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Monthly Archives: November 2013

Three Cheers for the Rule of Law: Holding Deadbeat Debtor Argentina to Account

Posted: 29 Oct 2013 06:42 AM PDT (CATO Institute)

Doug Bandow

Being a creditor is a thankless task. The worst offenders are governments, whose leaders constantly promise their peoples a free lunch, dinner, and more. 

English: Plaza del Congreso, Buenos Aires, Arg...

Réplica firmada de El Pensador de Rodin, frente Palacio del Congreso, Buenos Aires Argentina

Argentina is a typical offender. One of the world’s richest nations at the end of World War II, the South American country embraced political authoritarianism and economic populism. In the most recent Economic Freedom of the World rating Argentina came in at 137 of the 152 nations rated. 

The country’s worst measure is rule of law, which is reflected in its treatment of international creditors—and steadfast resistance to U.S. court rulings ordering Buenos Aires to pay its debts.

In 2001 Argentina defaulted on nearly $100 billion in debt. The Argentine people essentially had a wild party and woke up with a hangover. Their first reaction was to stiff the fools who had extended credit. Owners of roughly 93 percent of the debt gave in and restructured their paper, accepting huge write-offs.

But a few creditors, including NML Capital and Aurelius Capital Management, refused to concede. These creditors argued that Argentina should abide by its contract, which required it to obey U.S. court rulings. 

Naturally, Argentina’s government cried foul, complaining about the violation to its sovereignty—after it enthusiastically sought (and spent!) the foreigners’ money. The politicians who wrecked the Argentine economy called the hedge funds “vultures.”

However, Buenos Aires didn’t prepare for tough American judges.  As I noted in

Although Argentine politicians can dispense with the rule of law in their home country, they cannot so easily ignore legal rules overseas.  With the bonds issued under New York law, disgruntled creditors won more than 100 court judgments ordering Buenos Aires to pay up.

Last year’s federal district court judgment, NML Capital Ltd. v. Republic of Argentina in New York—upheld on appeal in February—prohibited Argentina from paying holders of restructured debt without paying off those holding original bonds. Buenos Aires sought review by the Supreme Court. But in early October the high court refused to grant of a writ of certiorari to take the case. Last week NML and Aurelius filed a motion in the appellate court requesting that it lift its stay of Judge Griese’s ruling, allowing enforcement against Argentina. 

Misguided is support for Buenos Aires, particularly from those purporting to speak on behalf of the poor at home and abroad. For instance, after the Supreme Court said no to review the Jubilee USA Network Executive Director Eric LeCompte declared: “The faith community is saddened by the high court’s decision.”

However, no one forced the Argentine government to borrow money. No one forced the Argentine government to waste the money that it borrowed. And no one forced the Argentine government to default. Argentina’s economic problems originate in government offices in Buenos Aires, not hedge fund offices in New York.

Indeed, politicians in Buenos Aires are the true vultures. One can argue about proper standards for international debt restructuring. But the rule of law is the best and, indeed, usually the only effective protection for the poor.

Those who are wealthy and influential do well in any system. Redistributionist economic policies ensure that only the well-connected prosper.     

Buenos Aires’ lawlessness puts everyone else at risk. Five years ago the Kirchner government confiscated nearly $30 billion in private retirement assets to raise cash. 

The only consistent protection against rapacious politicians is the rule of law. Obviously the legal process doesn’t always work well, but as Judge Griese proved in ruling for private creditors, with independent courts vulture politicians don’t always win.

The New York legal battle is esoteric—but matters for all of us. Despite so much amiss in Washington, the Argentine debt case reminds us that the rule of law remains alive in the United States.



Posted: 31 Oct 2013 03:35 PM PDT       (CATO INSTITUTE)

Julian Sanchez

International Religious Freedom Act of 1998

(Photo credit: Wikipedia)

Just in time for Halloween, the Senate Intelligence Committee has produced fig-leaf legislation that entrenches indiscriminate collection of Americans’ phone and Internet records, but dressed it up in the costume of a surveillance reform bill designed to ban such collection. The “FISA Improvements Act” does contain some mild but generally positive transparency measures—somewhat ironically, given that the bill itself was marked up in secret. But the main provision deals with the NSA’s controversial bulk phone records program. According to the extraordinarily misleading press release, the law:

Prohibits the collection of bulk communication records under Section 215 of the USA PATRIOT Act except under specific procedures and restrictions set forth in the bill

This is almost precisely backwards. In fact, the bill for the first time explicitly authorizes, and therefore entrenches in statute, the bulk collection of communications records, subject to more or less the same rules already imposed by the FISA Court. It endorses, rather than prohibits, what the NSA is already doing. Moreover, it imposes those restrictions only with respect to bulk collection of communications records—which is dangerous, because it signals to the FISA Court that Congress implicitly endorses the use of Section 215 to collect other records in bulk without comparable restrictions. (The key phrase “acquisition in bulk,” incidentally, does not appear to be given any concrete definition.) 

