Say Anything Blog

So you’re in favor of welshing on your debts Sparkle?

Does that extend to child support payments?

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

Welshing?  I’m offended.

Why do you hate Welsh people?

When the people fear their government, there is tyranny; when the government fears the people, there is liberty.

-- Thomas Jefferson

Rob’s recently listened-to songs:

But before the deal could be finalised, Donegal International, which is part owned by US-based Debt Advisory International stepped in and bought the debt from Romania for less than $4m.

Sparkie,

I agree the practice is egregious, but something seems amiss.

Exactly to what extent is the DAI involoved?  What percentage of Donegal Int. is owned by DAI?  Who are the other owners and what is their percentage of ownership? 

Until these questions are answered it sounds like an attempt to single out the American based company.  The implication of your comment suggests you bought it hook, line, and sinker.  One could infer from your comments an anti-American tone.

Welshing?  I’m offended.

Why do you hate Welsh people?

Oh, so now we’re going to start picking on eachother for typo’s!

This should be fun.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

I don’t get it...did you spell “welshing” wrong?

When the people fear their government, there is tyranny; when the government fears the people, there is liberty.

-- Thomas Jefferson

Rob’s recently listened-to songs:

weird I did get it right.

You had me thinking I should have used welch, but for once I was right in my word usage.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

Hey, gosh darnit!  We Welsh have all the spare vowels that Czechoslovakia didn’t want.

We gave them a home.

...for great justice

What has happened to Zambia is a prime example of corporate greed.
Another hedge fund, Elliot Associates is also known for this type of activity. In 1996 it bought debt from Peru in a similar manner for $11 mil and got paid $58 mil and are now suing Congo for $400 mil on a debt they bought for $10 mil. Not a bad investment huh. Do I have to mention Elliot Associates are very generous to their lobbyist in DC.
This is not just a problem for some African country, hedge funds were a major player in the collapse of the Asian and Russian markets back in 1997 & 1998 and I see more & more talk about hedge funds on the verge of collapsing here and some economist are predicting that if the big boys go it will take down the derivatives market at the same time due to the snowball effect. 23 sub prime mortgage lenders have closed doors so far this year and no one has any idea how much of the $13 trillion mortgage loan market the hedge funds play cause they are unregulated.
One more note some hedge funds and PE firms have already closed up shop, but they were small and only make the back pages of print.

“We have a dollar that’s adjusting and I am for a strong dollar.....
Our dollar doesn’t buy as many barrels of oil as it used to and so therefore it’s more expensive for the American people”..... Bush 3/12/08

So Mark, what you’re saying is that its ok for the marxist rulers of these countries to rip off the people of their country. 

But it’s somehow wrong for someone to collect on a debt from these marxist rulers because that would impact the standard of living of these dictators.  Heck if they paid their bills they probably couldn’t afford their secret police.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

Whistler.
Nice try.
Must be the Marxists.

Yun Chu said, “You must strictly not express in words what is very significant. Both dragon and snake are killed in one blow.”

Can’t argue with that can you Sparkle?

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

No.
The default answer all you tarts tote must be the right one.

Yun Chu said, “You must strictly not express in words what is very significant. Both dragon and snake are killed in one blow.”

Whistler

Your right, an effort must be made to export American cultural imperialism and set them free....we will be called “liberators”.

“We have a dollar that’s adjusting and I am for a strong dollar.....
Our dollar doesn’t buy as many barrels of oil as it used to and so therefore it’s more expensive for the American people”..... Bush 3/12/08

Did you moonbats ever stop to realize that an Empire conquers a country they do it to enrich the home Kingdom.  On the other hand everytime the US get’s involved in a foreign country it’s costing us money to help them.

So that pretty much exposes your “imperialism” line as a bunch of hooey. 

You guys are pathetic.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

Whistler,
Please.......what are you in the 16th century?

Name one defense contractor that has not been enriched.
Who is Carlyle Group?
Boeing?
Betchel?
KBR?
Lockheed Martin?
Raytheon?
Qualcomm?
Northrop Grumman?
Monsanto?

Come on I can go on all day.
These corporations and many many more are making billions due to Iraq war related contracts.
And just wait till we start replacing damaged equipment. Time to remove your blinders Whistler.

When we conquer it costs who money?

