glenn Greenwald is there, I miss it a little.

  4. doggett November 30, 2012 at 12:08 am #

    “Greece should NOT sell its assets. Greece should grow some balls, organize its own ‘chapter 11’ default and bankruptcy protection and then sequester whatever it bloody well takes. Instead of cringing in the gutter like Germany’s whipped dog.”

    Don’t disagree. However, the current Greek government would need to be removed from office AND the rest of the current governing class (and whoever pulls their strings) prevented from replacing them AND Greece would need to exit the Eurozone.

    I doubt this is likely unless there’s massive popular resistance similar to that which occured in Eastern Europe twenty odd years ago. But the way the situation continues to deteriorate this will increasingly become a possibility … ?

    • steviefinn November 30, 2012 at 10:22 am #

      The to my mind, the living personification of all that is wrong with Greek mainstream politics seemingly is formulating a plan to ban Golden Dawn a more popular party than his own.. Venizelous states that some of their MP’s have committed illegal acts which of course is true.

      The obvious hypocrisy of his position as he himself has been strongly suspected of not exactly being honest in his dealings, for which acts he & others like him are protected from the prosecution of as MP’s is another illustration of his/their lack of credibility.

      As it seems that GD’s support is high within the police & army it would be interesting to see the reaction if the fat one succeeds. Obviously not the same situation but if I remember rightly Hitler’s crew were once banned & .their glorious leader imprisoned.

      A big black stinking rat of Nazi’s forced into a corner & the possible arrival of a vulture fund & all the usual ingredients make for an explosive recipe, plus of cause there is always the unexpected.


  5. doggett November 30, 2012 at 12:11 am #

    “One day I’ll tell you a little something about McA.”


  6. John G November 30, 2012 at 12:53 am #

    Verdaderamente hermosa!

    You’ve made my day David.

    On that note, whenever the question of Greek or Irish post-euro bond issues has met the “but who would buy their bonds after a default?” question came up, my answer has always been “Any bond trader who was awake.”

    Put money into a basket case of spiraling debt, or put money into a clean(ish) slate?

  7. Zane Zodrow November 30, 2012 at 1:23 am #

    Definitely not too technical. I do a LOT of reading on financial matters, and you seem to put things together in a way few people can. Breaking:


  8. Joe R November 30, 2012 at 2:15 am #


    The vulture funds vs argentina case decision mentioned here previously, which was in a lower court is being appealed. So it is not over. They also say the decision was expected.

    Source – La Nacion de Argentina.

    “….el Gobierno incluyó esta opción de reabrir el canje en el pedido de revisión presentadoanteanoche a la Cámara de Apelaciones de Nueva York”.


    You are missing quite a lot on this subject area, Golem, like you did on your previous pieces on Spain.

    The most obvious similarity between the problems in Argentina and the problems in the euro area is with how Argentina pegged itself to a currency which was over valued in comparison to its actual economic condition, pre 2001, as Portugal, Ireland, Italy, Greece and Spain are now doing, and how they exarcerbated their economic woes and debt, like the PIIGS.

    Aside from this, you miss many important facets of the role of economic history in Argentina and of the region, of obvious failures like weimar like money-printing, no capital controls, huge off-shore deposits ( equal to 50% of all internally held deposits ) wealth sucked out of the country by Argentines thenmselves and so much more.

    There has been extensive external meddling in Argentina, but they brought a certain amount of their woes upon themselves. Argentina has a strong Italian streak in its makeup and its identity and shares many of that country`s difficulties with clientism and hierarchy within its business and governmental sections ( and Uruguay and Southern Brazil too ).

    Here are too easy to find pieces on Argentina –



    • Golem XIV November 30, 2012 at 9:19 am #

      Hello Joe R.

      I read the piece you link to – in a rotten Google translation. I was aware of the higher court but had to cut off somewhere. I don’t think the deliberations of that court really alter the argument though.

      As for missing many subtleties of Argentina – well of course I am going to. That is where those who know more, like you, do us all a valuable and much appreciated service for filling in as many of the lacuna in my reasoning as you can.