Perhaps most troubling, the bill contains a section stipulating that bulk orders for communcations records may not acquire the contents of any communications. That sounds good, right? The problem is, under canons of judicial interpretation, a narrow and explicit prohibition on getting content under bulk orders for communications records could easily be read to imply that content can be acquired via non-bulk orders, or even via bulk orders for other types of records. At present, it is not clear whether the statute allows for the acquisition of contents under 215, but there are strong arguments it does not—though, of course, I’d argue the Constitution would forbid this even if the statute didn’t. Under this law, though, a clever Justice Department lawyer could plausibly argue that a prohibition on content collection under one very specific type of 215 order would be senseless and redundant unless Congress intended for content to be accessible under 215 orders generally—and Courts generally have to interpret the law in a way that avoids making any provision redundant.

This is not at all a hypothetical concern. In 2006, Congress amended Section 215 to add special “protections” for educational and medical records. What Congress didn’t know is that, because those records are already protected under other federal laws, and 215 contained no language explicitly overriding those statutes, the Justice Department had determined that 215 simply could not be used to access those types of records—an interpretation that was reversed after the “protections” were added. Congress, in other words, inadvertently expanded the scope of 215 while trying to limit it—a fact that was discovered only later, when a report by the Inspector General revealed the unintended consequences of the amendment.

This bill bears out the prediction Sen. Ron Wyden made in his keynote speech at ourrecent NSA conference:

[W]e know in the months ahead we will be up against a “business-as-usual brigade” – made up of influential members of the government’s intelligence leadership, their allies in thinktanks and academia, retired government officials, and sympathetic legislators. Their game plan? Try mightily to fog up the surveillance debate and convince the Congress and the public that the real problem here is not overly intrusive, constitutionally flawed domestic surveillance, but sensationalistic media reporting. Their end game is ensuring that any surveillance reforms are only skin-deep.

The business-as-usual brigade have resigned themselves to the inevitability of some kind of NSA reform—but they’re clearly hoping some cosmetic changes, falsely billed as a “prohibition” on bulk collection, along with a few mild transparency tweaks, will preempt any more substantive reform. It’s an ingenious costume, but most assuredly more trick than treat.

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Subject: SPLC victory against Alabama anti-immigrant law
Date: Wed, 30 Oct 2013 18:37:11 -0400


October 30, 2013

Dear Gaston,

We’ve just won an important victory against Alabama’s racist anti-immigrant law.

The law undermined our most fundamental ideals as a nation. It was forged amid a legislative debate rife with incendiary rhetoric and bigotry aimed at a tiny sliver of the state’s population – Latino immigrants.

The New York Times called Alabama’s law “cruel, destructive and embarrassing” – the “worst in the nation.”

We sued the state over this unconstitutional law, known as HB 56, and following a series of court victories, we’ve announced a final settlement that effectively guts it.

  • No longer will schools require children to verify their parents’ immigration status.

  • No longer will the state of Alabama authorize the detention of someone during a traffic stop for the purpose of checking their status.

  • No longer will acts of kindness toward immigrants, such as giving someone a ride to the hospital, be considered a crime.

Because of our suit, the most egregious provisions of the law have been permanently blocked.

When this law was enacted in 2011, it unleashed a kind of vigilantism, leading some Alabamians to believe they could cheat, harass and intimidate Latinos with impunity. We saw families with children lose their water service … day laborers cheated out of their wages … sick children turned away from medical clinics.

Many Latinos — regardless of their immigration status — chose to flee the state rather than face the racial profiling promoted by HB 56. Farmers lost millions while crops rotted in the fields.

This victory will have a major impact on many lives — not just immigrants, but legal residents and U.S. citizens who could be suspected of being unauthorized simply because they are Latino.

We remain committed to pursuing comprehensive immigration reform in Congress so that no other state will be tempted to pass such a mean-spirited law again. And we continue to work in the courts to uphold the rights of immigrants facing injustice.

Thank you for your dedication to justice. It’s your support that makes victories like this possible.

Sincerely,Morris Dees
Founder, Southern Poverty Law Center

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