“We have a dollar that’s adjusting and I am for a strong dollar.....
Our dollar doesn’t buy as many barrels of oil as it used to and so therefore it’s more expensive for the American people”..... Bush 3/12/08

So you can’t win the argument without focusing on a very small part of the economy. 

Turns out that the military-industrial complex is about 2-3% of the economy.

So the tin-foil hat brigade thinks that this tiny portion of the country runs everything. 

What a nut!

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

Hahahahaha what a joke.

Or they conquer out of stupidity.
How many empires are left?

2-3% where did you come up with that.

“We have a dollar that’s adjusting and I am for a strong dollar.....
Our dollar doesn’t buy as many barrels of oil as it used to and so therefore it’s more expensive for the American people”..... Bush 3/12/08

I pulled it off the top of my head.  However the US defense budget is about 600 billion.  The US GDP is 12.49 trillion. 

So the amount spent on the military is 4.8% of the economy.  Maybe I undershot the mark, but I wasn’t that far off.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

You forgot to include the profits of the defense contractors.
Never mind the enrichment of other facets of the economy.
Just take a look at Carlyle Group. I’m sure you will recognize many faces.

“We have a dollar that’s adjusting and I am for a strong dollar.....
Our dollar doesn’t buy as many barrels of oil as it used to and so therefore it’s more expensive for the American people”..... Bush 3/12/08

You forgot to include the profits of the defense contractors.

Wouldn’t that be included in the the amount we spend on defense every year?  After all when you buy something you cover the businesses expenses and their profits.

I’m going to go out on a limb again and pick a number off the top of my head. 

I’ll bet defense contractor’s profits (on defense work) are under 20 billion a year.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

Mark D,

Please explain why the Carlyle Group, Bechtel, Boeing, KBR, GE, Lockheed, Qualcom, or any of the others should not make money?

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

Because when people stop worrying about money and do it just to help society everything will be utopia.  From each according to their needs to each according to their means.  (or something like that).

After all Mark doesn’t expect to get paid from his work.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

Bat One

This has nothing to do with whether or not corps should make money
back up and read 11:56

“We have a dollar that’s adjusting and I am for a strong dollar.....
Our dollar doesn’t buy as many barrels of oil as it used to and so therefore it’s more expensive for the American people”..... Bush 3/12/08

The Whistler

Please Read

The enrichment is not limited to just defense contractors.

“We have a dollar that’s adjusting and I am for a strong dollar.....
Our dollar doesn’t buy as many barrels of oil as it used to and so therefore it’s more expensive for the American people”..... Bush 3/12/08

After all Mark doesn’t expect to get paid from his work.

If the thought processes displayed here are any indication, he is justly and fairly paid for his efforts.

The purchase of the debt from the Romanians was perfectly legal.  Certainly no less so than when a portfolio of mortgages is purchased by an investor, or bundled and sold off as securities via Fannie or Freddie.  If I decide to sell my house and am in the midst of negotiations with a prospective buyer when someone else comes along and offers my a 25% premium over the prospect’s highest offer, all cash, I would be an idiot not to take the higher offer.

Besides, this debt has been around since 1979, for heaven’s sake?  Why??? that’s more than 25 years ago!

Finally, a little background on Zambi might be in order.  From the BBC, ironically,

President Levy Mwanawasa won a second term in September 2006, having campaigned on his economic record…

He has made the fight against corruption a centrepiece of his presidency, giving the green light to investigations into alleged graft during the Chiluba era. He pressed for the former president’s immunity from prosecution to be lifted.

Western donors have praised him for boosting economic growth to above 5% and attracting foreign investments, helped by his anti-graft campaign.

The International Monetary Fund, World Bank and Western donors have rewarded Mr Mwanawasa by cutting Zambia’s foreign debt to $502 million from an estimated $7.2 billion in June 2005.

So, Zambia’s international debt had already been reduced a staggering 93% in 2005!

This situation is no different than a delinquent bank loan or credit card account being sold to a collection agency.  The debt should be paid.

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

Turns out that the military-industrial complex is about 2-3% of the economy.

Everything runs on gas don’t it? I mean besides Rush Limbaugh… who has obviously figured out how to run on hot air.

Yun Chu said, “You must strictly not express in words what is very significant. Both dragon and snake are killed in one blow.”

