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Ear to the Ground

Greg Palast: How Obama Could End Argentina’s Debt Crisis

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Posted on Aug 8, 2014

    "Vulture" capitalist Paul Singer. Photo by Peter Stevens (CC BY 2.0)

“The ‘vulture’ financier now threatening to devour Argentina can be stopped dead by a simple note to the courts from Barack Obama,” investigative journalist Greg Palast writes Thursday at The Guardian. “But the president, while officially supporting Argentina, has not done this one thing that could save Buenos Aires from default.”

Palast explains:

Obama could prevent vulture hedge-fund billionaire Paul Singer from collecting a single penny from Argentina by invoking the long-established authority granted presidents by the US constitution’s “Separation of Powers” clause. Under the principle known as “comity”, Obama only need inform US federal judge Thomas Griesa that Singer’s suit interferes with the president’s sole authority to conduct foreign policy. Case dismissed.

While in office, President George W. Bush used this power against Singer’s operation to prevent it from seizing U.S. property despite the fact that Singer is one of the biggest and most influential contributors to Republican candidates, Palast notes.

President Obama has capitulated to Singer before, according to Palast. In 2009 Singer took control of Delphi Automotive, the only supplier of most auto parts used by General Motors and Chrysler when both carmakers were already in bankruptcy. Singer and his colleagues threatened to stop shipment of parts to General Motors unless the U.S. Treasury paid them billions in cash immediately. Within days, Singer’s group had received $12.9 billion from the Treasury’s auto bailout fund, Palast writes.

Palast continues:

In the case of Argentina, Obama certainly has reason to act. The US State Department warned the judge that adopting Singer’s legal theories would imperil sovereign bailout agreements worldwide. Indeed, it is reported that, in 2012, Singer joined fellow billionaire vulture investor Kenneth Dart in shaking down the Greek government for a huge payout during the euro crisis by threatening to create a mass default of banks across Europe.

So why won’t Obama oppose Singer?

I’m not a psychologist. But this we know: since taking on Argentina, Singer has unlocked his billion-dollar bank account, becoming the biggest donor to New York Republican causes. He is a founder of Restore Our Future, a billionaire boys club, channelling the funds of Bill Koch and other Richie Rich-kid Republicans into a fearsome war-chest dedicated to vicious political attack ads.

And Singer recently gave $1m to Karl Rove’s Crossroads operation, another political attack machine.

“In other words, there’s a price for crossing Singer,” Palast concludes. “And, unlike the president of Argentina, Obama appears unwilling to pay it.”

—Posted by Alexander Reed Kelly

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