Last week, the US Supreme Court made a decision that
could force Argentina to pay American billionaire hedge fund managers the full
value of its decade-old debts. Argentina’s dollar denominated/pegged debt is
one of many cruel legacies of the Washington consensus government
under Carlos Menem. Menem was known for being buddy-buddy with Bill Clinton,
and excluded the same sort of chill machismo as Clinton, while turning his
country into an internationally financed Ponzi scheme. In the 90’s, he was
lauded as a hero of fiscal discipline and inflation control, but his real
achievement was severely eroding Argentina’s sovereignty and allowing it to
become a petri dish for reckless neoliberalism. As poorly managed as Argentina
had been before the neoliberal experiment, it should now be clear that
establishing a currency board and pegging the peso to the US dollar was a disastrous
“solution.”
Argentina has been
struggling for years to build up its dollar reserves by exporting an enormous
amount of its agricultural production, at the cost of increased food prices for
the poor. Argentina has also seen millions of acres of its virgin land transformed
into soybean farms, with all the environmental consequences from the herbicides
and fertilizers that go along with it. Meanwhile, the US refuses to allow
imports of Argentina’s higher valued agricultural goods, such as meat and
citrus, due to grossly outdated health and safety measures that masquerade as
protectionism for America’s welfare farmers. On the one hand, US policy is
forcing Argentina to pay back debts in dollars, and on the other hand, US
policy is making it difficult for Argentina to actually acquire those dollars! Along
with the current disaster in Iraq, it’s hard to see how our current leadership
could do a better job of turning the entire world against the US.
The recent series of decisions from our neo-con court system may force
Argentina to pay back these illegitimate debts, which could drain billions of
its hard earned dollar reserves. This is crony capitalism of the worst kind; investors like Paul Singer are using America’s court system to force
the sovereign government of Argentina back into client-state status. The
already unstable Argentine peso,
which has caused some farmers to start reverting to commodity currency, could
fall even further as the result of this decision. In the purest sense, it’s
hard to see how human welfare, except for the top 0.001%, will improve as a
result of this decision.