      I write what I think based on what I know. I make my arguments passionately because that is how I feel. I set out my opinions and thoughts clearly so there is no hiding behind – ‘Oh my remarks were taken out of context’ etc.

      I do not claim anything I say is certain. I have opinions and I try to make the reasoning that brought me to my opinion as evident as possible.

      But mainly I am delighted if my opinions and argument serve to prompt better thoughts and more refined arguments from which I can learn.

      So I make no apologies for missing subtlties. Rather I see them as a clear invitation for others to help fill in those blanks and warn of simplifications – as you generously do.

      Seems fair to me.

      • Joe R November 30, 2012 at 5:35 pm #

        Agreed. You are but one man with many elements of your life outside of this blog and area and can’t be expected to be an authority on all that you become interested in. I am well aware of your grace in aknowledging this too, which is why I posted at all.

        I do think here-abouts the arguments are coming from one slant increasingly though. I feel it is necessary to read on both sides of a divide on a story to get the best picture, as omissions are often very telling as to the intent and position of the author. However, that all takes time and a lot of cross checking.

        I would point more than anything to the role of currency in all of this for me it is here that Argentina might serve as warning for what could happen in the PIIGS.

        • Golem XIV November 30, 2012 at 7:54 pm #

          I think you’re quite right about the currency problem. I think its undfeniable.

          As for my bias I am quite sure I am biased. I hope I make mine clear and evident to the reader.

          And thank you as always, for your comments.

  9. CArratiaM November 30, 2012 at 3:27 am #

    Wonderful article David!!

  10. Buck Turgidson November 30, 2012 at 4:14 am #

    Dear Golem

    I hold you in high regard I loved your documentary on the heart but please forgive me you really are a bleeding heart. Full disclosure here old Buckie here has about 10 percent of his net worth in Chevron stock and has enjoyed the dividends for 30 years.

    The last time Argentina defaulted I enjoyed cheap steaks and found it hard to spend more than a couple of pounds on a bottle of wine in a restaurant in BA so you can see that I am a unashamed capitalist. Let Ecuador another country I like to visit team up with Argentina to squeeze my beloved Chevron however as long as they pay dividends it’t OK with me. The rest of the world will just pay more at the pump. .

    • Golem XIV November 30, 2012 at 9:31 am #

      Morning you old capitalist you.

      What you say seems fair to me. I am happy to pay a fair price for goods an services. And by good I have never meant – the cheapest possible. By good I mean a price which is morally defensible. Cheap due to child labour is not good. Cheap due to dumping half of the industrial cost of production – which is how I think of pollution – on to the environment for others to deal with or clean up is not good.

      I suspect you agree with this. Does that make you a closet bleading heart? Only you can say. I shall just harbour my suspicions!

      I am not an implacable foe of private enterprise. I do not think central planning by government or anyone else is any sort of panacea. A balance would be nice.

      But a necessary part of that balance requires free enterpise and capitalism to be brought back within strong laws so that it remembers we are all in this together. And when those at the top, who profit the most, try to forget this – I would like to see them personally made to suffer the full and brutal weight of the law coming down on them like a ten ton iron fist.

      • Buck Turgidson December 3, 2012 at 2:51 am #

        The full and brutal weight of what law? In a global economy you would need a world court and these folks would be selected by whom? Your dismay at the court in New York proves that you need to go ALL IN for justice to prevail. One billion souls on this earth might support Sharia Law the other six billion not so much, and frankly that battle scares me more than unconstrained capitalism.

        • Golem XIV December 3, 2012 at 11:16 am #

          Morning Mr Turgidson,

          I share your worry when it comes to the idea of a world court in which Idiots of all stripes would try to force upon the rest of us their various Medieval or bronze age ‘god told me in a vision’ piles of mumbo-jumbo.

          But if you’ll forgive me I am not arguing for a world court AND don;t agree that such a court is necessary.

          The point about the Argentina example is to say that a single nation or better two allied nations can beat global capitalism at their won game.

          Use the weapons of teh enemy against them.

          So far it has been corporations which have used ragualtory arbitrage against nations. Nations can use regulatory and legal arbitrage against corporations.

          They can use secrecy against them too.