This has nothing to do with whether or not corps should make money .

Mark D,

Then what point is it that you are tediously trying to make, and what do The Carlyle Group, Boeing, Bechtel, and the rest have to do with Zambia, Romania, tractors, or Donegal International?

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

The purchase of the debt from the Romanians was perfectly legal.

Funny how we thumb our nose at some international laws and yet others we hold close to our heart. Bullshit Bat One. There’s no such thing as legal on the world scale. We all know it.

Yun Chu said, “You must strictly not express in words what is very significant. Both dragon and snake are killed in one blow.”

Sparkie,

Something a bit more authoritative their you “Bullshit” pronouncement would be rather more convincing.  If you’ve got something to back up your assertion by all means share it.

“We all know it” don’t count for shit!

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

We all know it.

oh
i forgot about the non-Hobbesians among us like HG who believe in objective justice and the lot. sorry. international laws are not enforceable (except by us). that’s why its crap that we pick and choose which one’s we want to abide by - pre-emptive invasion would be illegal according to international law - a clear violation of Iraq’s sovereignty. that’s why we are becoming a preponderant power.

Yun Chu said, “You must strictly not express in words what is very significant. Both dragon and snake are killed in one blow.”

Sparkie, Sparkie!

Hyper down!  We were talking about international debt and suddenly you’re off on a “pre-emptive” tirade?

Look, if you don’t have anything substantive or authoritative to back up your contention that the purchase of the Zambian debt by Donegal from Romania was illegal, just say so and be done with it.

That tantrum of yours is no treat believe me.  We’ve seen it before.

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

Bat 1

Then what point is it that you are tediously trying to make, and what do The Carlyle Group, Boeing, Bechtel, and the rest have to do with Zambia, Romania, tractors, or Donegal International?

I was responding to The Whistler comment at 1:14

“We have a dollar that’s adjusting and I am for a strong dollar.....
Our dollar doesn’t buy as many barrels of oil as it used to and so therefore it’s more expensive for the American people”..... Bush 3/12/08

I guess its legal Bat. Just like killing babies!

Yun Chu said, “You must strictly not express in words what is very significant. Both dragon and snake are killed in one blow.”

Everything runs on gas don’t it? I mean besides Rush Limbaugh… who has obviously figured out how to run on hot air.

Jeez, then you pull out that old one.  You leftie’s used that one back when we were engaged in Vietnam claiming that the only reason we were there was for the oil that was there. 

The proof is that we haven’t stolen Kuwaits oil.  We haven’t stolen Iraqs oil.  We haven’t stolen anyone’s oil.

Finally you claim that the war for cheap oil lead to profits by the oil companies.  Turns out the shortages are what help them.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

I guess its legal, Bat.  Just like killing babies!

Sparkie,

If it will make you feel any better, we can say instead that the purchase by Donegal International of the Zambian debt to Romania was not at all illegal.

Now, does that soothe your sensibilities?

As for the babies, I’d willing to bet that Roe v. Wade gets overturned and the regulatio of abortion becomes an issue for state legislatures to deal with a good deal sooner than transactions such as this one are regulated, much less banned.

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

Bat one

As I said

What has happened to Zambia is a prime example of corporate greed.

Illegal....no
Immoral....yes

Third world country’s don’t have the luxury of being the world currency reserve as we do. Can you imagine if we faltered on our $8.7 trillion debt and a Chinese hedge fund firm bought the debt and demanded $87 trillion.

“We have a dollar that’s adjusting and I am for a strong dollar.....
Our dollar doesn’t buy as many barrels of oil as it used to and so therefore it’s more expensive for the American people”..... Bush 3/12/08

Here’s the info on the shrinking middle class.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

how in the world would they demand more than the face value of the loan?

Meanwhile someone as knowledgeable as you would realize that China doesn’t own 8.7 Trillion in debt.

In fact according to this chart here China has a whopping 252 billion dollars in US debt, not the 8.7 Trillion.  (Really our debt isn’t 8.7 Trillion because we’re not going to redeem those Social Security bonds anyway.)

You tin foil hat guys just love to make up things to worry about don’t you?

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

Mark D,

Please explain what “corporate greed” has to do with the fact the President Mwanawasa’s autocratic predecessors raped and pillaged the country, much as Mugabe has done in neighboring Zimbawe?

