Vultures, debt and desire: the vulture metaphor and Argentina’s sovereign debt crisis

ABSTRACT

This paper explores the development of the vulture metaphor in relation to economic ideas, focusing on its reference to vulture funds in post-2001 Argentina. It traces the metaphorical connection between ‘vultures’ and the extraction of debt back to Elizabethan England, to Shakespeare’s poem Venus and Adonis (1593). In the same period, we also see English law’s earliest cases of the predatory purchasing of land titles in order to dispossess the poor. Contemporary cases involving sovereign nations defending against vulture funds have cited case law in the Elizabethan context in order to invoke a moral claim against speculation in distressed sovereign debt. The moral charge of the vulture metaphor – laden with connotations of greed, desire and manipulation – contrasts with legal arguments about repayment based on the rationality of contract law which demands repayment of debt and presumes equality of party. I explore this tension in both historical and contemporary litigation, ultimately focusing upon the performance of position taken by vulture funds, on one side, and the Argentine government on the other, in the ‘case of the century’ – NML Capital v. the Republic of Argentina.

KEYWORDS:

• Sovereignty
• performance
• law
• debt
• vulture funds

Disclosure statement

No potential conflict of interest was reported by the author.

Notes on contributor

Sonya Marie Scott is a professor in the department of Social Science at York University. She is the author of Architectures of economic subjectivity: philosophical foundations of the subject in the history of economic thought (Routledge, 2013).

Notes

1 Paul Singer is a US hedge fund manager who is notorious for his ‘activist’ investment strategies that often involve litigation against debtors (be they major firms or sovereign nations). His firm Elliot Management manages $34 Billion in assets (Forbes 2018).

2 Statute 32, Henry VIII, 1540 c. 9, also titled the Maintenance and Enbracery Act 1540.

3 All references to Shakespeare’s Venus and Adonis are made with the poem’s line numbers, as found in Rolfe (Ed.), 1890.

4 While not all privatization efforts were immediately successful, Kogut and Macpherson (2008) note that ‘The diffusion of privatization policies began with the British and Chilean privatizations of the late 1970s and early 1980s that demonstrated the feasibility of large-scale privatization’ (p. 110).

5 It should be noted that caution is needed when approaching these issues, as this particular military dictatorship was particularly brutal, repressive and destructive with approximately 30,000 people, primarily from the organized left, disappeared, tortured and killed during its tenure. Additionally, voice and attitudes towards economic thought were not unified within the ruling structure of the dictatorship.

6 Note that predatory capitalism today does not simply refer to the intentional taking of distressed debts or assets, but is also used to refer to systemic inequalities in wealth that grant disproportionate levels of power to corporate economies of scale and to finance capital. This is, some argue, the capitalism that seeks government protection of corporations and big finance in order to maintain inequalities and to avoid the pitfalls of genuine competition in the market (Chomsky 2005).

7 See Muse-Fisher (2014), Samples (2014), Vernengo (2014), Megliani (2015) and Rossi (2016) for legal defense of the use of sovereign debt-renegotiation, and the problems presented by NML v. Argentina for the defense of sovereign nations in future vulture fund litigation.

8 Stiglitz and Guzman (2016) refer to this particular case as ‘perhaps the most complex trial in history between a sovereign nation […] and its bondholders’.

9 This is best represented by the right-leaning Argentine dailies Clarín and La Nación.

10 This is best represented by left-leaning Latin American sources such as the news network Telesur, the South American Monthly Le Monde Diplomatique (Southern Cone Edition), and the Argentine daily Página 12.

11 The ATFA is a lobby group promoting the contract rights of holdout creditors in the case of sovereign debt litigation, specializing in Argentina post-2001 economic crisis Paul Singer was one of the major supporters of this group, at the same time that his private equity fund NML Capital stood the most to gain from successful litigation. Mike Lasusa (2014) notes that ‘ATFA executive director Robert Raben told the Huffington Post in that the group’s mission is to ‘do whatever we can to get our government and media’s attention focused on what a bad actor Argentina is’ […]. The organization also placed full-page ads in the Washington Post, the Financial Times, and the Wall Street Journal, as well as prominent Argentine media outlets such as Clarín and La Nación as ‘an answer to a campaign of misinformation being waged by the Argentine government, specifically by its Economy Minister Axel Kicillof’ (https://www.counterpunch.org/2014/07/18/fact-checking-fact-check-argentina/).