          I am not saying these a reperefect startegies nor are they without dangers. But as a way of opening a new front in the war they will do.

          They will do to show we are not helpless, can prevail and can take back powers that our leaders have been busy selling for their own personal enrichment.

          • Buck Turgidson December 3, 2012 at 4:29 pm #

            Dear Golem

            I love your name too however I feel like I am the “unformed substance” in this discussion.

            I agree that nation states should able to push back against corporations that don’t play by the rules and pollute. The best definition of playing by the rules in my opinion came from Jan Morris who said ” Be nice and you know what that means” Wouldn’t it be nice if oil company’s didn’t pollute and politicians and tin pot dictators didn’t send their oil profits to a numbered account in the Cayman’s?

        • John G December 9, 2012 at 8:46 pm #

          Islam and unconstrained capitalism, especially the usurious banking system, are not compatible.

          That may be part of the problem and partly why Muslims are being demonised and attacked, and Islam being libeled so ubiquitously.

          Btw, Sharia means law.

  11. Lovak November 30, 2012 at 12:23 pm #


    best I ever read about the subject! Love your moral voice combined with insight.

    • Golem XIV November 30, 2012 at 12:53 pm #

      Thank you Lovak. Much appreciated.

  12. Robert 1 November 30, 2012 at 2:01 pm #

    First, I would like to thank you for this fine series. I do not know how you find time to do such excellent research and publish such great articles what with all of your professional obligations.

    That said, I feel this is one of the finest articles you have written yet. I do not find it is technical and think it is brilliant and hits the nail on the head. Having visited Andean countries including Ecuador and now Colombia, I have seen some of the devastation caused by oil exploitation in these countries. It can only be described as immoral behavior. Absolutely without conscience.

    Please keep up the great reporting.

  13. John Souter November 30, 2012 at 2:53 pm #

    Somebody once remarked -“Good science fiction is better than bad science.”

    In the present financial system we have a myth wrapped up in a fairy tale seasoned by bad science and puerile fiction served on a platter of legal exploitation.

    And it serves only faction in the nutritional sense – that is the drive for domination by irresponsible global capitalism.

    Its goals and values are quite specific – You either control, administer or have the means to be viable as a consumer, or you are a non-productive overhead and as such disposable through neglect.(for now -the more productive techniques may be introduced later)

    It is as plain as the face you see in the mirror – we just cling to the hope that somebody, movement or nation will change it. They wont (the last four years bares testament to that) all they will change are the mirrors. They are too close to their version of nirvana to even consider the collateral casualties inflicted on their own warriors.

    This is not an epistle of doom for the simple reason their policies are mad and ultimately doomed to failure; but the predatory instinct of mankind towards victor and victim are hard wired into our psyche and proving difficult for the synapse of reason and logic to overpower and disconnect.

    In essence this is the battle for our world and all of our tomorrows.

  14. Dave (aka Frog2) November 30, 2012 at 3:57 pm #

    David — thought you might like this one –


    A German man committed to a high-security psychiatric hospital after being accused of fabricating a story of money-laundering activities at a major bank is to have his case reviewed after evidence has emerged proving the validity of his claims.

    In a plot worthy of a crime blockbuster, Gustl Mollath, 56, was submitted to the secure unit of a psychiatric hospital seven years ago after court experts diagnosed him with paranoid personality disorder following his claims that staff at the Hypo Vereinsbank (HVB) – including his wife, then an assets consultant at HVB – had been illegally smuggling large sums of money into Switzerland.

    Thanks again for all you are doing, f2

    • Golem XIV November 30, 2012 at 5:06 pm #

      Dear God! If Kafka were alive he would put his pen down in dispair.

    • steviefinn December 1, 2012 at 2:37 pm #

      I was only thinking the other night after watching a biopic of Camille Claudet. a brilliant sculptor & unfortunately probably better known as a mistress of Rodin, who was committed to an asylum for the last 30 years of her life by her family, for very little reason, that the same thing could not happen today. I’m not so sure now.

  15. Phil November 30, 2012 at 11:08 pm #

    Yet another excellent article – thankyou.