Your romantic vision of how the economic world works, or ought to, may be worthy of a Lyndon Larouche or Noam Chomsky, but it is hardly worthy of a discussion by mature, responsible, knowledgeable adults, such as takes place here.

What IS immoral is your naive notion that obligations need not be satisfied, that private property should remain private only so long as it is convenient to those in power, and that pity ought to substitute for fiscal responsibility.

Let me know when your house goes into foreclosure.  I might be tempted to buy it on the courthouse steps just out of spite.

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

But Bat1.  Those African leaders that looted their countries and destroyed their economies are Marxist and therefore can’t be blamed for stealing so much that everyone in the country is poor.  Sparkie can forgive that, he just can’t stand the fact that there still is such a thing as private property.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

TW

how in the world would they demand more than the face value of the loan?

???? Romania sold the Zambia debt to DAI for $4 mil, DAI is suing Zambia for $42 mil. is that face value?

Meanwhile someone as knowledgeable as you would realize that China doesn’t own 8.7 Trillion in debt.

I never said they did.

n fact according to this chart here China has a whopping 252 billion dollars in US debt, not the 8.7 Trillion.  (Really our debt isn’t 8.7 Trillion because we’re not going to redeem those Social Security bonds anyway.)

Irrelevant,
Chinese Hedge fund is not the Chinese govt. Read my comment again please.

I realize some of our debt is intra-governmental bonds and my example was extremely hypothetical.

Bat1

Purchasing a debt for $4 mil and then charging $40 mil in interest is not corporate greed?

Let me try this,
Say you fall behind in payments on your house, you and the bank negotiate a deal for $100,000 but before it is finalized an investor comes in and buys your mortgage from the bank for $125,000 then turns around and says you owe $500,000. Is that greed or would you accept it as business as usual.

It is irrelevant as to what kind of government Zambia is, DAI could care less. as it is irrelevant as to what religion or political party you belong to the investor that is demanding 4x what he paid for your debt.

“We have a dollar that’s adjusting and I am for a strong dollar.....
Our dollar doesn’t buy as many barrels of oil as it used to and so therefore it’s more expensive for the American people”..... Bush 3/12/08

???? Romania sold the Zambia debt to DAI for $4 mil, DAI is suing Zambia for $42 mil. is that face value?

You merely left out the fact that the 4 million was heavily discounted.  Romania sold the note for less than the face value due to the trouble of collecting the face value. 

So what is face value.  I think the 42 million is the face value of the note (what they promised to pay) plus unpaid interest.

I guess if the Zambia Marxists would have paid their debt then there wouldn’t be any problem here.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

Say you fall behind in payments on your house, you and the bank negotiate a deal for $100,000 but before it is finalized an investor comes in and buys your mortgage from the bank for $125,000 then turns around and says you owe $500,000. Is that greed or would you accept it as business as usual.

Mark D,

Your example is unrealistic on several levels, but instructive nonetheless.  First of all, it points out that in neither your example, nor in the DAI/Romania/Zambia case which prompted all this, is there sufficient evidence to make an informed, rational judgment.  Your indignation is ill-informed, although that is hardly much of a surprise.

For example, how much was the original debt, at what rate of interest and how and when were the payments to be made?  Next, what penalties were included in the financing documents in the event of late payments or default?  What constitutes default, and what recourse is available to the lender should the borrower, Zambia default on the loan?  (Incidentally, this was the point of my remark about the age of the debt, which you conveniently overlooked.)

I suspect that virtually no payments have been made on this loan since it was closed in 1979, and thus THE VAST MAJORITY OF THE $42 MILLION SOUGHT BY THE CURRENT NOTEHOLDER, DONEGAL, PROBABLY CONSISTS OF INTEREST AND PENALTIES per the original loan documents.  This view is supported by the ruling of the court, although without access to the original documents, and the Donegal/Romania purchase agreement its hard to be 100% positive.

Zambia, in an effort to qualify for IMF/World Bank financing had to clear up all the old debt outstanding, including the Romanian tractor financing.  The $3 million that the Romanians were apparently willing to settle for also indicates that this loan had been “non-performing” for quite some time.

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

You merely left out the fact that the 4 million was heavily discounted

What was face value?

