DOHA, Qatar — On my flight to Doha, where money doesn’t seem to be a problem, I read in London’s Guardian about the vultures making serious money out of the poorest national economies in the current international crisis.

They buy debt from very poor countries in the expectation that generalized debt relief will eventually be organized by the international community. These speculators then elude such debt settlements through various subterfuges, mainly by reassigning the debt, and the nominal end-holder subsequently sues in a friendly court in the United States or Britain to recover the full value of the original debt, or to seize poor-country assets.

Liberia’s president, Ellen Johnson Sirleaf, last week asked British parliamentarians to back legislation to block a 20 million pound judgment, handed down in London in 2009, that favored American investors alleged by the BBC to have subverted the debt-relief process. The investors allowed Liberian debt-relief negotiations to proceed while transferring their own debt holdings to companies that then successfully sued under British law to obtain substantially more than had been accepted in settlement by 97 percent of the other international creditors.

Such people would seem to be members of the lowest order of present-day necrophagic speculation, were that category not already overcrowded by mortgage-scam operators, real estate salesmen and brokers, and debt repackagers in the great globalized free market who in recent years managed to turn home mortgage rip-offs to the poor in America into an international crisis unforeseen by either the former financial masters of the universe or the world’s central bankers.

The competition in ignominy remains keen. The players include the financiers who buy credit default swaps to profit from the national debt crises they are striving to provoke. But such merely are everyday Wall Street or City of London gentlemen looking to finance their sons at Eton or Groton, and their second wives’ shopping.

There is a lot of money to be made by big international banks in impoverished small, and even medium-size, countries in times of world crisis. Let the Greek government of George Papandreou tell you about that. The conservative government that preceded his in Athens was advised by Goldman Sachs on using credit default swaps to disguise Greece’s national debt from European Union auditors. Traders now are speculating against the Greek economy and the euro.

U.S. Federal Reserve Chairman Ben S. Bernanke said last Thursday that the Fed will be examining these controversial credit default swaps. Gretchen Morgenson writes in The New York Times that Bernanke’s use of the word counterproductive about “the use of credit default swaps to crash an institution or a nation” sounds a trifle naive. It’s as if the Fed’s view of a bank’s betting against a client might disqualify the bank’s officers from the better sort of club. It doesn’t seem to. But perhaps the better sort of clubs no longer exists.

What about the people who are not running scams but furnished the brainpower for the system itself, and even now at the IMF and the European Central Bank are promoting lower wages and higher taxes?

An obvious problem in the United States is that it has so thoroughly outsourced its job creating and manufacturing, and mismanaged what was left, that there are practically no good jobs left in the country. This is the result of frivolous economic futurology in the 1960s and 1970s.

One of the big problems in Greece (and Italy and Spain) is that much of the GDP is on the black economy and untaxed. This is the result of wars, generations of inefficient or bad government, and national insecurity (the extended family has to look after you because the state is corrupt or can’t be counted on). The cause of this is history. What remedy does the IMF have for that?

There is something very strange when international authorities advise governments that they must practice stimulus and austerity both, and recommend lean labor forces, postponed pensions for workers and cuts in state health expenditure, while announcing there can be no economic recovery until the consumer begins to spend more money.

How does the consumer consume when he or she has no money, and sees little prospect for things getting better? This is monetarist economic ideology still at work in governments. Some American blogger suggested back when the crisis was starting that governments just hand out cash to families, rather than to banks. That probably would have worked.

Visit William Pfaff’s website at

© 2010 Tribune Media Services Inc.

Your support matters…

Independent journalism is under threat and overshadowed by heavily funded mainstream media.

You can help level the playing field. Become a member.

Your tax-deductible contribution keeps us digging beneath the headlines to give you thought-provoking, investigative reporting and analysis that unearths what's really happening- without compromise.

Give today to support our courageous, independent journalists.