    Have you read Greg Palast’s Vulture’s Picnic BTW ?

  16. Phil (Manchester) December 1, 2012 at 12:54 am #

    I’ve just been at a Labour party thing for Europe – the Shadow Education Minister, an MP, MEP, a Trade Union leader and a number of councillors were there. All they could talk about was ‘Keynesian’ spending and ‘growing the economy’.

    To which one had to ask, ‘how?’ You’re against the cuts but how are you going to repay the billions borrowed to bail out the banks? And if bailing out the banks IN THE WAY THAT YOU DID was the right and only course of action, why has Japan, WHICH DID THE SAME THING in the 90s, had over a decade of zero growth (only sustainable because they have the most equal distribution of wealth in the world) and is now facing a severe economic crisis?

    No answers, just rubbishing of the point.

    And of course, absolutely no comprehension of how 2008 could have been handled differently.

    And then there is the social-animal interest of sitting right next to these people and observing them, and you just think, ‘Christ, the Corporates and Financiers must run rings round you lot’.

    • Phil (Manchester) December 1, 2012 at 1:04 am #

      So, what are the elite making of all this?

      Interesting reading from Gillian Tett about her conversation with Bilderberg Steering Committee member Peter Thiel’s ”fears” for representative democracy in economies with zero growth:


      • Phil T. December 2, 2012 at 8:47 pm #

        Thank you Phil (Manchester) for linking – Onwards and Upwards: In a world without innovation and without expansion, it will be much harder to keep democracy going , by G. Tett in the FT.

        I had to read the article and hyperlinked references several times in order to better understand why you chose to link it here.

        iMHO – in recent years – the meaning and impact of the word innovation has been severely diluted. The same also seems true for words like expansion, growth and democracy, especially when utilized in economic/financial contexts. The various factions that co-opt these words and many other words & phrases to suit their agenda are exceptionally competent and persuasive as they de-value notions previously held – going nearly undetected by most of us.

        As a result, whether we realize it or not, as (unaware) victims of these Orwellian tactics – we as a populous become divided and parsed and ultimately at (petty) odds with one another on almost any issue delivered – when, we might in real terms- agree on the underlying, un-conflated issues were they visible and clear.

        In the context of Golem’s very ambitious 4-part series on America & Argentina with all of the supporting commentary thus far, I think I have more insight now as to why you have included G. Tett’s article in the discussion.

    • nell December 1, 2012 at 12:25 pm #

      Hi Phil

      You’re against the cuts but how are you going to repay the billions borrowed to bail out the banks?
      (sorry if this doesn’t work out – this is my first time trying html code).

      Most of us think of the government budget as comprising income (taxes collected) – spending. If the spending is higher than the tax income then the government has to resort to borrowing from the private sector. From this perspective paying back all the money borrowed to bailout the banks, can be viewed as an inescapble problem for a government that want to increase spending. However, this is a ‘gold standard/household budget’ view of our monetary system. The reality is that UK government has a monopoly supply of its currency and as such is under no financial constraints whatsoever. This is not to say that there are no macroeconomic constraints, but in terms of money, the government, barring a revolution, is in no danger of default. As voters, we should not be frightened of increasing the government deficit. What we should be frightened of is a contraction in spending across all three sectors of our economy (government, domestic private sector and foreign sector). Bearing in mind that spending = income and a contraction in spending will depress income. In the UK the private sector is burdened by debt which is 4 times the GDP of the nation. This huge debt burden is paralyzing investment (ie spending) and putting downward pressure on demand. There are two ways to offset the effects of private sector debt. One is to increase exports relative to imports. Unfortunately, since the financial crisis was global in nature, increasing the export market is a herculean task when other nations are not in a buying mood. That leaves the government sector. If we continue on the path of austerity the outcome is obvious, spending will continue its downward trend and incomes (households and business) will contract.
      It is more important to kick start the economy and get people back into employment at a living wage. To continue on the path of austerity because we are scared about finding the dosh to cover bank bailouts does no one any favours. Quite frankly, paying off that debt can wait (and may not need paying back anyway – remember banks owe us).