I think the 42 million is the face value

Think???

Zambia negotiated to liquidate the debt for $3m This was between Romania and Zambia
Romania would have accepted the loss

The $15 million loan from Romania (to buy tractors, was incurred in 1979.

- In Zambia one in 5 people are infected with HIV, and life expectancy has dropped to 38 years.

- Young people aged 20-25 actually have less education than their parents’ generation.

The HIPC Initiative is a comprehensive approach to debt reduction for heavily indebted poor countries pursuing IMF- and World Bank-supported adjustment and reform programs. To date, debt reduction packages have been approved for 30 countries, 25 of them in Africa, providing US$35 billion (net present value terms as of the decision point) in debt-service relief over time. Ten additional countries are potentially eligible for HIPC Initiative assistance and may wish to avail themselves of this debt relief.

Ahh you guys don’t care about third world country’s.
Why do I bother.

“We have a dollar that’s adjusting and I am for a strong dollar.....
Our dollar doesn’t buy as many barrels of oil as it used to and so therefore it’s more expensive for the American people”..... Bush 3/12/08

Romanians were apparently willing to settle

Exactly, willing to settle, but then entered DAI

“We have a dollar that’s adjusting and I am for a strong dollar.....
Our dollar doesn’t buy as many barrels of oil as it used to and so therefore it’s more expensive for the American people”..... Bush 3/12/08

Actually this is what I said:

So what is face value.  I think the 42 million is the face value of the note (what they promised to pay) plus unpaid interest.

That’s a bit different.

My point in this whole deal is that the liberals are willing to give a total pass to the Marxist leaders loot the country but object when someone collects on a legitimate debt.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

In Zambia one in 5 people are infected with HIV, and life expectancy has dropped to 38 years.

And in the US, roughly half of all voters identify themselves as Democrats.  Neither fact has any bearing on the lawful debts incurred by the countries respective governments, although the relative severity of the two calamities is certainly arguable.

Look, apparently your virulent anti-capitalist instincts have clouded your reasoning, not surprisingly, but if there is any “immoral” action in all this, and any party to be taken to task, its the Romanians, who had an agreement to agree, then sold the paper to a third party who offered $1 million more.

Still, what’s surprising is that the Romanians didn’t sell this note a helluva lot sooner.

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

Toot and Batty

You merely left out the fact that the 4 million was heavily discounted.  Romania sold the note for less than the face value due to the trouble of collecting the face value.

Face value = $3M. They sold it for $4M. Within 8 years, interest has increased the debt to $42M, or so it is claimed. A 1400% increase. Here is where the legality comes in. Just because there is no worldwide interest rate doesn’t mean that one can charge whatever they want. Its crap. I magine how you would feel if someone bought 300 bucks of your debt and was trying to get $4.2K out of you. Its a joke. Especially considering the fact that international law allows whatever despotic asshole can forcibly sit himself in the right chair to take out loans on behalf of an entire country. The whole mess is a joke. Clearly. The only people who would stick up for it are skanks. Some would clearly object to the endangering of so many ‘lives’ with the imposition of such abject poverty as it is clearly severely immoral.
HG
As far as your comment above goes, I was not trying to impune the US. This phenomenon, I feel, is severely immoral. It is as european as it is american. Ain’t it wierd how our morals differ?

Yun Chu said, “You must strictly not express in words what is very significant. Both dragon and snake are killed in one blow.”

Sparkie,

Find another subject to bray about besides finance. 

The “face value” is apparently $42 million, not $3 million as you suggest.  And if you “run the numbers” you’ll see that if the original amount financed was $15 million back in 1979, and few if any payments have been made since, $42 million is probably pretty generous to Zambia under the circumstances.  A review of the history of the US prime rate shows that the average prime for the year 1979 was 12.66% (Thank you, Jimmy Carter!) It is highly doubtful that the original finance agreement with Romania was at a rate substantially lower than prime, although it my have been subsidized by IMF, World Bank, or some other entity.

Your example, like Mark’s above, is based on a willful misunderstanding of how finance, and numbers in general work… a misunderstanding likely clouded by your own animus.  Most people are distrustful and defensive about things which they do not comprehend.

