Venture capitalists and 3rd world exploitation

--amadeus--

The English "Independent" has always been of exceptionally high quality. Any newspaper that gives Robert Fisk a blank page and tells him to write it as he sees it will never go far wrong in my book.

And this is a typically sharp piece of journalism. Well researched and hard hitting. Here's the opening paragraph:

Would you ever march up to a destitute African who is shivering with Aids and demand he "pay back" tens of thousands of pounds he didn't borrow – with interest? I only ask because this is in effect happening, here, in British and American courts, time after time. Some of the richest people in the world are making profit margins of 500 per cent by shaking money out of the poorest people in the world – for debt they did not incur.

Well worth a few minutes to read through and get angry about

silverharp

to be fair it more a western gov. matter , Europe and US trade policy has been very unfair to Africa. I'm surprised all the African gov's havnt got together and organised their own "jubilee" without looking for permission from their former massers.

Coriolanus

I used to buy the Independent, it's gotten very trashy the past few years. So now I read what I want of it online. I do wish the Irish Times' Miriam Lord took some tips from their Parliament Sketch writer though. He's brilliant.

Anyway, onto the matter at hand. I'd known a bit about it but Hari gave a bit more detail on it.

It is a multi-faceted problem though. International finance is massively trust driven. For example at the moment, the Irish Gov is paying more for loans than even Italy, Spain or Greece, because lenders have little faith in the nations ability to pay the money back timely. We're risky. In a similar manner, if a country decided to just flip the middle finger at it's creditors, they'd find it very difficult to finance future projects, and believe it or not, every country in the world borrows money to pay for large things. Very few countries can put a billion dollar down payment on a new dam, motorway etc. The money that gets used is an aggregate of investors world wide.

While what these investors are doing is heinous, what's worse is the system that has engendered them.

There really should be some safe way for a nation to declare bankruptcy on payments, or at least protect themselves from massive profiteering.

Plus, you have to think of the consequences of being able to turn around and say "Well, we're not paying for that because our Min Finance at the time was an idiot. Sorry now". Debt does pass along. It's not particularly fair that people get shouldered with the debt of an estranged alchoholic father, but in the end, the debt was assumed, and as in family, it passes along for nations too.

Or something. << I need to think about it more, so all of the above subject to rapid backpedalling and revision if I'm missing consequences etc!

--amadeus--

The Independent web site is great but they are doing an awful lot of those "top 10" click through things at the minute which are woeful.

The article is very emotively written. You could just as easily write it from the opposite perspective and talk about institutional investors - including pension funds - seeing millions written off the value of their investments by corrupt African regimes defaulting on debts while their people starve. As Nevore says the problem is complex.

My issue is the naked profiteering - these countries have effectively already taken the hit on trust that is involved in having the debts written down by up to 90%. To buy a debt for 10% of it's value and then demand immediate payback in full is outrageous loan sharking. And if it's wrong for these guys why is it right for a wealthy hedge fund?