    • John G December 1, 2012 at 10:00 pm #

      A currency issuing government doesn’t have to issue debt to fund spending. That may be the political convention but it holds no water in the real physical world.

      As you mentioned Japan, there is a serious scrap brewing between the LDP leader, and probable soon to be PM, Abe and the establishment forces fronted by the central bank governor, over his plan to have the BOJ finance treasury spending programmes to build new industries and infrastructure.

      Japan is facing accelerating deflation without direct stimulus and the establishment neoclassical position has no tools to ward that off.

  17. Daniel December 1, 2012 at 4:59 am #

    @bill40. I worked in China and had the same problems with censorship. The best VPN I found was ExpressVPN, about $99/year or you can take it for 1 mnth or 6 mnths

  18. sumo December 1, 2012 at 7:26 am #

    “Greece should grow some balls, organize its own ‘chapter 11′ default and bankruptcy protection and then sequester whatever it bloody well takes. Instead of cringing in the gutter like Germany’s whipped dog.”

    Yes, this is an option, a hard-ball option, that would get grudging respect (in private) from other hard-ball players like IMF and vulture funds.

    So why isn’t it happening? Is Greece is too corrupt? Too emasculated?

  19. nell December 1, 2012 at 10:31 am #

    @theonionmurders from justamug. You mentioned on CIF that you teach in HE. Me too. I was curious about which field you lecture in. I am a cognitive neuroscientist and lecture in psychology. I won’t be offended if you prefer not to answer on a public blog. I am just curious. My own academic colleagues seem pretty oblivious and largely uninterested in politics and economics (except some moaning about the tuition fees).

    • penny bloater December 1, 2012 at 2:16 pm #

      Hi Nell. Not offended at all. I teach a few areas within the field of humanities and social sciences which feed into PhD studies, mainly focusing on issues to do with ethnicity, social class, media and international political economy. Within this field it is, perhaps, fair to say that there are several colleagues that share our political views though there are no economics lecturers in our department.

      (BTW How did you know I was theonionmurders on CIF. Not that this offends or worries me in any way)


      • penny bloater December 1, 2012 at 3:04 pm #

        Cross postings!

      • nell December 1, 2012 at 4:58 pm #

        You mentioned something about GolemXIV in a CIF post. We seem to be on the same wavelength politically and then when you said that you were an HE lecturer it seemed kind of cool that we have the same profession. I want to say hi more personally and will look out for your post and links when you have them.
        Nice to know that you are here too. Golem’s blog has provided me with some of the best sources for new insights into the unrolling disaster of an economy. I like the passion, I like the unabashed morality, and I like the genuine desire to learn and understand that is visible both above the line and below the line. See you around.

        To get back into the spirit of this blog, I read a rousing peice from Dan Kervick on naked capitalism this morning. Topic is the US economy but applicable to the UK as well. I quote
        “For me, a bold vision of nation progress and prosperity requires a new, aggressive commitment to social and economic equality. I believe democracy is an excellent thing and the only long-term political solution to social despair, stagnation and unfreedom; and that genuine political democracy requires a significant degree of economic democracy. There is no realistic way of moving toward these ideals in a reasonable time frame that does not require taking active steps to re-work the distribution of wealth and income in our society. I would like to see progressive-thinking Americans acknowledge these goals frankly, without embarrassment, and get to work trying to accomplish them.”


    • Mike Hall December 3, 2012 at 7:32 pm #


      Big thumbs up on your post earlier expressing the correct (MMT) understanding of the UK’s monetary stem 🙂

      Noting you HE subject, I would be very interested to hear any views you have on Kahneman’s ‘Thinking, Fast & Slow’ ?

      From my (very) layman’s pov, it seems that your discipline is producing some very exciting insights into our cognitive abilities. And can’t help thinking that if the wider public were aware of their limitations re Kahneman, we might be able to break the general public of some very bad habits in trusting ‘establishment’ narratives?

      Any thoughts?

  20. nell December 1, 2012 at 12:28 pm #

    (sorry if this doesn’t work out – this is my first time trying html code).