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

Bat
Assume: I forcibly take control of the country and buy lots of stuff from abroad or just take out large cash loans in the name of the country. Then I leave power with or without the money. Should that be legal? I understand in this case that was probably not what happened, but the practice is widespread in general and much of Africa’s debt can be seen in this light.

Yun Chu said, “You must strictly not express in words what is very significant. Both dragon and snake are killed in one blow.”

Bat.
It doesn’t make sense if we invade when an illegitimate leader plunders a country’s oil money and gives the population none (Iraq - Saddam’s abuse often cited when doubt about the invasion is raised) yet we uphold debts when an illegitimate leader plunders non-existant money from a country (as is often the case in Africa). Does it?

Yun Chu said, “You must strictly not express in words what is very significant. Both dragon and snake are killed in one blow.”

Sparkie,

Let’s take the first of your two comments/questions, and leave the second alone.  Saddam’s Iraq was not at all analogous to the Zambian situation, either financially or legally.  (Although I’ll be glad to discuss that as well some other time.)

There is a perfectly understandable, though often wrong-headed temptation to allow sympathy to rule in a situation such as this.  But try looking at it from another point of view, that of Romania.

Romania too is a poor country.  It has little economic strength, having been decimated by 40 years of inept communist mismanagement (forgive the redundancy).  Why should Romania be expected to forgo what was originally promised them?  After all, the Romanians fulfilled their end of the contract.  There is no claim that the tractors were not delivered as called for by the contract.

So, the contract, the original loan agreement, is legitimate and legal.  And your real quibble is whether Romania should have been “allowed” to sell the paper to Donegal for a premium over what they were purportedly prepared to accept from Zambia, and whether Donegal should then have been “allowed” to profit so handsomely from their investment by demanding that the full amount due be paid.

Obviously, if the original loan documents are legitimate and the debt is valid, then Romania is free to sell the paper to whoever was willing to pay the most for it… whether that was Donegal at $4 million or the Zambians who were in essence bidding $3 million.

Now it’s likely that the loan documents themselves address the question of sale, transfer, or assumption of the loan, but they undoubtedly have something to say about default and default remedies as well.

As for Donegal, if the loan is legally the property of Donegal, they can certainly lay claim to every sent due them under the terms of the original loan documents.  And sympathy for the plight of the Zambians in no way excuses the fact that had payments been made over the past 28 years this would not have happened at all.

For the fact of the matter is that the riskier a loan, any loan, is deemed to be, the higher the cost to the borrower.  If any individual borrower, corporate entity, government body, or country can arbitrarily walk away from a financial obligation without consequence, then the cost to borrow, for that borrower and the next, and the next, will be higher to cover the additional risk.  It may not be an emotionally palatable situation, but it is the way things work… and the way they ought to as well.

Now, if it will make you feel any better, it is more than likely that Zambia will pay nowhere near the $42 million awarded by the court.  In the first place, the original loan was almost certainly undewritten by either IMF, World Bank, or some other such entity.  It is also almost certain that the impetus for clearing up this particular loan was a pending package of financing from the World Bank to the current conservative (responsible) Zambian government.

Now that Donegal has established the legitimacy and legality of its claim, there will be more negotiations.  More than likely, the amount that is agreed to pay off the claim will be included in Zambia’s new IMF or World Bank finance package.  And at an interest rate substantially below that 12.66% too.

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

Bat
I agree with you in this case. Nonetheless, I feel there are many other examples of debt being incurred and being gouged by these ‘vulture funds’ that are less than ok. Hence this comment. I think there needs to be some type of legal regulation in that respect.
I believe the Zambians are expected to repay somewhere in the neighborhood of 10-20M. So you are correct. Still, there is the matter of who can legally incur debt on behalf of a country and for what. I guess that wider discussion won’t happen this time…

Yun Chu said, “You must strictly not express in words what is very significant. Both dragon and snake are killed in one blow.”

Still, there is the matter of who can legally incur debt on behalf of a country and for what. I guess that wider discussion won’t happen this time…

Sparkie,

I’d be more than willing to have that “wider discussion” with you.  And unless you have some objection, this thread seems to be as good a starting point as any other.

Be forewarned, however.  There is a trap implicit in your question, and I have every intention of inviting you fall right into it.  You may not like where this leads.

“Poverty of goods is easily cured; poverty of the mind is irreparable.”