    Poo – it didn’t work out – I wanted the quote from Phil’s comment to appear in blue – anyone got any tips – I used the code
    phil’s question

    • James Dixon December 1, 2012 at 2:15 pm #

      “Poo – it didn’t work out – I wanted the quote from Phil’s comment to appear in blue – anyone got any tips”

      If this works, I used the old “blockquote” chestnut! It’s not blue, obviously, but colours and whatnot are way beyond my HTML “skill” level I’m afraid…..

      • James Dixon December 1, 2012 at 2:17 pm #

        Well, that worked well…..

        Forget I said anything!!

        • nell December 1, 2012 at 4:45 pm #

          Thanks for trying and making me laugh too – its like some surrealist play. Poo.blue….poo. blue…poo html.

          • James Dixon December 1, 2012 at 6:57 pm #

            Yeah, I’ve tried to be Bill Gates there, but it’s all ended up a bit like something from Antonin Artaud’s little-known “potty” period, innit!?

            Oh well, I’ll just add programming language to the list of stuff I’m hopeless with…..


          • Phil (Manchester) December 1, 2012 at 8:21 pm #

            I’m honored that you wanted to highlight my comment! ; )

            Anyone on this blog near Manchester?

  21. Phil December 1, 2012 at 6:37 pm #

    Slightly Off Topic, but just in case people ( like friends etc. ) are not informed about the current Monetary System ( which I presume most people here are ) , here is a well laid out series from PressTV … available for Download at the link below :

    The International Banking Cartel (I)
    The International Banking Cartel (II)
    The International Banking Cartel (III)

    Start here : http://www.presstv.ir/Program/272398.html

    Guests include Bill Still, Webster Tarpley , Michael Hudson , Simon Dixon and others.

    Of course , an excellent Golem article as usual.

  22. Phil (Manchester) December 1, 2012 at 8:15 pm #


    “The Bank of England warned that Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland could be overstating the amount of loss-bearing capital they currently hold by between £5bn and £35bn.”


    And our Fraud Squad officer’s take on it:


  23. GeoWaveRider December 2, 2012 at 1:26 am #


    Just over the border in Yorkshire, Halifax to be precise (unless you mean Manchester, Vermont).



  24. fran crowe December 3, 2012 at 11:49 pm #

    I am an avid reader here David ,but have only ever made one comment, because to be honest I thought your articles were becoming very technical and only understood by people with a good comprehension of”high finance”.
    However ,I would like to compliment you on what I consider to be one of your best pieces ever, written in a way that even I, an ordinary 3/8, can fully understand. Keep up the great work and hopefully more people will eventually wake up and realise that mainstream media is propaganda pure and simple.

    • Golem XIV December 4, 2012 at 10:02 am #

      Hello fran crowe,

      First, thank you for your very kind comment.

      Second, I would like to offer you an apology. It has been a worry to me that my writing was becoming too technical. I am sorry that it has.

      The problem is one of balance. On the one hand there is a real need for walking people through the basics and writing about things in a very clear and simple way. Without taking the time to do this simpler job, I know that we will never build a movement.

      On the other hand there are a growing number of people who have been reading here, on other very fine blogs and entirely under their own steam, who have reached a level of understanding and who want to move beyond the simple to get at the real machinery underneath.

      Without writing something for them we risk losing their interest.

      So I have tried to do both. Obvioulsy with patchy success.

      Mainly I find I can only write about what I find of burining interest at the moment of writing. That said perhaps this would be a good moment to ask everyone what they are most interested to hear about?

      Thanks again for your comment and for reading and deciding to be part of the solution.

  25. Ian Cropper December 4, 2012 at 12:11 am #

    The Guardian CiF is running a story on the Argentina v Vulture Fund battle.


    • Golem XIV December 4, 2012 at 10:11 am #

      Nice to know they are getting the word out. If only we here had their reach.

      That said one of the pieces I wrote about Greece has recently been translated and is now being posted around Greek academia.

      And the list of who reads here – which government departments in which countries, which intelligence organizations, which global banks and universities, and just generally the number of countries that pop up continues to amaze me.

      Add together who reads here with the bigger readership at places like Jesse’s or Naked Capitalism or The Ticker or Zerohedge and we, in the broad opposition , the non-mainstream media, are a growing force.

  26. fran crowe December 4, 2012 at 11:55 am #

    David ,

    Thank you for your reply, but you don’t owe me any apology of any kind.

    Not being overly educated, your writings are probably the only thing that
    have allowed me to follow the actual story of how all of our lives are being
    manipulated and ruined by literally,in real terms, a handful of greed driven

    I live in Ireland where we await in trepidation, another “austerity”
    (hate that word),budget tomorrow, when we will be subjected to yet more
    savage taxation and cuts ,to support our rotten government and banks.

    Thank you once again for your wonderful insight and exposure, of all that is
    wrong in this greed driven world we live in.I have no doubt you have a growing
    audience in this country and I will continue to read and educate myself further
    through your honest and informative articles.

    • steviefinn December 5, 2012 at 4:56 pm #


      I would also consider myself not overly educated, but I am grateful for that which I did get which was due to progressive policies in particular from after WW2. I consider myself very fortunate in comparison to my Grandfather on my Mother’s side who by all accounts was a very intelligent man, who spent his whole life from age 12 down a coal mine before dying at age 52 from pneumoconiosis.

      I do not want as Michael Hudson put it – the progressive era to be rolled back & my Grandchildren to live a life of struggle like that which was suffered by the vast majority of my ancestors.

      As for this blog of which I have been following for something like 18mths, it has served as a foundation for my new view of this World, made me adapt to cope with it & I am also very thankful that my blinkers have been removed.

      I have often got lost in the technicalities of some of the articles, especially at the start but overtime have developed a grasp of the fundamentals which I think is sufficient for my needs. I still get it wrong on occasion & usually have to read the articles more than once & am often grateful for the excellent comments of contributors which help a great deal.

      It is as you say an education & I am now doing much better than I did at age 18 when I briefly attended a day release ONC business studies course in which the economics part was called – The organisation & the environment – from which I emerged none the wiser. The difference now being I have an interest & there are no pretty girls to distract me.

      It’s good to hear from people like yourself.

  27. gatopeich December 4, 2012 at 6:42 pm #

    Thanks, David, for another great rant! 🙂

  28. Pat Flannery December 8, 2012 at 6:32 pm #


    I have only today read your three posts on Argentina and their comments (I now live in Ireland and had gotten bogged down in the trauma of our recent Budget.)

    Most of what needs to be said about your latest work has been said above. For me the only person I can think of to compare you with is Tom Paine himself. And that is not hyperbole, nor meant to embarrass you.

    Like Paine you have a very special gift of writing “common sense”.

    I hope things work out better for you than they did for poor old Tom.

    Kindest regards and THANKS!


  29. Cathal December 9, 2012 at 1:44 am #

    Hi Golem XIV/ Mr Maloney; thank you for this article. I’m pretty disgusted to learn about the activities of these vulture funds, and somewhat heartened to hear of how Argentina is showing a way to push back. And thank you for your blog overall. I feel that it’s one of the most honest and insightful sources of information and discussion that I’ve ever come across.

    I really wanted to respond to a concern you voiced in the comments above; I have never found your pieces to be either too technical or too political. I don’t have a political or economic background, but I find your pieces are well suited to someone such as myself – reasonably educated, curious, and willing to make an effort to grasp technical-ish descriptions of economics, law, etc. I enormously appreciate the presumably labour-intensive research that goes into this blog, the carefully reasoned and thoughtful opinions, and the journalistic acumen that can smell the BS from the official sources and translate what is really being said.

    I also appreciate how you consistently demonstrate the corrosive effect of the macro-economic decisions that have been carried out in recent years and decades on our institutions and our democracy. Or how they’ve revealed the true extent of ‘democracy’ in our governance, and how even that extent is shrinking further.

    Finally, I also wanted to say that I appreciate how you keep the morality of what’s happening – of bank bailouts, huge spending cuts, ever-increasing inequality, national bailouts that protect or enrichen ‘creditors’ – at the forefront of your discussions. It frightens me to think that so many are made to really suffer, in order to perpetually increase the privilege and wealth of so small a number of people. It’s cruel and it’s insane.

    So anyway, thank you thank you thank you for sharing with us your sanity, wisdom, work-ethic, and your obvious kindness.

    Oh also – you mention above that “government departments… intelligence organizations… global banks and universities” read this blog. How do you know which ones? That’s pretty effin’ cool! It’s interesting and slightly worrying too – reveals that those who would rather people didn’t know this stuff are keeping an eye on those who would speak the truth. I suppose at the least, you’re keeping their ‘PR’ folk busy…

  30. Cathal December 9, 2012 at 1:54 am #

    (apologies for the that rogue ‘y’; what a devil…)

    • Golem XIV December 9, 2012 at 3:10 pm #

      You’re talking to the king of mis-spellings, random punctuation (my wife says I punctuate as if I were sowing seeds), and finger-trouble-typos, so please – no need to apologise over a rogue ‘y’.

      Thank you for your very kind comment. They are hugely appreciated.

      As for knowing who reads – there are innexpesive analytics which allow me to note teh IP address of those who log on. Ordinary people I have just a number, no name. Businesses and organizations oftern attach their name to the IP so both show up. Banks, law firms, big business, small business etc.

      Many intelligence organizations attach their name – for example the US Depratment of Defence come up as DOD and then the location. So do the intelligence branches for most of the US armed services.

      Most government departments announce themselves similarly.

      There is, of course, a whole other set of intelligence organizations who do not announce themselves. If they chose to read I would never know.

      Of those intel organizations who appear it is almost certain they are automated enquiries. COmputers running through an assigned list. The computers scan for phrases and if they find one they flag it up for further ananlysis.

      There are several levels of automated analysis before you would ever get to a person who’s time is valuable.

      I am certailny on teh long automated list. I can tell this from how quickly things get picked up and by whom.

      I have probably also made it on to one or other shorter list which may, at times be consulted by a real person. I think this because sometimes I get 3-6 diffrerent parts of one organization reading.from very different locations. I think suggests people. I could be wrong.

      As an intelligence friend of mine says – it is so very simple and cheap for teh intelligence services to scan electronic media, it requires so littlle effort and so few resources, that you should assume they are because they can at no cost to themselves.

      These days intelligence is akin to market research more than 007. It is not so much spying it is about knowing what opinions are bing formed and by whom.

  31. Nelson December 12, 2012 at 7:29 am #

    Excellent article. Wow! it is very well written and researched. The logical argument is persuasive. In no way is it anti-American. I have always felt that the predatory activities of corporations described in John Perkins “Confessions of an Economic Hit man” would, sooner or later come back home to roost in the U.S. and Europe. 2008 has shown that. Your article also echoes it.

    My fear and implicit acknowledgement is that Argentina and Ecuador will lose. The American strangle hold is too tight. The exorbitant privilege of the U.S. dollar coupled to the implacable U.S. military, its allies and clients is too powerful. The fact that the American government has been hijacked by the banksters leaves me feeling less than optimistic.

    The best way to prepare is to remove any visual impediments, and to let others know.

    Thank you so much.

    • Golem XIV December 12, 2012 at 10:05 am #

      Thanks Nelson. We might win yet.

  32. John G December 15, 2012 at 8:11 pm #

    FLASH: U.N. Court in Germany orders Ghana to release Argentine naval ship detained on bond holders’ behalf


  33. Fnol March 3, 2013 at 10:22 pm #

    Don’t know if you’ve explored the ‘odious debt’ campaign and the origins of the concept but with the need to reset the global economy and repudiate clearly un-repayable bankster debt, you might find odious debt fits in quite well with your piece.
    Here are a couple of references from Google: http://cadtm.org/Odious-debt and https://now.mmedia.me/lb/en/reportsfeatures/odious-debt

  34. ptolemy September 9, 2013 at 2:08 am #

    In reference to Argentina ,…why don’t you come down and live in South America for a awhile. You might change your tune. It is you, who takes the “moral high ground,” with your blasé imperialistic blah, blah, comments;..and oh, so easily said too. Come on down. Experience the culture and you’ll know what the bullshit is all about.

Leave a Reply